moved:
That, in the opinion of this House, the government should call a federal-provincial first ministers' conference for the purpose of reapportioning the tax base among the federal and provincial governments through the transfer of tax points.
Madam Speaker, it is an honour for me this morning to launch this debate on behalf of the Bloc Quebecois. This is, in my opinion, a very important debate that addresses Quebec's historical demands.
From the outset, I think it is a good idea to reread the motion:
That, in the opinion of this House, the government should call a federal-provincial first ministers' conference for the purpose of reapportioning the tax base among the federal and provincial governments through the transfer of tax points.
In Canada, the financial situation of the two levels of government, namely the federal and provincial governments, can be summed up very simply: the needs in the health, education and social services sectors are in Quebec and in the other provinces, while the money is in Ottawa.
For several years now, Ottawa has been accumulating indecent budgetary surpluses. This would be acceptable if Ottawa seized this opportunity to withdraw from the area of taxation and left it to the provinces or if it would transfer part of these surpluses to Quebec and to the provinces, for health and education. But Ottawa would rather hide these surpluses and reallocate them massively to reduce the debt. It even refuses to restore transfer payments to the 1993 level.
The hon. member for Saint-Hyacinthe—Bagot has had, and will again have the opportunity to demonstrate, with all the energy, enthusiasm and seriousness that characterize him, this critical aspect because this is what led to today's debate.
In the last federal budget, Ottawa's fiscal effort in the transfers for post-secondary education is the lowest in 30 years. As for health, the federal contribution is now only equivalent to 14 cents for each dollar spent by Quebec.
Today's motion seeks to correct the fiscal imbalance and to ensure that the revenues of each government are based on their fundamental needs.
This is why the Bloc Quebecois is calling for a federal-provincial conference for the purpose of reapportioning the tax base through the transfer of tax points from Ottawa to Quebec and the other provinces. In Quebec there is complete agreement on this, and the premiers of some of the other provinces share that consensus as well.
I prefer to leave discussion on the financial situation up to the hon. member for Saint-Hyacinthe—Bagot, our finance critic, and he will be speaking later in the day.
It is not difficult to figure out that the money is in Ottawa while the needs are in the provinces. The federal government's revenues have increased by 53% between 1993 and 2001, while its expenditures have decreased by 3%. Over that same period, Quebec's program expenditures have risen by 16% and health expenditures by 32%.
In other words, the health sector alone represented 71% of the increase in expenditures. Federal cuts in expenditures have been at the expense of the provinces through cuts to transfer payments. From the early 1990s to the present, federal transfers to Quebec have dropped from close to 20% of Quebec social expenditures to about 13%.
The hon. member for Hochelaga—Maisonneuve will certainly elaborate more on health.
Spending in education increased by only 3% from 1993 to 2001 because health was a priority. Things were already fiscally tight.
This problem is due to the federal government, because its financial contribution in terms of transfers for post-secondary education is at its lowest level in 30 years, as I said earlier.
The federal government contributes less and less to the needs of Quebecers. Between 1993 and 1999, its share has dropped from 23% to 13.5%.
A bit of historical context of the tax point issue would be in order. Tax points transferred to the provinces are not a kind of federal assistance, nor are they an exercise of its spending power.
In fact, they contribute to balance the tax positions in the federation, and this has nothing to do with the Canadian social transfer for health, education and social services.
The tax point transfer to the provinces in the 1960s, aimed at giving back to the provinces some of the tax room they had yielded to the federal government in the 1940s, particularly to finance the war effort.
Important dates should be remembered. In 1882, Quebec introduced its tax on corporations. In 1892, it created inheritance tax. In 1917, the federal government introduced a personal income tax. In 1939, Quebec collected tax on personal income. From 1941 to 1942, tax rental agreements were signed by which the provinces agreed to refrain temporarily from collecting personal and corporate income taxes and inheritance tax; in return, the federal government agreed to pay them a rent for the war effort.
In 1947 after the war, the federal government tried to renew for five years the tax rental agreements for the purpose of reconstruction. Quebec and Ontario refused and created their own corporate income tax scheme. These two provinces also started collecting inheritance tax again.
In 1952, the federal government maintained its approach and offered a new transfer package to the refractory provinces. Ontario accepted the offer, but not Quebec.
In 1954, Duplessis said “Give us back our booty”. Since it failed to negotiate a partial withdrawal of the federal government from the field of personal income tax, Quebec got back on board with a rate equal to 15% of the federal rate.
Between 1960 and 1966, a series of tax points were transferred to the provinces. In 1977, there was a federal-provincial agreement on tax points, an agreement that excluded Quebec which, supposedly, had received more than its share in 1966.
That tax point transfer has indeed been the subject of a federal-provincial agreement. The provinces and the territories received from the federal government a transfer of 13.5 tax points for personal income tax and one tax point for corporate income tax.
In 1997-98, the main tax point transfers to the provinces and the territories amounted to $2.7 billion. These transfers are now worth four times more, that is, $13.9 billion. That does not mean that the federal government is transferring tax fields worth $13.9 billion.
Tax points are, in fact, provincial revenues. Thus, the tax point figures appearing in the various federal budgets are simply the current value of the points transferred in the 1960s.
Here I would like to quote a comment Allan Maslove, a professor at Carleton University's school of public administration, who said that tax points are now an established component of the provincial tax base and should not be viewed as a form of transfer from Ottawa.
Historically, all Quebec premiers have expressed concerns over the tax balance with Ottawa. By starving the provinces financially the federal government, citing its spending power, manages to impose its management conditions on certain areas of Quebec jurisdiction.
I mentioned earlier Mr. Duplessis, but I would like to point out that Jean Lesage, at the federal-provincial first ministers' conference in 1960, reiterated Quebec's position with respect to federal spending power by decrying the conditional funding paid to the provinces in the form of shared cost programs.
Following him, Daniel Johnson in 1966 renewed Quebec's decision to opt out of established joint programs and not take part in any new programs. In addition, he demanded that Quebec's withdrawal be unconditionally fiscally compensated. He said:
Joint programs are an obstacle to the unfettered growth of Quebec. They impose priorities that may get in the way of those Quebec would otherwise set, and limit its real budgetary autonomy ... Joint programs freeze the fiscal resources of a nation like ours and deny us full control over areas of activity that rightfully come under our jurisdiction.
Mr. Johnson's successor, Jean-Jacques Bertrand, maintained Quebec's position. He, too, denounced the exercise of federal spending power.
Then it was the turn of Mr. Bourassa's Liberal government, which also saw this spending power as a federal intrusion in Quebec's jurisdiction. Like his predecessors, Premier Bourassa felt that a new fiscal balance would allow Quebec the full exercise of all its powers. He said:
—we will only achieve a viable balance if, within the framework of the general principle, we can ensure the necessary flexibility so that each level of government has the revenue it needs to exercise its fiscal powers without a negative impact on overall growth and the balance of the various sectors of the economy.
The government of Quebec's inaugural speech, read in the national assembly in March 1973, made rebalancing tax sharing in the federation a priority.
All this is to say that what we are asking for this morning is consistent with what Quebec has asked for in the past, not just under PQ governments but under all governments since Duplessis.
