Nelson Riis

[Federal-Provincial Fiscal Arrangements Act, March 9th, 1999]

Six, after my presentation. That is very encouraging.

The equalization program dates back to 1957 when only three sources of revenue were identified. I mentioned them earlier: personal and corporate income taxes and successive duties. The revenue base is expanded now to 33 and I mentioned what some of those tax areas are. There is a list in the legislation and it is a bit of a shock to read all of the different tax bases that exist in the provincial jurisdiction. I recognize only a few of them.

In the 1982 budget I remember Allan MacEachen introducing a change to the system where the national standard of 10 provinces was replaced with a five province standard. At that time the situation in all 10 provinces was considered. Mr. MacEachen then changed it to only a five province standard. It was felt that Alberta on top with its oil revenues and the Atlantic provinces on the bottom skewed the national standard so much that the five in between provinces of Quebec, Ontario, Manitoba, Saskatchewan and B.C. replaced this national standard. It was done.

However, after all is said and done there can be no disputing that it is all about the bottom line situation and that is how much each individual provinces gets under the operating formula.

This implies that along with the very basic financial need there have always been some very serious political considerations applied in reaching agreement on these transfer payments.

We remember with interest how when the information came to the province of Newfoundland about the change in equalization payments and that this was to bump up the payments to Newfoundland all of a sudden, bingo, Brian Tobin had a balanced budget. That was helpful presumably in the days just before the election in Newfoundland.

Politics does play a role because there has to be agreement with the provincial jurisdictions and I guess whenever agreement is sought politics is certainly an element of consideration at least.

I mentioned already the timing of this situation. To suggest a few weeks of consideration at the tail end of the process for parliament is simply inadequate. I propose that rather than look at this every five years we should look at this annually. This should go to the finance committee on an annual basis with a thorough briefing so that it is parliament that plays a meaningful role in this equalization process as opposed to simply bureaucrats from the federal and provincial governments involved.

It is fair to say without being overly critical of the political element that we really have not had an opportunity to deal with this adequately and effectively to ensure that what we are agreeing to here today is in the best interest of the country. We assume it is because of what people tell us but I do not think we have an adequate grasp to make that decision comfortably ourselves.

It would be better to communicate these changes on an annual basis rather than at the end of the five year cyclical renewal period. I agree with the points made in the 1997 auditor general's report on equalization. It made a number of recommendations that encouraged an improved a more important role for parliament in the renewal process.

For example, in his report to parliament he made the point that a very clear statement of the objectives of the program ought to be made so that it would be perfectly clear in everybody's mind what is behind all this. Someone may say it appears perfectly clear. We have just gone through a federal budget where there were a number of changes to the transfers to provinces, another form, I suppose, of equalization. We appreciate now that the government is moving to a per capita system with those transfers for health, education and social services. This will change things. I am not even certain people know that has happened, that it is moving toward a per capita basis.

With the changes to the transfers from the federal government to the provinces combined now with the equalization program, what does it mean in terms of the provinces? This gets more complicated and it seems to me we need to look very carefully at what the objectives of this program now are in light of the changes being made to the federal transfers to the provinces and perhaps, more important, to have a clear understanding of what the expectations of these transfers are.

I listened with alarm to my friend from the Reform Party when he made his presentation in terms of how he sees the world and how he see what Canada ought to be. I respect his view but it is totally different from mine. I wonder if it is clear what we expect from these equalization payments in terms of how they are spent. Let us face it, when the money goes to the provinces it is just handed over. There are no strings attached. It is done in good faith, here is the money and you folks deal with it as you wish or deem appropriate.

Such an important program is trying to create a level playing field for all citizens in Canada. I hate to use that term because it conjures up the wrong things. We ought to make that very clear, that we have some expectations in terms of what the moneys from these equalization payments ought to be attached to and then have a very clear, acceptable and understandable way of reporting the results from these expectations.

We could apply this to most federal programs in the system where there is little clarity in what we expect from this program and certainly very little reporting on how we reach that expectation. A best example of that would be the tax system. We have had a lot of tax discussion in the House during the last little while and I do not want to get into it at this point. It would be inappropriate.

What is curious to think about is if we took every significant tax expenditure program and applied to that a cost benefit analysis to the country of who benefits, how much, what is the point of this, what is the goal and how effective is this in reaching that goal. I wonder how many of those tax expenditures, or as the Minister of Finance even now calls them, tax loopholes, would continue in the system. My guess would be very few. I suppose they had laudable goals at one point but there was never any measurement put into the system and I suspect most of them have long outlived their usefulness. However, that is a little beside the point.

The resource revenues that are now part of the new formula will reflect the value rather than volume in resources, including timber, which I mentioned earlier, as well as gas and oil receipts.

The recipient provinces such as New Brunswick and Quebec are satisfied with this formula for calculating forestry revenues because the old formula overestimated provincial fiscal capacities.

On the whole issue of oil revenues, there has been another change to acknowledge that new oil is more expensive to extract than old oil. This now also is being reflected in this new formula so that those parts of Canada now that are relying on revenues from a new oil source as opposed to an old oil source will have much higher levels of expense. That reality will be reflected now in these new categories as well.

I mentioned gaming already. The one thing we overlooked in this gaming business, acknowledging that revenues from gaming will be an important part of any province's revenue base, is the cost associated with gaming. Let us face it, when a whole lot of people are gambling in one province, a lot more than in another province where the facilities are less accessible, there will probably be a lot of people having troubles. I am referring to gambling addicts and that sort of thing where there are a lot of costs attached to provincial jurisdictions as a result of dealing with gambling addicts and losses attached to that sort of thing. That is something we want to look at in the future in terms of fine tuning this process of the complicated base.

Once again, recognizing that there are floors and ceilings in this to help out and there are seven provinces eligible for equalization payments, not British Columbia, Alberta and Ontario, the equalization transfers for this year ensure that all provinces with average tax rates have revenues of $5,431 per person in order to fund public services. Most provinces are very supportive but Manitoba has some concerns. I will leave it at that and I look forward to the vote later today.

[Federal-Provincial Fiscal Arrangements Act, March 9th, 1999]

My friend next door says it is heartwarming and indeed it is.

Equalization is a fundamental principle that is very much part of what makes Canada a compassionate and caring society. Surely that is one of the crucial measurements of a country.

I listened with interest, as I always do, to my friend who spoke earlier. He made the case that less government is a better country. I thought about countries around the world where there is very little government. Normally they are not very pleasant places to live. As a matter of fact, countries that have very little government, that have downsized their government, are brutal places to live. Often it reflects a society that is uncaring particularly of those less fortunate.

Obviously we seek to find a balance. When I think about equalization enabling us to be a compassionate and caring society, what better society could we be part of than one that is actually compassionate and caring for all its citizens? One of the reasons we are all proud to be Canadian is that Canada is that kind of country.

This is not to suggest that this bill is perfect, not by a long shot. There are many ways that we can improve Bill C-65 and improve the whole issue of equalization.

What demonstrates this is that most in the House of Commons have tried to figure out what this bill actually does. We have tried to look at the formula used for equalization. I am not a brilliant person. I am probably not even that smart but I am not a stupid person. Quite frankly, I cannot figure out how this thing works. I have asked many others how this equalization formula actually works. I have not found anybody who could explain it to me in a way that I could understand.

There must be somebody somewhere who understands it. When the question was put in committee, it was fascinating. The question was put to the experts from finance. How many people actually understand the equalization formula used between the federal government and provincial governments? The answer was perhaps five people in Canada.

I do not know who those five people are but there are probably five people in Canada who actually understand how this bill works. That is one of the real downsides of this because we are being asked to approve a formula. We are being asked to approve legislation, approve a concept that nobody fully understands. That is not what this place is all about.

It is imperative that members of parliament understand how the equalization formula is applied so that we can judge it. Is it the appropriate formula? Are there more appropriate ways to decide who gets what in terms of where they happen to live in Canada, what province gets an equalization payment and which province would pay one.

If there is one major flaw, it is that it has become so complicated, convoluted and complex that no one really understands how the system works today. We assume it works well. We know that all the provincial finance ministers and officials met regularly for five years to try to figure this thing out. They have come up with some kind of plan which they say on balance is effective and the best deal they can come to.

To be fair, the province of Manitoba has some concerns about this formula which now involves 33 different criteria. When it first started a few years ago, there were only three criteria. The three criteria were personal taxes, corporate income taxes and succession duties. That was it. That was fairly easy to figure out. Everyone could say that the provinces that are getting a certain amount based on this formula makes sense and the ones which are not getting anything also makes sense because they are doing relatively well.

Now there are 33 separate revenue sources ranging from income taxes to insurance premiums, from property taxes to payroll taxes, from sales taxes to sin taxes. It goes on and on. Experts from the provincial finance departments and experts from the federal system get together on a regular basis and fine tune it so that everyone can agree.

Manitoba, as I said, has some disagreements but it will have a chance to sit down soon and start to renegotiate from its perspective a fairer system. Everyone says that is fair enough and they will proceed with this understanding. While Manitoba is not delighted about this, it understands that in the end it will be okay as well.

I might mention that because of the flooding situation Manitoba experienced, the collection of income taxes was disrupted. Consequently the formula that was used to determine this year's transfer to Manitoba was based on erroneous information that could not be avoided. With any luck this will be readjusted later this year so that Manitobans will get a fair deal in the end as well. That is my understanding. From what I can gather, everyone has enough faith in the system to say that will actually take place, including the people from Manitoba.

Before I get into some of the more substantive comments about the legislation, there have been some changes in criteria. There have been many changes but I am going to identify two or three of them.

One is the recognition that a good revenue source for a lot of provinces is gaming. It seems that video terminals, VLTs, and casinos are turning up on almost on every street corner. For some provinces they are a major source of revenue. For others they are not a major revenue source yet. For British Columbia it is not a major revenue source yet, but apparently it is taking steps to expand its casino base, as those who have read the newspapers recently are probably aware. Other provinces are as well. Since gaming is a significant revenue collector, it has now been factored in as a new criterion to be considered.

On the fine tuning, as a member of parliament from British Columbia, I appreciate this one perhaps more than people from other parts of Canada who are not so closely attuned to the timber base. In the past the criteria has been based on the volume of timber. We realize that volume of timber is not necessarily an accurate reflection of the revenues collected from timber sales.

Some timber is a poorer quality than other timber. Others are a higher quality. It is going to be based on the value of timber products. If a province is collecting a certain amount of money in terms of value obviously makes a lot more sense than a province which is collecting less or more but the volume is quite different. Value as opposed to volume when it comes to things like timber makes sense.

Let us look at some of the purposes of this program. The program of equalization is an effort to reduce disparities among the provinces' revenue raising abilities or fiscal capabilities. The equalization payments compensate provinces for the differentials in their tax bases. That is straightforward.

The program allows for the less prosperous provinces to provide public services of a quality and at taxation levels comparable to those in other provinces. Again, to come back to the idea of being a Canadian citizen in this part of Canada or that part of Canada, it ought to mean about the same thing. That is the reasoning behind the program.

This bill represents a completion of negotiations that for the most part have been about what constitutes this tax base. The legislation represents over two years of discussions with federal officials and various levels of provincial people, including all provincial finance ministers.

Herein lies a rather annoying element. It is not a major criticism; it is an annoying point that I have to raise, which is that we have been rushing this through the system. One of the reasons this has become an issue today in terms of how long the debate should be, it that it has to pass before the end of this month. We knew that five years ago. We knew it three years ago, four years ago, one year ago. Negotiations have been for the last two years and have taken a little longer than expected. We are up against the wall.

The government is pushing us saying that this bill has to pass. It should have had more serious consideration, but this goofy time system made it problematic for us. In my judgment, we are rushing this and we ought not to be rushing it. It is too important. Perhaps what we can do the next time around is try to get at this issue earlier than at the eleventh hour.

The equalization transfers are calculated according to a formula set out in the Federal-Provincial Fiscal Arrangements Act. Therein lies another area which requires some consideration as part of an ongoing examination of this process.

Because of the various tax bases that determine the bottom line for the provinces, there is ongoing discussion and debate on the makeup of these tax bases. As I indicated, Manitoba is not a happy camper at this point, but it accepted this and assumed that things will be sorted out shortly. Not just assume, Manitoba knows things will get sorted out shortly.

Members have probably looked at the figures that have come out from the finance department which project, as best as people are able to project, over the next number of years how each province is going to be treated. In my recollection I think every province that collects money now from the equalization program will see their collections expand over this period of time. But the reality is if a province becomes hotter in terms of its economic base and things turn out better than expected, those numbers will be adjusted downward.

It is a funny thing. There is a lot of history attached to these programs. I am an amateur historian by interest and I was looking over the Saskatchewan equalization payments. Lo and behold there was a history story. I noticed that in the past the province of Saskatchewan sometimes never received any equalization payments. My friend across the way will know this as well. Some years Saskatchewan received some, some years it did not. Some years it received a lot. This seemed odd because other provinces seemed consistently to be either haves or have nots.

I wondered why there was a pattern and Saskatchewan got equalization payments some years and other years did not. Lo and behold there was a direct correlation. The years when Saskatchewan worked its way out of needing an equalization payment, guess what political party was in office? The New Democratic Party.

The New Democrats balanced the books, heated up the economy, got things moving well and then for whatever reason, they were kicked out of office. Then Liberals were elected or Conservatives were elected or Reform, I guess we could use that generally as well and they got the province into trouble. The books got out of whack and the economy went into a nosedive and Saskatchewan required equalization payments again. People got fed up with that, tossed them out of office and brought in the NDP again. Everything gets back in order and the equalization payments evaporate.

It is interesting when we see political history as reflected in the economy and reflected now in the history of the equalization payment program for Canada.

Let me talk about some of the purposes behind this program. I mentioned the fact that only five people know what this is all about, which I think tells us a great deal.

[Federal-Provincial Fiscal Arrangements Act, March 9th, 1999]

Mr. Speaker, I may not seem enthusiastic, but I am enthusiastic. Under this exterior of certain calmness and seriousness I am very excited about the possibility of speaking to Bill C-65 which concerns equalization payments in Canada.

This defines what is best about being a Canadian. It defines what is best about being a country like ours. I liken it to a family. A well-functioning family, as opposed to a dysfunctional family, is a family that cares for all of its members. If one of the family members is having a difficult time the family rallies around and does whatever is necessary to help. When another member is having a difficult time or runs into some difficulties or problems, the whole extended family rallies around.

That is what distinguishes effective families from those which are less effective. It distinguishes an outstanding family from those we call dysfunctional. Today's discussion reminds me of one of those very functional families, the best of families, a family that cares about all of its members in a real and demonstrable way. Of course in our society that is normally in a financial way.

This bill really says that those provinces which are doing very well for whatever reason, be it location, an abundance of natural resources or whatever the advantage, are seriously prepared to assist those having difficulties or those that are less fortunately endowed in terms of natural resources, location, financial resources or whatever.

What does that tell us about our country? I suspect it is the kind of characteristic that attracts people from all over the world who want to live here. They know no matter where they live in Canada, whether it is in Atlantic Canada, the north, south, east, west, central, wherever, that being a Canadian citizen means relatively the same thing. They would have access to the same kinds of services. They would have access to relatively the same kinds of opportunities, whether it is university or college training in Cape Breton, Nova Scotia or Victoria, British Columbia.

Access would be relatively the same. One of the ways we accomplish that is through programs like equalization. Clearly, when it comes to the vote on this bill, the New Democratic Party caucus members in the House of Commons will be voting enthusiastically in favour of the legislation.

As a matter of fact, the very concept we are talking about today, equalization payments in Canada, is part of our Constitution. It is written right into the Constitution. It is what Canada is all about. The Constitution says reasonable and comparable services no matter where they live. What a glorious phrase. What a glorious statement to hold up to describe what being a Canadian is all about.

[Petitions, March 8th, 1999]

Mr. Speaker, it is an honour to present a petition pursuant to Standing Order 36 on behalf of a number of constituents who point out a whole number of concerns they have regarding the export of freshwater.

They make a number of suggestions on what the Government of Canada and parliament ought to consider.

[Canada Winter Games, March 8th, 1999]

Mr. Speaker, on behalf of New Democrats in the House of Commons I would like to congratulate the people of Newfoundland, and especially the residents of Corner Brook with its 7,000 enthusiastic volunteers who dedicated their time, energy and talent to support the young athletes who came from coast to coast to coast representing Canada's very best, including young Patrick Snider who received a Bronze Medal for épée fencing.

Canadians are truly proud of these young athletes, their sportsmanship, their professionalism and their achievements. It was truly moving to see these young future Olympians in competition. We wish them all well.

[Division No. 327, March 8th, 1999]

Mr. Speaker, I rise on a point of order. I regret interrupting my good friend's presentation, as I am looking forward to hearing it, but when he refers to the members across the way he mentions presumably a certain party across the way. I think he should clarify that in this crucial debate.

[Division No. 327, March 8th, 1999]

The enthusiasm comes loud and clear and emphasizes the point. I thank my Reform Party friends for the firming up of that position. We are good buddies of course, but good buddies can have different views on things. It is important that these positions be clarified.

I am actually dumbfounded. When we think about the struggle this country has. It is dwarfed by our friends to the south, the United States of America, and the synergy of business promotes their cultural industries. It is an incredible force and from day one it has been a continuous battle on our front as Canadians to stand up to that onslaught.

I look specifically at the film industry. The American film giants have a stranglehold on the theatres across the country. Their control is a reality. Think of our struggling film industry. I am proud to say it is now centred in British Columbia. For a number of years the Canadian film industry was centred in central Canada but in the last few months, the size and the dynamism of the film industry are reflected in British Columbia. We are proud of that. Maybe it has something to do with the fact that we are a lot closer to Hollywood than other parts of Canada, I do not know. Nevertheless, it is a continual struggle.

It has now been clarified beyond any doubt what these amendments do to Bill C-55, so I will conclude my remarks and look forward to addressing the next round of amendments.

[Division No. 327, March 8th, 1999]

I was sending up a trial balloon. I could not believe that anyone would want to delete the heritage department.

[Division No. 327, March 8th, 1999]

Mr. Speaker, my friend says that this is an inaccurate comment. I do not think it is inaccurate at all.

It is clear from the content of this grouping that the essential components of Bill C-55 are being deleted. It is fair to say that if we support the general thrust of Bill C-55, we will oppose these amendments put forward by the Reform Party.

It is also fair to say that in the budget plans put forward by my Reform Party friends, they would also essentially decimate the Department of Canadian Heritage. I stand to be corrected but that is my interpretation.

[Division No. 327, March 8th, 1999]

My friend says it is mean. Fair enough. I am just describing reality.