Mr. Speaker, it is my pleasure to speak to Bill C-65 which renews the equalization agreement. Like my colleague from Medicine Hat I am a little disappointed that the government has seen fit to have such a short debate and to rush something through the House when it knew it was coming. It has made no effort to really look at what equalization payments are or at the need for restructuring and some massive reorganization. It seems to think it can add a few band aids and every thing will be okay.
Bill C-65 makes technical amendments to the formula that determines equalization payments. I want to review the three sections. It provides for the phasing-in of tax base changes over the period from April 1999 to March 31, 2004. It adjusts the definitions of resource revenue and revenue to be equalized. It changes the minimum and maximum payment provision.
The question that some Canadians will be asking is what exactly is equalization and what is it for. I would like to review some of its history for Canadians who may be watching the debate this afternoon.
It was introduced in 1957 and it was an effort to balance the vast disparity in potential tax bases among the provinces to ensure that every Canadian citizen had access to similar levels of social programs. Equalization is included in the Canadian Constitution. It is found in section 36 of the 1982 act. It reads:
Parliament and the legislatures, together with the government of Canada and the provincial governments, are committed to: (a) promoting equal opportunities for the well-being of Canadians; (b) furthering economic development to reduce the disparity in opportunities; and (c) providing essential public services of reasonable quality to Canadians.
Section 36(2) goes on to read:
Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public service at reasonably comparable levels of taxation.
Most Canadians support this concept. Very few Canadians have difficulty in supporting the concept of equalization, but when Canadians get into the details they start to have some problems.
I want to share with them an experience I had with the unity panel in B.C. In the fall of 1997 I was asked by Premier Glen Clark to sit on the B.C. unity panel. It toured the province of British Columbia with regard to the Calgary declaration. Its purpose was to gauge public support for the declaration. The unity panel used various means to measure the support of British Columbia. It included a mail-in questionnaire, public meetings, focus groups and a province-wide telephone survey.
In the telephone survey the unity panel asked questions about equalization. I want to share some of the results. One question that was asked was: Should the provinces and Canada work together in setting up national standards. They felt they wanted a shared partnership between Canada and the provinces.
The question on equalization was:
The federal government has an equalization program whereby the four provinces receive tax dollars to allow them to provide a similar level of public services to those available in richer provinces like British Columbia, Alberta and Ontario. Generally speaking, do you strongly support, somewhat approve, somewhat disapprove or strongly disapprove of federal equalization programs?
I am glad to share with the House that 37% strongly approved and 44% somewhat approved of equalization programs. The vast majority of participants supported the principle of equalization. To quote from the B.C. unity report:
However there was a great deal of reluctance to accept the possibility that British Columbia should, therefore, receive less than other provinces.
Many participants commented that British Columbia's population has special needs itself such as its specific demographic characteristics, seniors and immigration, that needed more funding and that there should be some recognition of this situation in federal transfers and there should be flexibility in arrangements to respond to this.
It was because of the results of the efforts of this B.C. unity panel that travelled the province that the B.C. government added three additional principles to the Calgary declaration:
(1) That British Columbia supports national standards for health and believes that these standards are best set co-operatively by the federal government with the provinces;
(2) That British Columbia supports the federal government's equalization program and believes that for other federal transfers for health, education, and social programs, provinces should receive the same level of federal funding per person;
(3) That British Columbia believes that provinces should be able to assume greater responsibility in areas that are important to them, such as fisheries in the case of British Columbia.
This resolution passed unanimously in the B.C. legislature. It is the second additional principle that is relevant today. British Columbians widely support the concept of equalization, but we have to remember that it goes far beyond this equalization program.
The federal government unfortunately has built in equalization bias in all of its transfer to provinces. When it comes to the three so-called have provinces, B.C., Alberta and Ontario, they get a reduced level of transfers from the federal government. There is not only the formal equalization program but the transfers to the provinces that show discrepancies. When we combine the formal equalization program with these other biases we get a different picture. I want to share some of the issues that are evident.
In the province of Newfoundland 43.7% of the provincial budget is from transfers from the federal government. In Nova Scotia it is 40.3%. In New Brunswick it is 38.2%. In Quebec it is 15.3%. In Prince Edward Island it is 36.8%. In Manitoba it is 29.3%. There is heavy reliance on federal government transfers. On the other hand we have Alberta with 9%, British Columbia with 8.8% and Ontario with 10.9% of their provincial budgets coming from federal transfers.
This system of bias permeates through all the programs the federal government has with the provinces. It is very evident with the federal spending on immigration settlement in the provinces.
Let me provide the House with some numbers from 1997 when I was the Reform Party critic of immigration. This is the money that is sent to provinces to help new immigrants settle in their chosen home. Quebec, which is a have not province, receives $90,000,000 a year. B.C. receives $23,373,000.
The province of Quebec which takes considerably less immigrants than the province of British Columbia gets three times as much money per capita per immigrant. The province of Quebec gets $3,067 per immigrant. The province of B.C. gets $1,000 per immigrant to help them settle in their chosen home. It is not only in the transfer payments, it is in all these other payments that we see the bias.
I have sat in the House for five years listening to members of the Bloc Quebecois tell Canadians how Quebec is not getting its fair share out of the Canadian federation. Yet when I look at the figures in the equalization program, that is not what I see. In the last complete fiscal year, from April 1, 1997 to March 31, 1998, the federal government spent $8.987 billion on equalization, almost $9 billion, of which $4.177 billion or 46.5% of the equalization program went to Quebec. It would appear to me, although we hear many complaints from the Bloc, that Quebec has done quite well in this regard.
When we talk in billions and millions of dollars, it is quite easy for the eyes of the viewers back home watching this debate to glaze over. It is incomprehensible to them. I would like to relate what we are talking about on a more individual basis.
When going through the website looking at the various programs that are provided to various provinces, I was struck by some differences. In viewing the Quebec government's website, I came across a wonderful program that is available to all Quebec children under the age of 10. Every child under the age of 10 in Quebec has access to free dental coverage.
In the province of British Columbia that is not the case. In British Columbia the parents are responsible for the dental care of their children. In effect the have province of British Columbia is helping the have-not province of Quebec to provide a health program to its children that is not available to the children in British Columbia.
British Columbia sees it as somewhat unfair that it is expected to have less and not to have the same advantages and the same level of care as a have-not province. It sees its money going to allow a have-not province to have better services and better care for its children. Is this equal and fair? I think many British Columbians would say no, it is not. This is only one example.
I will go to the example of the cost of universities. This country has three so-called have provinces. In 1998 Maclean's reviewed the universities in a special issue. It indicated that there were 24 universities in Canada's three have provinces. The average tuition fee in those have provinces was $3,581. By comparison in Quebec where there are seven universities, the average tuition fee was $2,109 for Quebec residents. It amounts to 60% less in cost for a student from Quebec to go to university than a student in the three have provinces. Even when it charges more for out of province students, it comes to $56 less than the average of the three have provinces.
Once again we have a situation where the three have provinces, the provinces that contribute to the equalization program, are not getting the same benefits out of Confederation that the have-not provinces receive. It is a question of a level playing field and a lack of understanding why the provinces that are always putting in get fewer services from the government and why we are always being asked to pay more for those services than the have-not provinces.
British Columbians ask if this is fair. Is this equal? Does the equalization program mean that the have provinces will give money to the have-not provinces to provide services that they do not have themselves?
Then there is the province of New Brunswick which uses the largesse, the money it gets from the have provinces, to subsidize businesses to move to New Brunswick. British Columbia lost some of its UPS people and offices because the money it sent to New Brunswick was used to subsidize the businesses to move out of British Columbia to New Brunswick. For some reason British Columbians do not think it is fair that their money should be used to take jobs away from them.
The largest flaw in the equalization program is that it has lost sight of what it was supposed to be about. It is about providing reasonably comparable levels of public service at reasonably comparable levels of taxation.
The complexities and intricacies of equalization are an accountant's dream. They probably cannot believe this equalization formula, how it is derived and how it is used. The basis of the formula looks at 33 tax elements of the economies of five provinces: Quebec, Ontario, Manitoba, Saskatchewan and British Columbia. It tries to estimate how much revenue the province can raise in each category. This may work if every province had the same kind of tax system but they do not. They are all different. It also does not take into account some of the geographic differences in the country.
In this bill the formula has been amended so that forestry revenues will no longer be based on the volume of wood harvested but changed to the value of production. Like my hon. colleague from Medicine Hat mentioned, this formula does not take into account the cost of production to obtain the forestry revenues. It costs significantly more to harvest trees in the rugged mountainous terrain of British Columbia than it does to cut the same value of trees anywhere else in Canada.
Similarly the equalization formula does not take into account the costs of providing services in each province. Once again let us compare the cost of building 100 kilometres of highway in British Columbia to the cost of building 100 kilometres of highway in Saskatchewan. The disparity in costs seems to be irrelevant to the formula. The government seems to think the cost of delivering services to Canadians is the same everywhere and that is just not so. Because B.C. has the potential to raise more money, it not only has to fund its own highways by itself but it also has to contribute to the building of the highway in Saskatchewan.
I would suggest that there is a grave need for change in the equalization program and Bill C-65 just provides more tinkering. It does not address the real problem. I would suggest that the real problem is why does a country like Canada have seven have-not provinces and only three have provinces? This is what this issue is all about and what needs to be dealt with in the discussion of equalization programs.
The Reform Party of Canada fully supports the notion that all Canadians must have access to the same level of health care, education and social services regardless of the province that they live in.
However, we should also be honest about the program. In the new Canada act we recommended changes to the federal-provincial fiscal relations and I want to quickly go through those. One is to make all payments to the provinces under jointly funded programs in the form of equal per capita grants. Another is to address disparities and regional opportunities through a single equalization cash transfer based on the relation of the per capita gross domestic product of a recipient province to the per capita gross domestic product of Canada. I would like to remind the House of the third element that the Leader of the Opposition brought up earlier, by recommending broad based tax reductions to give the citizens of all provinces additional money to spend, and aid in improving all provincial economies.
I would suggest that the biggest flaw in Canada's equalization payments is that it is only looking at the symptoms and not the ailment itself.
