Pierre Brien

[Supply, February 21st, 1995]

Mr. Speaker, I am pleased to go over the whole decentralization approach for the second time, an approach on which the Liberals and Reformers agree. It is how they see decentralization. They tell us that they will let the provinces manage social programs.

They mention natural resources. I would remind my colleague that, under the constitution, some if not most natural resources should come under provincial jurisdiction, just like health and education. How generous of them to tell us that they will let us manage these sectors in the future.

They tell us we should be happy that we will now be responsible for these sectors. We would also like to have the revenues to manage them. They cannot transfer expenditures without the revenues that go with them. While the federal government continues to collect taxes as in the past, it will transfer responsibilities but less money. They will tell us about their flexible federalism, which left them broke so that they will now return the favour by aggravating our difficulties.

In addition to giving us administrative responsibility, they will give us jurisdiction, and then impose national standards. They say that in their paper. They say "in co-operation". Talking about federal-provincial co-operation is all fine and well, but we know who always ends up setting national standards.

They also say in their paper that equalization payments will allow all provinces to meet these national standards. Their figures say the exact opposite: we cut your transfer payments and equalization but maintain the same standards. There is something wrong with their logic.

A little further, there is a statement about health care. It seems national standards would only apply to essential medical services. There is no explanation of what that means.

This is hardly decentralization. Real decentralization involves providing financial resources in amounts that are equivalent, sufficient and fair-take your pick.

There is another element missing from this document. In economics, it is very difficult to do an accurate assessment of the mathematical impact of a measure. Economic forecasts are a good example. People think economics is an exact science. Making an economic forecast is like predicting that, when I leave the House, I will either go straight ahead, to the centre or to the left, but since around noon I usually have lunch at the cafeteria in the West Block, it is far more likely I will turn right. On the basis of a number of set assumptions, one can say yes, he will turn right. However, anything can happen.

The document fails to consider some of the more predictable consequences of cuts in welfare payments and unemployment

insurance. This money is often recirculated into the economy. People who receive welfare payments do not keep the money. They spend it. So if we cut those payments, we get the so-called negative spiral effect on the economy, and the document fails to factor in the negative impact of these cuts.

We cannot cut $15 billion in our social programs without affecting government revenues. No way. These people buy things, and the store owner uses that money to buy what he needs. That is the positive impact of dollars that circulate. Dollars that no longer circulate, that are kept by the government to reduce the deficit, have a negative impact. This aspect of the issue seems to have been ignored.

I am not saying that we should continue going into debt. I am merely saying that the negative impact of the proposed cuts has not been evaluated. I am convinced that their proposal would not lead to a balanced budget.

As for the suggestions made by the Bloc, I am sure we were agreed on one of them, the one involving business subsidies. We talk of cutting the government's administrative expenditures where overlap exists, senseless expenditures-the Senate could be completely abolished, we would not be sorry to see that, but that will be debated after we are gone-collecting unpaid taxes, the defence department, and so forth.

We are ready to consider tax expenditures, but they do not believe in such things. They think that there are only budgetary expenditures. Some expenditures are tax expenditures. Is a box at a Toronto Maple Leafs or Montreal Canadiens game a revenue generating expenditure which should be a tax deduction? I have my doubts. The tax system could be tightened up.

But there is no mention of revising anything, of changing anything to do with taxes because they are afraid-these people are very fond of such measures which allow them to make taxes less progressive. Our progressive tax system is diminished by such taxation measures. At a certain level of income, it becomes difficult to maintain the progressive nature of the system because people use the tax system to circumvent it.

This cannot be changed, these are the same people who advocate a flat rate of taxation across the board. That is their idea, it is part of what they are demanding. This is all based on a peculiar vision of society which does not allow for any redistribution of wealth whatsoever, and that is its greatest fault.

I would like them to show me how they would redistribute the money, how they would narrow the gap between high income earners and low income earners which has grown steadily in the last fifteen years. Why is this not mentioned in their document? Redistribution is not one of the Reform Party's priorities, so it is not mentioned.

It is clear and quite plain that we will never get involved in a program like that. There are other ways of going about things. All it takes is a bit of imagination and to stop repeating the theories of right-wing economists.

[Supply, February 21st, 1995]

Mr. Speaker, today we have a good example of the financial trouble we are in: a government which does not do anything, which does not realize the magnitude of the problem, and an extreme right wing opposition ready to impose a drastic remedy on all citizens.

Allow me to come back to the Reform Party's motion, although I do not feel it is worthwhile spending a great deal of time on it. Many of the things we do in this House are not always very helpful, and we are maintaining this tradition this morning.

If we have a quick look at government finances, we see that, first of all, this year's deficit will still hover around $38 billion. We will continue to get into debt for the 24th year in a row. Our debt will exceed $545 billion, while interest rates will add $85,000 a minute to our debt.

Our structural deficit is $28 billion, which means that even with phenomenal growth and a fully functioning economy, this deficit would persist. The Canadian economy is plagued by many structural problems. The Reform Party's discussion paper does not have much to say on this. Interest on the debt amounted to $38 billion last year and will reach $45 billion this year.

Our external debt represents 44 per cent of our total debt. When referring to our external debt, we must also take into account provincial governments, municipalities and businesses. Forty-four per cent of our economic activity is in foreign hands. The problem with foreign debt is that our savings rate is insufficient and our economy is far from operating at its full potential.

I will also touch on what our Reform friends are suggesting this morning. I find it hard to call them "friends" when I read their document. This paper is a all-out attack against Quebec. Let us see what policy sectors they are going after. As we know, because of history and a number of factors, Quebec receives equalization payments, social assistance and unemployment insurance from the federal government.

These are the only sectors where federalists can say that they send Quebec more money than they receive from it. There is no reason to boast about sending Quebec more money in these sectors, whether it is social assistance, unemployment insurance or equalization payments.

This is how they compensate for the fact that Quebec does not get its fair share of subsidies allowing it to better structure its economy, as in research and development and other such sectors. They compensate with transfers, a kind of social assistance for the provinces.

Today, Reformers are telling us: "We will put some order into this. Not only will we not touch those sectors where Quebec is at a disadvantage, but we will cut UI, social assistance and equalization payments". The figures speak for themselves.

The Reform vision would include cutting a total of $15 billion from our social security system. That includes $3 billion in equalization payments. As we all know, equalization is one area where Quebec receives a fairly substantial amount. It does not work out to much per capita, for instance, but since our population is larger, the total amount is still quite substantial.

They want to cut in this area. They also want to cut $2.5 billion in welfare payments and $3.4 billion in unemployment insurance. These are the three biggest items they want to cut, but they also want to cut $6.6 billion in cash transfers to the

provinces. This is incredible, and I am amazed that they failed to consider the regional impact of this so-called budget.

Perhaps the Reform Party should stop and think what the consequences and the impact of this budget would be on the Maritimes. They would also cut in other areas such as funding for official bilingualism and multiculturalism and the rest.

It is my impression that the Reform Party still acts like a regional party, a party whose vision does not go beyond the few regions it represents, a party that is incapable of looking at Canada as a whole, which is typical of the political situation in this country today. And it also says a lot about the future of a party that hopes to govern Canada someday. I would not wish this on any Canadian. In any case, we may not be around, but I would feel sorry for Canadians if they were ever governed by a party like the Reform Party. Besides, it would not be in the best interests of Quebecers for Canadians to suffer the impact of the lack of vision of these people on their social policies.

Just consider other cuts they would make. Three billion dollars cut from pension benefits. Three billion dollars, which works out to a 15 per cent cut in the income security system for senior citizens. Are they going to apply those cuts across the board? Fifteen per cent of everybody's pension cheques? Is that what they want to do? Hard to say. They do some simple arithmetic and come up with $3 billion, just like that.

They would make additional cuts totalling $3.4 billion in unemployment insurance, although they know perfectly well that this year, the Unemployment Insurance Fund will generate a very high surplus. They probably want to let the surplus accumulate or reduce premiums. It is not clear how they want to do that.

They would also make cuts of $200 million in funding for education. We know that they supported Minister Axworthy's plan that would raise tuition fees and let students pay a larger share of education costs. So it is not surprising that the Reform Party should suggest that. I am not sure what we should call this document, to do it justice. Perhaps we should call it an essay that would hardly get a passing mark.

There are another $10 billion in cuts that should be examined more closely, but basically, it is an all out attack against social programs and especially those that benefit Quebec.

What is the basis of the Reform Party's approach? It is generated by some kind of conservative ideology according to which the rich drive the economy and our social programs have burdened us with debt, and the only solution is to make drastic cuts in those programs in order to put public finances on a sound footing.

Their document does not talk about tax equity. Not at all. It does not talk much about fighting the underground economy. It does not mention the tax treatment of corporations or businesses because according to them, these are the people who generate economic activity and they should be praised for doing so. Their god is the "invisible hand" of Adam Smith at its best. Government has no place in the economy or the social sector, and if they could privatize social security completely, they would. But of course, they cannot go all out in that respect.

I heard them say in their introduction that they were proud of what they had done, proud of this document. If this document were actually in effect, however, I doubt they would be quite so proud about facing people in the street, sinking ever deeper into poverty.

Clearly they took their inspiration to some extent from the model provided by Alberta, which is going to fix up its public finances and will succeed in getting out of the deficit. However, one has to understand the Alberta model. Yesterday, there was a very good report on Le Point . If I am not mistaken, 30,000 welfare recipients have left Alberta. Where have they gone? Whose responsibility have they become? It is easy to do something in isolation, but others have to carry the cost of it. Where are they now? In British Columbia, Manitoba or Saskatchewan, and surely being provided for by another provincial government.

Some of them will no doubt re-enter the labour market, but still. So it is easy to do something in isolation when you can pass problems or costs on to others. It would be just about impossible to apply the Alberta solution to all of Canada. The additional revenues generated by the oil industry in Alberta this year could not be duplicated for Canada as a whole. The situation there is a highly specific one.

We should have a look as well at what all of this is doing to the health care system and to hospitals. I would like to quote a few passages from the Reform Party's document on decentralization, which echoes the Liberals in talk of new federalism, decentralized federalism, federalism on the move, developing federalism and everything else they would have us believe, but always with the same idea behind it all.

They suggest transferring financial problems to the provinces, which is what decentralization is all about, while maintaining national standards. Page 24 of their document provides that the federal government would use equalization to make these national standards attainable. However, further along in the figures, we see that they are going to cut equalization payments. They are therefore denying the means to those who need it to attain the national standards. Not only do we keep

national standards high, but we cut the money and then we force them to meet the standards. How are the provinces, the recipients of equalization payments, going to attain these standards? This would be the worst decentralization scenario, if it were handled this way. We would of course keep all the departments on overlap service.

Further on, the document states that, in terms of the health care system, essential services must be maintained so that they may be covered. What is an essential service? What does it mean? Under this kind of health care system, does it mean that essential services will be available to anyone, at any hospital, on any given day? Do they know what the impact of all this will be? It is said that prevention is one of the weak spots in our health care system and in our society in general. I would be curious to see the impact that only covering essential services will have on that.

People with health problems that they consider minor will not get out and get treatment. What kind of health problems will that lead to? Obviously, they do not talk about this. Their approach is overly simplistic. If I were a teacher in a CEGEP-I suppose that such projects could not be considered university level-and I had to mark this project, I would be hard put to give it a passing mark.

I would like to touch on what could be done. There are some things that we should do to improve government finances, because they have been suggested. There is a difference between making things even more difficult for people, which is what the Reform Party would do, and doing nothing, which is what the current government is doing-it did nothing to reduce the deficit in its first year, then decided to put changes off for a year and is too afraid to make a move before the referendum in Quebec.

We must not think that we can fix 24 consecutive years of overspending in 15 or 20 minutes of debate, as the Reformers would have us believe, or by jotting a few things down on paper; it is much more complex than that. We must take progressive steps, like the ones we need for our tax system.

I have been lucky enough, in these times, to travel throughout Quebec with the youth commission on the future of Quebec and to hear many visions for the future; how to build the desired society and the principles on which it should be built, be it Canada or Quebec. The values and principles mentioned most frequently are those of fairness and justice.

No one has any solutions to offer, apparently. We are told to emphasize certain things. There is little mention of collecting unpaid taxes, which would reportedly amount to some $6 or $7 billion. We can certainly not collect all of it, but we could at least collect part of it, even if it is only $2 or $3 billion per year over the next two years.

As for overlapping and waste by the federal government in particular, a great deal of money could be saved in this area, perhaps a few billion more. The only matter on which we agree with the Reformers is that of business subsidies. We can indeed eliminate subsidies which are in any case not effective and which distort the market. In the area of defence, more cuts can be made; $1.5 or $1.6 billion in additional cuts could easily be made.

We would also have to look closely at certain tax rules. We have talked about family trusts ever since we came to the House, so much so that I am getting fed up with the whole subject. Talk, talk, talk, but nothing happens. We must also reconsider the approach of investing in megaprojects. A restrictive tax policy would lead to a slightly more relaxed monetary policy, especially in regard to short term interest rates. The impact on our economy would not be negligible.

Certain measures would serve, over the next two years, to restore public finances to a level which would make foreign investors more confident, decrease pressure on interest rates and improve Canada's economy on the whole.

I shall conclude with the choices available. For a good number of Quebecers, 1995 is the year for making choices. For Canadians as a whole, it is also the year to make financial choices and, as the time draws nearer, a greater number of possibilities emerge, such as the Reform proposal, a proposal which has not been put forward in Quebec. Reformers need only look at the results of the byelections in Brome-Missisquoi and even in Saint-Henri-Westmount to see that their vision of society in the future, their vision is not catching on at all in Quebec and probably never will because it is out of touch with reality.

If this vision is becoming widespread in Canada, no wonder the union between Quebec and Canada is in trouble. So, if this is how Reformers see things, let us not be surprised if this vision has an impact on the choices Quebecers make, because they see things differently. So, I really wish they would stop wanting to cut in the financial assistance provided to Quebec on account of the fact that it receives more in terms of social assistance, unemployment insurance and transfer payments. I wish that Quebecers could levy their owns taxes and spend these amounts effectively so that they would not need to be on the receiving end of such programs, so that fewer people would be in need.

But for that to happen, half the economic lever must not be left in the hands of someone who could not care less anyway about economic development. In that respect, the Quebec government has come up with a solution, a solution it is putting forward with the support of the Bloc Quebecois and perhaps even another party, the Democratic Action Party, which is making it increasingly clear it wants Quebec to be fully sovereign.

So, there is growing support in Quebec for sorting out our problems on our own and letting others do the same, but I am still not convinced that this vision of the Reformers is shared by all Canadians. I certainly hope that is not the case, because this is no way of looking at the future, this is not something desirable.

To conclude, there is a whole range of possibilities between doing nothing, which is the Liberal approach, and laying off everybody and putting everyone on the street, as the Reform Party is suggesting. Good for them. Preparing this budget has kept them busy for a few days, but I do not think it will be very useful in the long run, in the greater scheme of things, to put the fiscal house in order.

[Riding Of Brome-Missisquoi, February 14th, 1995]

Mr. Speaker, yesterday the voters of Brome-Missisquoi exercised their democratic right. For Bloc Quebecois militants, the result is much less disappointing than our political adversaries would like to think. Let it not be forgotten that in the vote on the Charlottetown accord, Brome-Missisquoi was one of the few ridings to vote in favour.

Yesterday the Bloc took 44.5 per cent of the vote, an increase of almost 4 per cent since the general election in October 1993.

The Bloc and its sovereignist option have gained in popularity. In the riding of Brome-Missisquoi, the real loser was the leader of the Conservative Party, with only 3 per cent of the vote.

[Supply, February 14th, 1995]

I will be quick, Madam Speaker, and will ask my colleague to reread my speech, which he probably did not understand, because it was in French. Let him reread its translation.

I can see why someone who can only envision resolving the public finances issue through social spending cuts would be frustrated to see other people find other ways of resolving it. They know very well how hard a time they are having with it. Their ideas are not being accepted in Quebec and that probably frustrates them all the more.

It would be my pleasure to send him a copy of the finance committee's report, which contains the Bloc Quebecois' proposed solution to the public finances problem. I will tell him once again that it was certainly not the most needy who got us into our current debt situation. That is certainly not the case. Look at the past to see the reasons for the current debt level.

[Supply, February 14th, 1995]

Madam Speaker, I will be pleased to answer my colleague who, I hope, will be living in that Quebec with us too. By then, I also hope we will be able to convince him because he seems to show a certain interest in that new Quebec.

First of all, I would like to make a few corrections in what he said about the causes of economic uncertainty. As a primary factor, and I hope this is an error, he cited the political situation as a cause of instability over the last year. May I remind him that the greatest instability in interest rates, when they increased the most, in April and May, that was in reaction to the federal budget when the stock markets recognized that public finance had no means to correct the situation. If he has stock market investments, he will be able to check as stock market performance and interest rates are very often at variance.

The federal budget and overall indebtedness are the first factor. Even if some people mention the uncertainty associated with a sovereign Quebec, this is not because of the political regime or because they have concerns about public finances in a sovereign Quebec in view of the present high Canadian deficit.

They themselves implicitly admit that it is the size of the Canadian deficit which causes uncertainty. This has nothing to do with politics. A sovereign Quebec with viable public finances would be of no concern whatsoever to financial markets.

He also stated that a sovereign Quebec would be responsible for 25 per cent of the debt and that my colleague had mentioned that this morning. He probably remembered part of what my colleague said. The latter probably said that this is what the Liberal and federalists would want. If I may give an example, the Bélanger-Campeau commission which examined this subject indicated that we de not share only one side of the balance sheet, we share the assets and the debt, both sides.

When we add this all up and look at it from an assets standpoint, we arrive at a figure of 18.5 per cent. Since we are contributing 23 per cent of federal government revenues, and taking on 18.5 per cent of the debt, this means a significant gain on top of savings in overlap. There will no longer be two departments of revenue, two departments of the environment, two departments of whatever. I could go on a long time. This will eliminate problems for business, which has to meet the different environmental standards of Ottawa and Quebec City, complete tonnes of forms, GST reports, QST reports. Our business people will use this time to concentrate on what they do best: improve the economy. This will be good for Quebec and good for Canada. I hope Canada's economy will be as strong as it can be, because Canada will be our principal trading partner.

I have no concerns about the viability of a sovereign Quebec. I am perhaps a bit more concerned, sincerely, about the viability of a Canada without Quebec, since it will have to redefine itself, and the process has not yet begun. It will be hard to adjust quickly.

Things are happening in Quebec. A lot of people are taking part in the regional commissions. They are expressing their ideas. They are describing their vision of Quebec in the future. And as I said, it is completely different from what I hear people talking about here. There, they are talking about equity, redistribution and social justice. Here, people are talking about reforms to social programs that involve cuts affecting the disadvantaged in order to improve public finances.

There are other ways to improve public finances, and I think the approach of a sovereign Quebec will show the way, and we can become an international example on how to turn public finances around and achieve sovereignty democratically. Quebec knowledge and know-how will become an international export.

[Supply, February 14th, 1995]

Madam Speaker, today we are discussing a motion by the Reform Party whose purpose is, basically, to make the government reduce its spending so as to improve the state of public finances. There is nothing wrong with the principle as such. The motion also wants the government to avoid raising taxes and to downsize government. The Bloc Quebecois certainly has no trouble accepting these three principles.

However, the position behind this motion is not necessarily one we can embrace. Our position on the economy is certainly not that of the Reform Party, certainly not the position of the right, which says that economic growth depends largely on what the wealthiest in our society contribute to the economy.

This is often the group they try to defend, either by proposing a single tax or other measures to avoid any form of progressive taxation or redistribution. There are certainly major differences in how the role of government is viewed with respect to redistribution of income. In any case, since it came to power, this government has done very little to improve public finances.

A few weeks from now, we will be told that by the end of the fiscal year, we will have a deficit of about 38 or 39 billion dollars, in addition to a debt of over $500 billion, accumulated during the past twenty years. This is hardly a reason to celebrate.

However, I know some members will celebrate, because the deficit will be one or two billion dollars less than the original forecast. However, whether the deficit is on target is irrelevant. We have to consider the facts.

The facts are that we will still have a very substantial deficit of 37 or 38 billion dollars, as I said earlier, and perhaps even 39 billion, if the government tries to include some of next year's

spending in this year's budget to reduce the pressure on the next fiscal year. We must get back to basics. Forget about objectives. What we want is results.

Since the government failed to make certain cuts last year, this has put a lot of pressure on Canadian interest rates. Since February, interest rates have gone up by about 300 base points. Everyone who has to borrow money is feeling the impact on the economy. The Minister of Finance likes to say that increases in the interest rate are like increases in income tax. If he believes what he says, why did he not do something earlier in the year, instead of adding this pressure to the interest rates?

Of course, our friends like to say that the state of the economy is a destabilizing factor. I, however, contend that the greatest destabilizing factor is the state of public finances. Foreign investors recognize this, and this is what they look at first.

There is also no vision for society. It is unfortunate to find that, after a year and a half in office, the present government is taking the same approach as its predecessor. According to this approach, cuts are the only way to improve public finances-a view shared by the Reform Party.

I can remember during the elections speeches about giving priority to jobs and trying to generate growth as ways to improve public finances. So much for those speeches. No vision of society has been put forward in an effort to find a way to revitalize the economy, to everyone's benefit.

You are aware that economic indicators measure growth with traditional indicators such as production levels. We must not forget, however, what we learned in the 1980s-that increased does not necessarily mean increased employment.

The two are linked, of course. If there is an increase in total production, or in the gross domestic product, the number of jobs will certainly increase also, but these two trends are separate. Production may increase significantly faster than the level of employment.

The gross domestic product is therefore not the only yardstick for the economy. We have to focus on the people who are increasingly excluded from society, the unemployed living on unemployment insurance or welfare or who have returned to school because they cannot find a job. Many people are waiting to enter the labour market. The present government has no vision, in this regard.

I would like to speak a bit about the approach which consists of saying that the deficit problem will be resolved by making cuts across the board. We agree that certain cuts can readily be made, for example in the government machine. Later on, I will return to the Bloc Quebecois' suggestions which we have repeated time and again.

We have a major difference of opinion with the Reform Party: in our opinion, some expenditures are tax expenditures. We must look beyond budget expenditures, transfers to individuals and to the provinces.

We should also look at whether they are tax expenditures, lost revenues. We could get into a real philosophical debate on this issue: Is it a tax hike? Is it a spending cut? It seems clear to us that it is a question of spending.

It has always been difficult to discuss the issue of tax expenditures in an effective way, even during the finance committee's hearings, because the figures are derived from data that is only partly revealed. Expenditures that the government plans to make are revealed, but no roll-up of these expenditures is ever given, even though that information is available.

Therefore, I want to talk about this right leaning philosophy that only wants to see across-the-board cuts, blind indiscriminate cuts, a philosophy that often ferments such ideas as a single tax rate, the same rate for everyone. It tempts even the people who would be affected the most. They say "use one tax rate". Currently, we use a progressive tax rate system; the higher the income, the higher the tax rate. Of course, the tax system, however, sometimes reverses trends, but that is another problem which can be looked at in a different way.

Therefore, the principle of redistribution, which is desirable in society, would be severely compromised under a system with one tax rate. I said to someone who was explaining the concept to me that I would give the matter more thought if that person could explain to me how income would be redistributed with just one tax rate for everyone. As long as the proposal cannot be linked with redistribution, how the state redistributes wealth, the concept will not get any support from me.

I would now like to return to what can be expected in the next budget and rumours on this subject. It is becoming clearer that the government will increase its revenues in the next budget. An increase in the surtax for individuals or in income tax rates, traditional taxes or certain consumption taxes is planned, or pension funds may even be hit. There is obviously a lot of money there, and the government is looking for revenue. It is much easier to get a quick revenue fix than to cut spending; it takes more courage to cut spending, especially when friends are among those affected. The Liberals have always had trouble cutting their friends's spending so this may be very difficult to do.

Now why does the government want to do that? Because of the two additional years, and the Conservatives and Liberals are equally at fault. For the past two years, there have been no major changes in budget policy, and we have just had two consecutive

deficits of $40 billion, record amounts in Canadian history. This is a country that is supposed to have the best quality of life in the world. This is the country they are trying to sell us, especially to Quebecers. Perhaps we should check the size of the mortgage.

My point is that this government has only itself to blame, because it failed to take action during the second year.

I will give an example of tax expenditures that were introduced and then withdrawn, to show the lack of vision and judgment we see so often in our tax system. That is why we favour a genuine review of the tax system, not a quick fix to please friends who contribute to the party coffers but something that will reflect our social values, our principles and our objectives. Look at the way the government treats capital gains, for instance.

What was the procedure in recent years? First, the government introduced the principle of allowing a $500,000 exemption; the first $500,000 of capital gains were not taxable. After a while, the exemption was reduced to $100,000. Once taxpayers in the highest bracket had taken advantage of this exemption-not everyone can declare a capital gain of $500,000-the government said: "Well, this is costing the government a pretty penny. We will reduce the exemption to $100,000", and so they did. Now that the others had managed to take advantage of this exemption, they said: "Well, this might be too costly for the government after all, so let us cut the exemption to zero", which they did.

If it does not make sense to treat capital gains differently today, why did they do it in the past? How much money did the government lose in the process? How much did it have to borrow to compensate? How much did it cost society? Now, they claim social programs are too expensive, that they are putting us into debt, and the government has all kinds of names for those people.

Actually, if we look at the operating budget, although it does show a deficit, it is practically negligible, which means that if we had not accumulated all this debt over the years, we would not be having this discussion today.

What caused these problems? Is it our social programs? I am not so sure.

This certainly requires some adjustment and a serious look. I come back to the approach advocating only cuts and not fiscal spending. What does this mean? Forty billion dollars spread among 20 million taxpayers. That means about $2,000 per person. We resolve the deficit problem by cutting $2,000 per individual, cuts in expenditures related to individuals.

Can everyone handle $2,000 in cuts? We here in this House can do it easily, with no problem. However, what about people on social assistance, single parent families and older people? Can they handle a $2,000 cut per person? Can they really? It is not a sure thing.

This is why we need to have another way of looking at the approach to public finances as well. There has to be a way to put a stop to the present inefficiencies and straighten out the job market with different and new ideas. We could use our imaginations, we could be creative. There is no end to technological innovation these days. When it comes to public finances, we are stuck for ideas. We want to copy other formulae and other approaches.

We hear more and more talk about New Zealand in Canada these days. People are trying to convince us that we will share the same fate. Why do we not try a different formula? Why not do things differently?

Over the next year, debate will be vigorous, because two visions of society are on a collision course, particularly in Quebec with the discussions on the referendum. I hope there are Canadians who also share a different vision from what we are hearing conveyed at present.

I would like to speak about reviewing the taxation system in connection with current statistics on income. Sixty per cent of people, 60 per cent of the population, have incomes of $25,000 or less. Returning to my earlier idea of cutting expenditures by $2,000, for people with a $25,000 income, that is going to hurt. We must target the cuts where the money is and where it will hurt much less.

Of course, I mentioned redistribution. Also, when we put forward budget policies, specific taxation policies, we must evaluate them before developing them, while they are being developed and after they have been developed. Given the veritable army of civil servants, this could be done and it would be a more productive use of their time. Perhaps cutting 45,000 employees would not be contemplated if this type of useful analysis were conducted. It is certainly possible to re-think the work of the public service in regards to such an approach.

I took part in prebudget consultations. I must say that I was rather disappointed. Earlier, I heard a Liberal member say that all departmental programs were undergoing a review. It is a shame that, in politics, we lack the courage to lay working hypotheses out on the table when people are being consulted. These public consultations were very difficult because the discussion became almost philosophical at one point. It was hard to say that there was nothing concrete, only partial information. It was difficult for people to judge, even for members of the committee.

If that review had been conducted a little quicker, put out on the table to be debated, but it was not, and the government does not want to be transparent, it wants to give itself as much leeway

as possible. It does not want to resolve the public finances issue effectively, publicly. Never. This will be done in the backrooms.

Therefore, in my opinion, the exercise will be relatively ineffective. Anyway, most of the report was written by the Department of Finance, which does not want to be affected by the recommendations, so it is making sure it has some leeway.

I would like to use the remaining three or four minutes to talk about the rumour going around regarding a form of flexible federalism which will be introduced in the next budget by decentralizing some powers. What a laugh. The Axworthy reforms were strongly contested and implementing his reforms is proving very difficult; the proposal is obviously lacking vision; people are not rallying around it, they are divided on the issue.

The government had to put these reforms on the back burner because of the referendum campaign. But the underlying idea was to cut social program spending. How can this be done now, and in a more positive way? That must be the challenge that Cabinet is facing now, and a decision on the issue has probably already been reached, since the budget has to go to the printer any day now.

Therefore, it is probably already a done deal and the Minister of Finance is probably now in the process of announcing to his provincial counterparts how he intends to reduce the amount of money they receive, and trying to have them believe that he is telling them good news.

What the government is essentially trying to do is to regroup certain transfer payments. Education, health and Canada Assistance Plan transfer payments will be grouped together and added up. What the government will be doing is an addition of sorts. The government will add up the amounts and say to Quebec or another province: "This was what you received in the past, and now we will give it to you in one block payment. However, you will get a lot less, because we have to improve public finances. The rest is up to you. You must decide where to cut, make unpopular choices, tell students their tuition fees will go up. You will bear the responsibility». That is essentially the message they want to convey, while trying to pass it off as decentralized federalism.

Will they cut the workforce which administers these programs here? I doubt it. Will they abolish national standards if they stop contributing financially? If they no longer make a financial contribution, will they forget about national standards? On what logical basis would we maintain national standards, although we know full well that the Liberal Party has this vision of national standards, centralized here and equal across the country, a single country, a single nation in their opinion?

It would be very surprising for them to really decentralize, but they try to convince people that this is flexible federalism. I said yesterday, and I still think today, that this type of federalism is so flexible that we are broke.

In conclusion, I will say a word about transfer payments to the provinces. If I remember correctly, transfer payments to the provinces have been cut by $48 billion since 1982, including $12 billion for Quebec alone, but that did not improve the government's financial situation. So we must not fall into the trap of thinking that this will do much to improve government finances. First of all, it is shifting the burden to the provinces. This will be hard on several provinces whose credit ratings are substantially lower than that of the federal government. The federal government's financial situation is worse, except that it is easy for them to generate revenue by collecting more taxes, but in theory only because people would not stand for it in practice.

This did not put government finances on a healthier footing and it is not a good approach. We must also look at job creation, an issue on which the government is very silent. It lacks a vision. In summary, yes to selective cutbacks, first in the administrative machinery, at the Department of National Defence. We must also collect unpaid taxes. We can achieve a real reduction in overlap, which provides much more effective ways to create a better climate and improve the economic situation. However, I doubt very much that this is the approach contemplated by the government and that concerns me a great deal. In any case, people will have to make choices soon and we will see which vision of society they prefer, especially in Quebec.

[Income Tax, February 7th, 1995]

Mr. Speaker, I have a supplementary question for the Minister of Finance.

Does the Minister of Finance intend to act on the warning against increasing taxes given him by the business council on national issues, which said that the overall tax burden in Canada is already too high, jeopardizing investment projects and, more seriously, hampering efforts to reduce unemployment faster?

[Income Tax, February 7th, 1995]

What a shame, Mr. Speaker, I still had a few hundred million dollars earmarked for the Minister of Finance.

Why is he considering raising taxes for the middle class instead of following the suggestions made by the Bloc Quebecois?

[Income Tax, February 7th, 1995]

Mr. Speaker, my question is for the Minister of Finance.

Just yesterday, the Minister of Finance asked the official opposition to make suggestions for reducing expenditures. Yet on December 15 in this House, he denounced proposals made by the Bloc Quebecois and denounced the fact that they would only amount to a reduction of $5 billion.

Rather than contemplating another tax increase for the middle class, why does the government refuse to act on the suggestions made by the official opposition, such as collecting $6 billion in unpaid taxes, eliminating duplication which costs $3 billion in Quebec alone, scrapping over $1 billion in unproductive subsidies to companies, cutting the defence budget-

[Regional Comsultations On Quebec Sovereignty, February 6th, 1995]

Mr. Speaker, today marked the beginning of the regional consultations on Quebec sovereignty.

The Bloc Quebecois is proud to be associated with this highly democratic exercise in which all Quebecers, whatever their origin, their language or their political affiliation, will have the opportunity to discuss, ask questions and obtain information about the draft bill on Quebec sovereignty.

The discussions that will take place throughout Quebec, and that will include both the elderly and young Quebecers, will enrich the democratic debate on the sovereignty question and extend it to all groups and levels of Quebec society.

It is in this context of exchange that we applaud the courageous and pragmatic decision of the Greek, Italian and Jewish communities to take part in the process. They deserve our utmost respect and admiration.