Pierre Brien

[Budget Implementation Act, 1995, June 5th, 1995]

Mr. Speaker, I wish to thank the Reform Party member who allowed me to take the floor now, since I have to leave in a few minutes.

I am happy to address the House today on Bill C-76 at report stage. Since our arrival here in Parliament, we have seen this bill take shape. It reflects the whole approach of the government to transfer payments to provinces.

The government introduced over time a series of measures which affected and reshaped its approach. It started with a cap on equalization last year, which affects mainly Quebec. The amount has been estimated at $1.5 billion over the next five years.

Last year's budget contained cuts to unemployment insurance and also to what we call shared costs programs, that is post-secondary education and health. Cuts estimated at $2 billion had already been announced in last years's budget, and this years's budget brings further reductions totalling $7 billion, which will come into effect in the next two years, that is $2.5 billion next year and $4.5 billion the following year.

This year's reductions come on top of last year's cuts. The whole area of transfer or transfer payments to provinces has therefore been hit with massive cuts.

The government also tried to conceal the whole thing in the budget by presenting transfers to provinces, tax points and equalization payments all together. It mixed them all up in such a way as to give only global amounts and summarized data. From now on, the federal government will administer a new Canada social transfer that will combine all the amounts it contributed to CAP and the Established Programs Financing for post-secondary education and health. By these cuts, or the merging of these three fields in order to make one global cut, the government is hiding its true intentions.

The Minister of Human Resources Development had given some hints with his consultations and the rainbow series of papers he distributed. At that time, it was supposed to affect post-secondary education, among others. There was also mention of other sectors such as health, but that was still to come, since there were also consultations on that issue.

Now, in order to avoid debates such as this and not wanting to be seen as the culprit for having made all these cuts, the federal government says: "Let us add everything up and cut the envelope". This way, we can shift the blame to the provinces". We have a fine example of this in Quebec with the whole debate we are having about health care reform, which is aimed of course at improving delivery but is also motivated by cuts imposed by the federal government.

Because of these cuts, the provinces are forced to choose. The federal government did leave them some leeway. That is what they call decentralized federalism: "You must cut, but you get to choose where these cuts will be made". This is easier said than done, because at the same time the government is telling us: "You will required to comply with a number of principles arising from the Canada Health Act and, regarding social assistance, residency requirements will be excluded as grounds for denying assistance to an applicant". Basically, we are told that these are the only two conditions that will be maintained, the only two national standards that will apply to the Canada social transfer.

At the same time, the provinces are expected to develop other standards together. Upon further analysis, one realizes what the government means, and reads in the committee's report that it

recognizes the responsibility of the Minister of Human Resources Development to develop standards "through mutual consent". Also stated in the same report is the need to maintain an element of cash payment in transfer payments as part of the Canada social transfer because, in time, these could be reduced to nil. It says that a portion of the federal transfer payments must remain in the form of cash payments, so that it remains possible to tell the provinces how to apply these standards.

So, they have just confirmed what we suspected all along: there is indeed a strong desire to maintain national standards through this new Canada social transfer. The bottom line is that the federal government will reduce transfer payments and that there may be more federal standards than before, since the federal government may now impose post-secondary education standards.

We know very well what happens during these discussions, when 10 or 11 people sit around a table to try to define national criteria. There is often a lot of energy spent with few results and, at the end of the day, the federal government prevails through financial blackmail. Other decisions will have to be made by the federal government in coming years.

We are still waiting for the reform of the goods and services tax, the notorious GST. The federal government still leaves itself a way out and room to manoeuvre so that it can impose its vision in future talks with the provinces. I remember being a guest on a radio show the day after the budget. Since the Minister of Human Resources Development was interviewed just before me, I was able to hear what he said. He candidly told the host-who was asking him if he was sorry that the federal government would no longer exercise control and impose standards in sectors affected by transfer payments-that, on the contrary, they would have more control than ever. This shows that what Liberals say here in this House and what they tell other people are two different things. I tend to believe what the minister said on the radio, that he did want more control and that the federal government would have more control in the long run.

I want to link this to a number of things, to a speech by the Prime Minister that has been somewhat forgotten. I remember when the Liberal Party held its convention in Trois-Rivières, in eastern Quebec. At that time, the Prime Minister accused the Quebec government of not caring about poverty, once again using his old theme about how that government was only concerned about separation. The fact is that we care a great deal about poverty and we ask: Who will be affected by these cuts? Think about it for a moment. Who will be affected by these cuts to social assistance, to post-secondary education and to health care, which come on top of cuts affecting the UI program? We have to take a close look at this issue.

The government waxes eloquently about job creation, but it takes measures which will adversely affect people.

These measures will hit Quebecers even harder, because of a series of decisions made over the years by the federal government regarding spending in a number of sectors, including research and development. As we often said in this House, we feel that, because Quebec did not get its fair share in these sectors, it was forced to become more dependent on welfare assistance and unemployment insurance.

I am not proud to say that Quebec has the largest number of welfare recipients or unemployed. We are not proud of that, and this is not the kind of financial assistance which we seek from the federal government. If another approach had been used in the past, the situation might be different now.

But this is not the case, since we were adversely affected by a series of decisions on structuring expenditures. In the past, at least the federal government would say: "We know what we did to you, but we will compensate you for that". Now, this government says: "In addition to that, we will cut the compensation which you used to receive". This is not the kind of money which we want, without increasing the rest and without giving us the means to do something about it. Just think of manpower training and the fact, as was mentioned earlier today, that the federal government will simply not let Quebec assume control of that sector.

This is a strange approach. There are also other financial cuts which will have an impact. For example, in the first year, that is next year, transfers through the Canada social transfer will be reduced by $2.5 billion, which means that Quebec will be deprived of some $650 million. In the House, ministers and the Prime Minister himself said it would probably be $300 million or $325 million. Officials who came before the committee said it would be $625 million, which is much closer to the $650 million that has been mentioned since the beginning.

If that is another illustration of this government's mathematics, it is easy to understand why people are often suspicious of its management and decision-making processes. They have their own way of calculatiing things, as ministers and the Prime Minister showed when they talked about $325 million for Quebec, while everybody knew that it was really $625 million for the first year.

As regards the $4.5 billion in the following year, the criteria for the breakdown of these cuts are still to be negotiated. Otherwise, Quebec would have to contribute $1.2 billion. But we will renegotiate, and one approach that is strongly favoured is a breakdown according to population. Under this approach, Quebec's share would be $1.9 billion.

So, the criteria change will most probably penalize Quebec. It will certainly not favour it, given that the provinces requesting this change are complaining that Quebec is overcompensated in comparison to them, Ontario in particular, which will come to the

table, according to what is reported these days, with a Conservative government, whether liberal members like it or not, which could seriously complicate the picture. So, that is how things stand right now.

In short, I will resume my speech by saying that we will end up with less money, provinces will get less money, standards will be forced on them, some pretty high standards that they will have to observe under difficult economic conditions. No doubt about it, this is shifting the financial burden to the provinces.

When the taxpayer takes a look at the federal government's books, he will find at first sight that there is a slight improvement, but he will feel a deterioration elsewhere. Either he will have to pay more for some services, or he will be hit by the cuts made by provincial governments. The situation will be a real headache for the provinces because they will always be caught with this whole intractable approach imposed on them, the compliance with national standards.

That being said, I understand there is some concern in Canada because of the rise of the right in the area of social policy. We see it in Alberta, and even here in Ontario now. In Quebec, we do not have that problem, so people there are not afraid, and are not asking the federal government for national standards.

It this system were flexible enough, we would have an asymmetrical solution that would be different for Quebec than for the rest of Canada, but here we have a Canadian vision which does not give much recognition to the specificity of Quebec on that issue.

The time to decide will soon be here. Quebecers will be able to choose other models and other approaches in a public debate, even though our mind is already made up in that regard. The Prime Minister says he is concerned with the neediest, but if he wants to keep some credibility when his government tables its record, he will have to explain why he attacked mostly the unemployed, the welfare recipients and the students since he took office.

I can hardly believe he really feels any compassion. We have his words, and then we have the facts. Here, we are faced with facts; that is what we are looking at, and we are very disappointed.

[Sharing Of Federal Debt, June 2nd, 1995]

Mr. Speaker, the sovereignists have always maintained that a sovereign Quebec will negotiate sharing the federal debt with the Government of Canada on an equitable basis. A study conducted by the Institut national de la recherche scientifique and released yesterday shows that a sovereign Quebec's share of the federal debt would have to be reduced by $24 billion on account of the fact that, over the years, Quebec has paid more than it has received from the federal government. The INRS study concludes that a sovereign Quebec should therefore be responsible for 17.4 per cent of the federal debt.

It is important to note that in the present federal system, Quebecers currently assume 23 per cent of the federal debt with the $30 billion in taxes that they pay each year to the federal government. Hence the INRS conclusion that the total debt burden of a sovereign Quebec would amount to 103 per cent of GDP, as compared to 108 per cent for Canada at the present time.

According to the INRS study, a sovereign Quebec would therefore have a lower debt level than Canada now has.

[Supply, June 1st, 1995]

Mr. Speaker, I listened carefully to the speech of our friend from Outremont, who loved to pass out cheques for the infrastructure program, of which he spoke with a certain wistfulness. He also referred to my colleague of Longueuil who is a former Conservative. I would remind him that the latter at least had the courage to cross the floor and change sides. I hope the hon. member will have as much courage when the time comes to make decisions in the interest of Quebec, which he is supposed to represent.

My colleague said all sorts of things about decentralization. He chose a good example when he spoke of the Canada social transfer. Actually, it was the deficit that was decentralized. I hope he will rise in caucus to defend the interests of Quebec, because he should know that Quebec might have to bear more than 40 per cent of those cuts. I also hope, when he talks about the consensus in Quebec about manpower training, that he will be intelligent enough to look at what is really going on. The consensus is not only inside the Parti Quebecois. Ghislain Dufour is not, as far as I know, a member of the Parti Quebecois, and is not likely to become one in the near future. Yet, he was among those who said that manpower training should be the responsibility of the government of Quebec.

What positive action he intends to take in the coming weeks within his own party to defend the interests of Quebec on those two issues?

[Gross Domestic Product, June 1st, 1995]

Mr. Speaker, why is the government refusing to correct its aim, when the drop in the gross domestic product is signalling an economic slow-down, when its present policy flies in the face of its election promises regarding job creation, and when there has been no net job creation during the past five months?

[Gross Domestic Product, June 1st, 1995]

Mr. Speaker, my question is for the Prime Minister. The gross domestic product fell for the second time in as many months. According to Statistics Canada, the GDP fell by 0.2 per cent in February, and by 0.7 per cent in March.

It would appear that the economic slow-down is due to a slump in exportation and domestic consumption. The situation is largely the result of a monetary policy which favours high interest rates, and is not aimed at reducing unemployment.

Why is the government persisting in pursuing the same monetary policy as its predecessors, when it knows that it is bad for the economy and for job creation?

[Supply, June 1st, 1995]

Madam Speaker, I will make a few comments before putting my question. First, I want to point out the contradiction in the hon. member's last comment. He claims that sovereignists are self-centered, but it is the federalists who say that, if we do achieve sovereignty, they will not enter into an economic union with Quebec.

So, which side is self-centered? It is the Canadian side, and I do not mean the people, but those who are mandated to represent them and do not do so properly in this case. They are the ones who say that they will refuse to participate in an economic union with Quebec. They are the ones who are self-centered, not us.

As for us, we are saying just the opposite: we welcome the idea of a partnership. After all, it would be consistent with today's trend. It is possible to want to control things and have as much power as possible as a nation and still be open to the idea of economic partnerships with others.

It is the hon. member who is inward-looking and self-centered. He is new here but, over time, he will come to recognize all the examples of duplication which exist.

The member referred to the Canada social transfer. I participated in a talk show at a Montreal radio station, CJAD, with the Minister of Human Resources Development, who addressed people who were panicking at the idea that the federal government would no longer have control. Interest groups in Canada are indeed concerned when they realize that the federal government will have less control over social programs. They are worried when they see the rise of the right wing in western Canada, and I can certainly understand their concern. They are worried about this whole issue.

The Minister of Human Resources Development told these people, and you can listen to the tapes: "Quite the contrary! We will now have more control than before". I would appreciate it if the two of them could get together and try to reconcile their views, given that the member just referred to an extraordinary flexibility.

He also mentioned the Federal Office of Regional Development, now a federal structure with no money and no means to act, but which gets involved in many issues. The member says: "Now, this is a good illustration of the future in regional development". I say that there is still a lot of room for improvement.

Let us now look at the issue of manpower, to which the member briefly alluded, and also the co-operation agreements in his region. In his speech, the hon. member said that we would discuss, examine and consider the issue, and that is exactly what is being done. But while governments are discussing, the unemployed and welfare recipients are not working. While he says: "It is all right, federal and provincial officers are working together, trying to harmonize things and reduce overlap", nothing is being done, because of all the tension between the two levels of government which are always eager to pass the buck back and forth.

When only one level of government will be dealing with this issue, things will be clearer for the citizens who will have a more direct influence. The time will have come to stop talking about it and to take action, and I can hardly wait. My question is related to all of this. At first, the Minister of Human Resources Development said that he would reduce transfer payments for post-secondary education. Given the reaction of students, the government decided to hide its agenda first by lumping up the programs and then by making its cuts so that no one would know which program was hit the hardest.

Having said that, let me add that the Quebec National Assembly unanimously passed a motion put forward by the Action démocratique, with the support of the Liberal Party of Quebec, the close federalist friends of the members opposite, which said that Quebec should get more tax points instead. They all agreed on that.

Since the hon. member believes that the system is flexible, I would like him to tell us why his government does not want to give this area of jurisdiction to the province of Quebec and if he supports the resolution passed by the National Assembly of Quebec, which is asking for more tax points instead of cuts to cash transfers. I would like to find out the position of the hon. member on this issue.

[Budget Implementation Act, 1995, May 31st, 1995]

Mr. Speaker, I am pleased to take the floor to talk about the amendments to Bill C-76. When I heard the hon. member for Gatineau-La Lièvre talk about the monetary system and cuts in the public service, when the subject is really amendments to the Crow's Nest Pass policy and to the subsidy to Western grain farmers, I thought I had got my day wrong.

Well, we cannot very well prevent him from talking about the subjects dear to his heart, but I am happy to hear that he does not share the views of his Minister of Finance, and I urge him to point that out to the minister, who is following a monetary policy basically similar, if not identical, to that of his Conservative predecessors. I also urge him to mention it to his constituents.

This is a good illustration of a policy which makes it difficult to deal equitably with an issue. It happened in the past, and it continues in the budget, which treats dairy producers from Quebec and grain producers from the West differently. This is the continuation of a long series of historical decisions regarding agriculture and rail transport which, in both cases, worked to the advantage of Western Canada.

I am quite pleased to point this out, because we still hear Liberal and Reform members criticize the fact that Quebec receives, in some areas, transfer payments or equalization payments. They called them gifts to Quebec, but they do not criticize this policy which, for a long time, has allowed the West to develop. The development of the railway system cost billions of dollars, and allowed a lot of farmers to grow and prosper in Western Canada. However, we seem to forget all the money that was poured into this because it is less visible nowadays, since it was done over a period of time.

But now, with all the financial choices and spending cuts we face, this resurfaces. A moment ago, my colleague from Saint-Hyacinthe-Bagot talked about that. When the unemployed are victims of cuts, we do not say to them that we are going to allow them transition, adjustment periods. Soon, we will be making changes to the Canada pension plan or looking at the income security program, and throughout this debate that will be held in the fall, I am sure that these changes will not provide for long transition periods for the persons affected.

But when we speak about capital gains, family trusts, and other matters, then we have to have long transition periods to give people a chance to adapt. However, when the ordinary people, who are the most affected, are concerned, we forget about that.

I talked briefly about the impact of this policy on the development of the railway system. This has also encouraged farmers. For years now, in Quebec, we have been told that every rail section must be viable. When they are not, the tendency is to privatise them, to get rid of them, to give them to anybody, and not to keep them. Under the same policy out west, we have always supported the maintenance of this system, because they were very clearly linked to the development of the farming industry.

Earlier, I tried to describe the situation in this way: if you are a grain producer, it is not the dairy truck which goes by your house, but the rail system, to help you, support you or allow you to send your crop to the export points. Over the years, things have evolved. At the beginning, almost 90 per cent of the financial support came from the government.

And now, financial choices have to be made. In its budget, the federal government says that it must cut in that area, but it is planning a $1.6 billion compensation package. An important factor to consider is the fiscal side of the equation. When we talk about non-taxable money, the amount is higher than that, perhaps more than $2 billion.

In the same budget, we are told that tens of millions of dollars will be cut for milk producers in Quebec, but no mention is made of any compensation. So, we have the unfair treatment given by the federal government which has supported the railway system and supported Western Canada to the tune of hundreds of millions of dollars, on the one hand, and has funded development differently in Quebec, by giving it less support, on the

other hand. And now, this historical imbalance is being perpetuated, under the pretext that market forces must now be left to come into play.

In Quebec, there is no compensation package, no transition measure. The federal government is saying to milk producers that they can raise their prices, and that they have the flexibility to do that. In other words, it is saying to Quebec consumers that they will pay for that. We account for some 23.8 per cent of total tax revenues, so we will also pay 23.8 per cent of the compensation package given to Western producers.

In this bill, there are many examples of the federal government's approach toward development in the different regions, particularly those in Quebec. This is the same bill sets up transfer payment negotiations which, for Quecbec, can only lead to reduced transfer payments, and a smaller percentage than what it is getting now. No matter what solution is found, I am convinced that Quebec will not receive more than before.

The Ontario government will come to the negotiating table with many huge claims. This has been going on for several years, and just because Ontario changes government does not mean that these claims will also change. Quebec is facing cuts that will affect it more than the other provinces. It is said that more than 40 per cent of the cuts will be made in Quebec. In the same bill, dairy producers are also being hit harder, because they will not get any compensation package.

There are many reasons why, once this bill is passed, the federal government will be even less committed than before to supporting Quebec's development. These people are the same ones telling us that this system is cost effective, that it is good for Quebecers.

I want to raise a point in response to what the hon. member for Gatineau-La Lièvre said about federal public servants. Whenever the issue of sovereignty comes up, the people across the way are eager to tell us that it would spell disaster for the Outaouais, although they are saying very little about the roughly 15,000 jobs they are cutting in the region. The hon. member was very subdued in the House, probably because he has a carefully crafted quote for his next householder. He does not criticize his government's decisions in the newspapers or anywhere else. He did not defend them in committee. Where was he? Where are these great champions of the Outaouais who enjoy telling us that we are very well served by the current system? This bill also contains provisions affecting federal public servants.

The government whip did not rise either. Government members make timid speeches to keep their constituents happy; their remarks are never very searing. There are fiscal choices to be made. If the Western Grain Transportation Act must indeed be repealed, they should stop trying to provide indirect financial support and incentives, and stop attempting to raise the Liberal Party's profile in the West, as was recently done in Manitoba. Although we understand why they want to improve Liberal prospects in that region, $2.2 billion is a lot to pay just to buy votes. We have serious reservations here. If this policy must be scrapped, they should have the courage to do so now and to respect the commitments made by the Bloc Quebecois.

[Taxation, May 3rd, 1995]

Mr. Speaker, how can such a retroactive repayment be sought, considering that the problem is the direct consequence of the negligence of the revenue department, which, after four years, has just changed the rules affecting thousands of taxpayers?

[Taxation, May 3rd, 1995]

Mr. Speaker, my question is for the Minister of National Revenue.

After granting a research and development investment tax credit during four years, Revenue Canada has now changed its mind and is asking the 15,000 Quebecers who took advantage of that tax provision to repay amounts which are three to four times higher than their tax savings. This retroactive about face could force about half of those concerned to go bankrupt.

How can the Minister of National Revenue ask 15,000 middle income taxpayers from Quebec to repay deductions, with interest, allowed under a tax provision which they used in good faith?

[Income Tax Act, April 25th, 1995]

Mr. Speaker, before I get into this subject any further, in the limited time at my disposal, I must take a moment to situate this bill. Bill C-70 implements measures from the budget, last year's budget, that is. It was tabled at first reading before this year's budget. It is a series of fairly technical measures, highly complex ones true to the image of today's tax system. We will be examining these measures further in committee, so I will spare you all the details.

One measure was the focus of discussions before and after the elections and within the Liberal Party and has been raised by the Bloc Quebecois as well since the elections. It is the whole issue of foreign affiliates, commonly known as tax havens, raised by the Auditor General. This fairly voluminous bill contains various measures. A number are indeed positive. However, it does not go very far and it skirts a number of issues. This could be called a timid reform, which enables the government to say that it has satisfied some of the Auditor General's requests, but it does not go far enough. There is no mention of the list of countries with which we have tax agreements. Sixteen countries are listed as having agreements deemed to be sources of problems.

The aim of tax agreements is to avoid or enable businesses to avoid double taxation. This is laudable and understandable. The problem arises when different countries have different tax rates. At this point we start talking about fickle businesses. They produce in various countries, sell their products from one business to another and with the cost transfers, manage to switch profits and losses between countries. This causes problems because profits are transferred to places with the highest rate of taxation and losses can be deducted in others.

And then you have countries like Canada, where interest charges are allowable expenses. This makes matters worse and it is an extremely complex task to tackle corporations with operations in several countries. Slightly higher, stricter standards are set for them, to determine whether they are really producing, but the fact remains that it is not easy to figure out, particularly when rates vary widely. So, there is a need to look seriously into this and not in a piecemeal fashion as it has been the case for a while now.

This brings to mind the whole Liberal approach to taxation. When they were in opposition and during the election campaign, the Liberals used to say that the way to deal with taxation was not piecemeal but comprehensively. So far, not much has been done in this respect. A piecemeal approach continues to be applied to very technical, complex issues. Sometimes positive measures are taken. Still, they miss the main point, that is to say streamline the whole system, make the tax system less complex and easier to understand, which furthers the goal of transparency and restores people's confidence in their institutions and elected representatives, particularly as regards this trust that was lost.

I wish to take this opportunity to draw a parallel with a tax matter on which the government made a rather clear commitment, namely to do away with the goods and services tax. If you think back a little, originally, when this legislation was first passed, it was fiercely opposed by the Liberals in this place, the other place and everywhere. They opposed it even more strongly in the days and months that followed, going as far as promising, during the election campaign, to replace it within two years, that is to say by January 1, 1996, eight months from now. But there is no concrete proposal on the table yet. Considering how long it takes to develop and draft this kind of document and how quickly the GST was implemented, causing a great many problems, it is safe to assume that the government will be unable to honour and fulfil its commitment in the next eight months. Furthermore, this is another reform characterized by a piecemeal approach.

I will get to elaborate further on this subject in the second part of my remarks, to be continued when debate is resumed. I just want to say for now that this bill contains some good measures, which we will consider in committee. There is one in particular that we will consider thoroughly and it deals with foreign corporations. But we will do so bearing in mind that this piecemeal approach must end. A more comprehensive approach to taxation must be taken.