Richard Bélisle

[Borrowing Authority Act, 1994-95, March 7th, 1994]

Mr. Speaker, the next speakers for the Bloc Quebecois will each take 10 minutes.

This budget contains a number of desirable initiatives that have been described in great detail by government members. According to the Bloc Quebecois, however, these measures remain incidental. There is no comprehensive plan with specific objectives, no global vision providing a medium-term perspective and supported by strong measures to put public finances on a sound footing, make drastic cuts in the government's operating expenditures and improve the employment situation.

During four prebudget seminars, the minister consulted his socioeconomic partners as they had never been consulted before. I think we all remember that. The minister had mobilised his partners. The public was prepared to tighten its belt, provided the cutbacks were fair and would require all taxpayers to do their fair share, all of course, to help reduce the public debt.

Still in the initial months of its mandate, the so-called honeymoon period, the Liberal government had a unique opportunity to send out the right signals and change the course of Canada's public finances. However, consulting is one thing but making difficult decisions is another thing altogether. Instead of changing course, as all Canadian taxpayers expected the government to do, what happened? We expected leadership, a change from 20 years of letting public finances slide in this country, a process that started under Pierre Trudeau's Liberal government, as you will probably remember.

I think the government should look at what is being done by Premier Klein of Alberta, who is of course too far to the right for the present Liberal team. Nevertheless, by cutting where he has no other option, Mr. Klein will eliminate Alberta's deficit in three years, and in the future, this may be the only Canadian province that can maintain an adequate social safety net, all because the inevitable cutbacks were done at the right time and not under pressure from international lenders who, one day, will force the federal government to make these choices.

According to us, the deficit reduction forecast in the budget brought down by the Minister of Finance is far too timid. The deficit for 1993-94 was artificially inflated to $45 billion, but according to us, this legacy from the Conservatives should be more like $42 billion. The forecast deficit of $39.7 billion for 1994-95, just under the $40 billion mark, is based on an expected $9 billion increase in tax revenue. If this increase does not materialize, the deficit for that year will be $46.9 billion. We see the same scenario applied to the projected deficit for 1995-96.

The Department of Finance expects the 1995-96 deficit to be $32.7 billion. This would require an increase in tax revenues of $8.1 billion-another increase for the second consecutive year. The government hopes to bring the deficit down to $32.7 billion by March 31, 1996. To do so, it is projecting a total increase of more than $17 billion in tax revenues over the next 24 months. However, it has yet to deal with the problem of smuggling and the underground economy, most tax shelters have been maintained and taxpayers' ability to pay has already been stretched to the limit.

The adjustment of Canadian companies to the new global economy, with all the industrial restructuring and manpower adjustment that involves, is not yet complete. There is also the much needed conversion of military infrastructures to viable civilian projects, but instead, the government has decided to close or downsize a number of military bases in this country.

At a time when rapid change is making new directions mandatory and a new economy is emerging that will impose certain costs before it can be viable, can we expect a real increase in tax revenues as projected by the government? The government's projection is based on a 15 per cent increase in tax revenues over the next two years, in the uncertain climate we have just described.

The deficit will not go down. It will not reach 3 per cent of GNP by the end of this government's mandate. It is clear the government has missed the boat. Like Tory ministers Wilson and Mazankowski, the government is depending on a putative increase in tax revenue to deal with the deficit, while the only way to reduce the deficit in the short term and eliminate it in the medium term is to make drastic cuts in government spending.

The revenue forecasts are unrealistic, and even if they prove to be true, the federal government's net debt would still be $511 billion by March 31 this year, it would go up to $551 billion by March 31 next year and would reach $583 billion by March 31, 1996.

The government has failed completely in its much-awaited initiative to reduce its own operating expenses. Imagine, trimming $413 million from a program budget of $122.6 billion for

1994-95. This represents a reduction of roughly one-third of 1 per cent. The government has failed to make the kinds of deep budget cuts demanded by taxpayers during the last election campaign.

The Minister of Finance tells us that he has begun to put in place the principal components of a plan which should reduce the deficit to 3 per cent of GDP by the end of this legislature. Cutting operating expenditures by one-third of 1 per cent cannot be viewed as a serious deficit reduction effort.

The government will never meet its target. It has pulled the wool over the voters' eyes. Departmental operating budgets will be trimmed by $1.6 billion over three years, while unemployment insurance and social security transfer payments to the provinces will be reduced unilaterally by $7.5 billion over the same period.

Quebec, which has its considerable share of unemployed, will be especially hard hit. Is this what is meant by viable federalism? Having failed to clean up its own house, the federal government will demand from the unemployed and the least privileged an effort nearly five times greater than that which it will be asking of its five federal departments.

In conclusion, this budget does not solve anything. It does nothing to ease the tax burden of middle-class families who clearly could have boosted the level of consumption. The budget also fails to deal with the problem of administrative laxity repeatedly criticized by the Auditor General. Once again, in moving to broaden the tax base, the government has ignored family trusts and the idea of a minimum corporate tax. The problem of administrative overlap and disagreements between Ottawa and the provinces will be fuelled when Ottawa sits down at the bargaining table with $800 million to invest unilaterally in occupational training.

This budget only postpones the hard choices. They will be that much harder to make and the provinces will have an even heavier burden to bear, whereas the federal government will be shifting responsibilities onto these same provinces' shoulders without transferring to them the relevant tax fields. The entire tax base will be barely adequate enough to support the federal debt which has grown to prohibitive proportions.

[Main Estimates, 1994-95, February 24th, 1994]

Madam Speaker, what strikes me upon reading the 1994-95 Estimates tabled by the Minister responsible for Treasury Board is that, compared with the 1993-94 budget, there is a 0.5 per cent reduction in transfer

payments and a 3.2 per cent reduction in other program spending, while at the same time the cost of servicing the debt has gone up 3 per cent. This means that budget cuts are being made to accommodate an increase in the cost of servicing the debt.

The government's policy in the years to come will be to cut transfers to individuals and transfer payments to the provinces. However, as we postpone these cuts, the debt increases accordingly, as shown in the budget, which means even larger cuts will be necessary in the future, always to accommodate the cost of servicing a debt that will soon be out of control. We are fast approaching the breaking point.

As the debt increases and transfers to individuals are cut back, the gap between rich and poor widens. The gap between the various levels of our society has never been greater, and is getting wider. Ironically, the cumulative debt of the past 20 years was the result of a desire to redistribute wealth across the country.

When servicing the debt means transferring tens of billions of dollars from taxpayers to investors, this will create even greater gaps between the rich, the middle class and the neediest in our society. Is this the failure of the Canadian model of a just society, an echo from another era?

Total budget expenditures are forecast at $163.6 billion, an increase of 2.1 per cent. We are told that more than 75 per cent of this increase, or 1.6 per cent, is due to the cost of servicing the public debt. The impact of the debt on the estimates will get worse over time because the government's spending cuts are not enough, as was illustrated by the minister's speech this morning.

The cost of servicing the public debt is $41 billion, compared with $38.5 billion last year. Program spending is estimated at $122.6 billion, compared with $121.8 billion last year, a difference of only 0.7 per cent, while debt charges are 6.5 per cent higher than last year.

This year, cuts in operating costs-departmental budgets-amount to $413 million, out of a total $2.1 billion in cutbacks. My point is that departmental budget cuts represent only 19 per cent of the total reduction in operating costs. The $725 million cut in unemployment insurance, however, represents 33 per cent of total reductions. Reductions in business transfers add up to $117 million or 5.3 per cent of total cuts. I think it is clear where this government's priorities are. It uses the unemployed to get the cuts it cannot make in its own operations.

Cuts in the departments represent less than 2 per cent of the government's operating costs, of which a substantial 19 per cent is generated by defence. There was no disciplined item by item assessment by the government, as the Bloc Quebecois had requested.

However, there is still fat and waste in government operations. The Auditor General estimates that if the government stopped the waste, the potential savings would amount to several billion annually. A reduction of $400 million in operating costs, less than 2 per cent, is certainly not enough when the cost of debt servicing increases by $2.5 billion during the same period.

The government has failed to make the necessary reductions in spending. Only a reduction in expenditures achieved by eliminating waste and poor management procedures will in the long run reduce the tax burden on the middle class that has caused the underground economy to flourish, as we have seen repeatedly during the past few months.

Although so-called spending cuts were announced with a great deal of publicity, government program spending will increase again this year, by another $800 million. This amount corresponds to statutory programs such as equalization.

Instead of coming down hard on the unemployed and senior citizens, whose age credit has been cut, the government should have acted immediately to streamline government operations by getting rid of the duplication and overlap that costs the government between $2 and $3 billion annually. This is nearly eight times the cuts made in this government's budget plan.

Second, the government should make further reductions in defence spending. A 12 per cent cut is planned over five years, while the Bloc Quebec asked for a 25-per cent cut. The Collège militaire royal in Saint-Jean should not be closed until Quebec has received its share of national defence spending, on a per capita basis. This closing does not make sense, especially since the college had just been renovated at a cost of several million dollars.

In concluding, I would like to add that the government should have made further spending cuts and invested half of this spending room in job creation and the other half in reducing the debt. Most analysts agree that the infrastructure program does not do enough because it creates only 45,000 temporary jobs and is, in the final analysis, the employment recovery program the government announced with so much fanfare.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, I listened with interest to the comment made by the hon. member to the effect that the figures may be distorted by the fact that a lot of investments in research and development are done in Ottawa and that, on a per capita basis, as he said, the gap between Ontario and Quebec would probably be much less significant. I do hope the hon. member is right and I will take another look at the figures. I want to point out though that instead of referring to Ottawa, it might be more accurate to say the national capital region, which also includes an important part of Hull, on the Quebec side.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, I want to thank the hon. member for his comment. Indeed, I was referring to GST revenue, which was something like $13 billion or $14 billion, give or take a billion or a billion and a half.

This tax brings in between $13 and $15 billion annually. This is more or less what I wanted to point out regarding Bill C-9, namely that the government should conduct cost benefit analyses or more in-depth studies before creating new taxes, and that it should also eliminate loopholes. I am not strictly referring to

tax loopholes, but also to all those exceptions which are made whenever a new levy or tax is implemented.

Of course, the government wants those taxes to be the least regressive possible. Reductions and exceptions are provided for the poorest individuals or households. In this case, I think you mentioned the figure of $17 billion for GST related credits to exporters, and 50 per cent of the GST for schools and hospitals. If you eliminate all that and add the cost of the administrative work done to collect the tax, you end up with $14.9 billion when, as you rightly pointed out, that tax initially brings in $29.5 billion. Therefore, once all the exceptions have been taken into account, the tax does not even bring in 50 per cent of what was originally expected. Indeed, we start with an amount of $30 billion and, once all those exceptions have been taken into account, we are left with $14.9 billion. And we are told that the previous federal tax, which did not have all these exceptions, used to bring in $18 billion.

So, all these efforts were made to create a new tax which, in the end, brings in $3 or $4 billion less in revenue. What I am saying is that before implementing a new tax measure or a new federal tax to replace the GST, some in-depth analyses and studies must be done to try to eliminate administrative costs to businesses.

This $14.9 billion which we are left with in the end does not even take into account the efforts made by businesses to collect the tax by using new accounting techniques and computer systems. We are told that the previous tax used to bring in $18 billion. However, the economy must be considered as a whole: if the government is not paying, then it is businesses, and the latter paid several billion to implement this tax; it is hard to figure out exactly how much, but it could be somewhere between $5 and $10 billion. So, in the end, we are maybe talking about $7 or $8 billion in revenue for the government. Indeed, there may be only $4 or $5 billion left in the end. So, all these efforts were made to replace a tax which used to bring in four or five times more in revenue. Consequently, we must really be careful and conduct more in-depth analyses before implementing a new tax.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, as I said during my speech, we would have liked to see in Bill C-9 some income tax measures affecting individuals and families more directly.

In Quebec, the provincial tax legislation contains a whole slew of measures designed to help parents more directly, especially parents of young children. One has to recognize that this bill contains provisions which are more directly targeted to businesses.

The hon. member referred to measures 9 and 11 concerning research and development. I do hope that, for once, these measures can benefit Quebec. We know that in the last ten years, all the help provided to R and D has essentially benefitted Ontario, at the expense of Quebec. During the period from 1980 to 1989, Ontario got most of the federal subsidies for research, namely 50 per cent. Historically, Quebec only received 17 per cent of federal grants for research and development.

I do hope that this bill will, for once, benefit Quebec as much as the other provinces of Canada, especially Ontario.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, the proposals contained in Bill C-9 implement measures announced, as you will all recall, by the previous government in its economic and fiscal statement and April 1993 budget.

The new government, already short of ideas on new tax incentives to offer small business owners and workers, is borrowing ideas from an old government worn out by nine years in office.

This bill in fact proposes 12 amendments to the Income Tax Act. As we all know, the first measure deals with unemployment insurance premium relief for additional jobs. It provides a refundable tax credit in respect of an increase in unemployment insurance premiums payable by certain employers for 1993.

How much does it cost to administer this extensive red tape? That is the question. This kind of relief is reminiscent of GST refunds. The government collects some $13 billion in GST. Once you subtract all the associated administrative costs and refunds, you realize that this tax, while it was supposed to reduce the debt and eliminate the annual deficit, is really

bringing in very little revenue because of the red tape and all the efforts put into levying it.

It is the same thing with the unemployment insurance premium relief proposed in Bill C-9. What is the use of increasing taxes and premiums without eliminating loopholes? That is basically what is suggested here: reductions, relief for certain target groups. Why favour those groups over others? At the end of the day, all those taxes and premiums are of very little benefit to the community as a whole.

This morning I had before me a copy of the federal Income Tax Act. It is a four-inch thick document. The main objective of income tax should be to enable the government first to collect the money it needs to operate and second to redistribute the wealth among the population.

Why all these tax credits, these extensions, these abolitions and so on, if not to feed and support the whole bureaucratic machine and all the professionals gravitating to it.

A friend of mine who owns a small business was telling me last week: "A small business with 20 employees must have a full-time person, I repeat full-time, just to fill out government questionnaires and forms, including the endless changes, like those proposed in Bill C-9, that the government is constantly making to its laws and regulations." This friend is the owner of a small business employing some 20 people.

And to think that, during the last election campaign, one could read on page 19 of the Liberal Party's red book: "Expenditure reductions will be achieved by cancelling unnecessary programs, streamlining processes, and eliminating duplication. This effort will take place in partnership with provincial governments".

Unfortunately, the red book does not mention that the government will stop constantly increasing taxes and expanding the tax base by always creating exemptions for various groups, as proposed in Bill C-9. If the government conducted cost benefit analyses before creating new taxes or raising contributions such as unemployment insurance premiums, it would know the real, net benefit from each type of tax or contribution.

The tax or contribution collection costs should include the true cost of the bureaucracy needed to collect this tax, as well as the cost of all these relief measures, tax credits, tax deductions and program extensions such as those proposed in the bill before us today.

If we add up all tax collection costs and all changes and relief measures to make taxes less regressive for the poor or less detrimental to investors or investments creating jobs, the real benefit of various taxes or contributions is often minimal in the end for the government.

Bill C-9 is aimed at amending the very foundation of the income tax act. We in the Bloc Quebecois want to tell this to the current government: We already have in Canada a four-inch thick Income Tax Act. Let us stop making it more complicated and trying to make it more complex. What taxpayers want is simpler tax procedures. We should redesign this legislation from top to bottom and stop making it more complex, only to feed, as I was saying earlier, the whole bureaucratic machine and all kinds of tax consultants.

If we read carefully the 12 changes proposed in Bill C-9, what do we see? The first measure provides for premium relief. The second one refers to a tax credit that, in fact, amounts to a temporary exemption for small business. It is a kind of tax shelter, another exemption. Why create so many tax measures when there are so many exemptions in the end?

The third measure is also an extension for small business. This begs the question: Why do we always have to rescue fiscal lame ducks unable to make it on their own?

The fourth measure abolishes a tax. The fifth concerns labour-sponsored venture capital corporations. It is another addition to the current Income Tax Act. The sixth measure also extends an existing plan. The seventh measure refers to flow-through shares. It is a tax deduction, another tax shelter. The eighth measure removes a deduction; it amends an existing measure. The ninth measure is also an improvement to an existing credit.

The question we should be asking is this: Why all these tax shelters? On this subject, the economist Jean-Luc Migué tells us: "Why subsidize investments? If they are profitable, they will be made; if not, they should not be made from an economic standpoint".

These first nine measures of which I just spoke are taken from the former Conservative government's economic and fiscal statement, as was mentioned before. As I also said, did this government inherit its fiscal imagination from the former Conservative government?

The last three measures were also announced in the former government's budget of April 26, 1993. Here again, measure 10 is a tax credit, measure 11 is another tax credit and measure 12 concerns instalment payments of income tax. These 12 fiscal measures are a heterogeneous assortment, with no overall vision.

We would have expected imaginative, innovative fiscal measures that would have created jobs, but they give us adjustments to old tax measures that only further entrench this Tower of Babel which the federal Income Tax Act is.

The Prime Minister and the Minister of Finance always tell us to wait for the next budget when we ask them what fiscal policy this new government intends to adopt. Why have Bill C-9 when

the next budget will likely change everything again on February 22?

I will let this House consider the study conducted by André Lareau and a team at Laval University, which says: "If the government is not more imaginative, the reason is that the lobbying is done not by families but by companies. Thus, parents must pay tax on diapers, but there is no tax when you buy shares in a company".

We might also add that the lobbying is not done by middle-class individuals or the most disadvantaged people and this new government acts only in response to well-organized pressure groups, which explains an Income Tax Act that is changed and gets bigger in response to pressure from various quarters.

In conclusion, I would like to emphasize that Bill C-9 says nothing about helping families who have to pay taxes, indeed income taxes.

Mr. Yves Séguin, a former Minister of Revenue in Quebec, said in La Presse on February 6, 1994: ``Former spouses, in most cases ex-wives, who receive alimony must add it to their income. This alimony is calculated very strictly, on the basis of the children's needs, and gives the mother absolutely nothing. Instead of paying 25 per cent income tax, for example, in many cases she has to pay 37 per cent or more, perhaps $2,000 or more, and she does not have the money to pay it''.

Finally, nowhere in this Bill C-9 do we see any tax measures directly for the people, individuals or families, but rather abatement measures intended for businesses, and most of these abatement measures are inherited from the former Conservative government.

[Regional Economic Development, February 11th, 1994]

Mr. Speaker, the Quebec government recognizes the important decision-making role that must be given to regional co-operation and development councils in order to ensure that Quebec regions have control over development decisions that directly affect them.

The federal government should undertake to comply with the priorities established in the strategic planning of each regional county municipality in Quebec. If the federal government were to make this kind of commitment, the efforts of regional leaders in Quebec would be successful. The economic recovery of all regions in Quebec hangs in the balance.

[Property Taxes, February 4th, 1994]

Mr. Speaker, I have a supplementary. Should we understand that the Minister is committed, on behalf of his government, to paying this year the full amount of grants in lieu of taxes owed to municipalities,

such as Montreal and Toronto, as any responsible property taxpayer should, thus leading by example?

[Property Taxes, February 4th, 1994]

Mr. Speaker, my question is for the President of the Treasury Board. In December 1992, the previous Conservative government froze the payment of all grants in lieu of taxes on federal lands and buildings, which of course caused a significant shortfall in revenues for municipalities across Canada.

Does the Minister intend to honour the promise made by his Prime Minister during the election campaign so that the federal government meets its obligations regarding payment of grants in lieu of taxes to local governments?

[Pre-Budget Consultations, February 1st, 1994]

Mr. Speaker, I thank the hon. member for Sherbrooke for his question.

The position of the Bloc Quebecois on this matter is that poorer Canadians are protected by universal social programs. People who want more protection can contribute to a private supplementary plan, and that is what they do. As I was saying earlier, my constituents are mostly middle-class people and they already are the most heavily taxed. By taxing those insurance premiums, the Liberal government would be increasing, in a covert way, the tax burden of middle-class Canadians.

We, in the Bloc Quebecois, are totally opposed to this covert way of taxing even more heavily middle-class taxpayers who already carry most of the tax burden. There has been a lot of talk about tax shelters. Canadians with high incomes can use tax shelters to avoid paying thousands of dollars in taxes.

The disadvantaged are protected by a series of social programs and, often, it is the middle-class people who find themselves in the middle of the social or economic pyramid and who have to shoulder all the burden. As I said earlier, we, in the Bloc Quebecois, are totally opposed to this covert way of taxing even more heavily those who already pay most of the taxes.