Pierre Brien

[Registered Retirement Savings Plans, December 1st, 1994]

Mr. Speaker, how can the minister continue to leave open the possibility of taxing RRSPs and increase the concerns of Canadian taxpayers at a time when people are taking and renewing RRSPs, and considering that if RRSPs were to be taxed, 44 per cent of those who participated in the poll said they would stop contributing?

[Registered Retirement Savings Plans, December 1st, 1994]

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

Right in the midst of its pre-budget consultation exercise, the government continues to leave open the possibility of taxing RRSPs when, according to a Gallup poll, over 86 per cent of Canadians and Quebecers oppose such a measure.

Considering that the government did not wait until the end of its pre-budget consultation to announce that it would not reduce UI contributions below the level mentioned in the budget, will the Minister of National Revenue now reassure concerned Canadian taxpayers that he will not tax RRSPs?

[Underground Economy, November 28th, 1994]

Mr. Speaker, I have a supplementary question for the Minister of Finance who should be more concerned about differences with his colleague, the Minister of National Revenue, than between the Bloc Quebecois and the Parti Quebecois.

Does the minister recognize that only a comprehensive review of the tax system will be able to bring the black market phenomenon under control since, as he admits himself, the new administrative measures brought about by his colleague in charge of national revenue in order to improve tax collection will not be enough?

[Underground Economy, November 28th, 1994]

Mr. Speaker, I will try again. During an interview, the Minister of Finance clearly confirmed the importance of a flourishing underground economy and I quote: "The Minister of Finance believes what his officials have been saying all along, which is that the black market accounts for 5 per cent of the economy. The Minister of Finance believes that it is a lot higher than that".

Does the minister recognize that the growth of the underground economy, confirmed by a drop in GST revenues during the first half of the year as compared to last year at the same time, is due to the recent increase of the tax burden and the inequities of an outdated taxation system that an increasing number of Canadians are trying to evade?

[Underground Economy, November 28th, 1994]

Mr. Speaker, my question is for the Minister of Finance. During an interview, the Minister of Finance clearly confirmed the importance of a flourishing underground economy and I quote: "The Minister of Finance believes what his officials have been saying all along, which is that the black market accounts for 5 per cent of the economy. Paul Martin believes that it is a lot higher than that".

[Budgetary Policy, November 28th, 1994]

First of all, I am very glad to see that the member is starting to reflect upon the possibility of a sovereign Quebec, of what a sovereign Quebec could achieve and could be. We should probably be thankful to his constituents who are now more than ever telling him that they think it is a desirable model and probably a forward-looking option. So now, the member is curious about the policies of the Bloc Quebecois and is showing some interest.

I am really glad and I congratulate his constituents for showing him the errors of his way. The member raised four points in his question, which I want to go over, one by one. He said that the public debt is a world-wide phenomenon. It is so easy to use clichés! Since the member thinks that this is a world-wide phenomenon, let me repeat what I said at the beginning of my speech, there are two periods to consider.

I heard one of my colleagues say that the Liberals are responsible for Canada's indebtedness. That is probably more exact. Between 1970 and 1985, we started with a surplus to end up with a very significant deficit.

At the international level, between 1985 and 1993, a period dominated by the Conservatives which the Liberals would qualify as a very difficult time, the debt level of member States of the OECD increased by 22 per cent. Meanwhile, the debt in Canada rose by 77 per cent, roughly 3.5 times more than in OECD countries. Maybe indebtedness is a world wide phenomenon, but the phenomenon in Canada is a lot bigger than anywhere else, probably due to structural problems.

He takes an interest in what the monetary policy of a sovereign Quebec would be. I am happy to see that he thinks about it and that a sovereign State of Quebec might be allowed to sit on the board of the Bank of Canada to discuss its point of view. It would be interesting to finally be able to discuss issues as an equal partner. Anyway, all I said about the monetary policy is that his party-I do not know if he was a member of Parliament at the time or if he followed the business of the House-his Minister of Finance and all Liberals criticized John Crow and the monetary policy of the Bank of Canada. But now that they are themselves in charge, they tell us the current restrictive and harsh monetary policy must be maintained.

All I noted is a blatant contradiction. All I said about the monetary policy is that whoever is asked to apply it should be forced to solve the problem of short-term interest rates. He said that interest rates are low in Canada, while, on the contrary, interest rates are high in Canada. The difference with the United States is larger. That is what has to be looked at, especially concerning short-term rates. People should not be misled on such serious concepts.

He talked about international finance and the fact they worry about a sovereign State of Quebec that would be "crippled with debts", in the words of the hon. member for Bonaventure-Îles-de-la-Madeleine. If Quebec can be said to be crippled with debts, how would he describe Canada's current debt situation? Canada is, with Italy, one of the countries most heavily in debt. Actually, Italy's foreign debt is much less serious than Canada's or even Quebec's.

What international financiers will look at are the results. That is what they will look at. His colleagues and himself-well maybe not himself because he will continue to live with us in Quebec, especially since we sense a very strong change in attitude on his part. As I was saying, his colleagues will have to take their responsibilities and consider an economic partnership because it is not true that Ontario will refuse to trade with Quebec. That province has a $3 billion trade surplus with Quebec. I cannot imagine Toronto business people-who are supposed to be very rational-saying that even though they make money, they no longer wish to do business with Quebec.

The Liberals will have to explain to their constituents that it could be a very interesting free trade zone. It is a forward-looking and constructive option. Our constituents expect us to have a sense of responsibility, to stop playing politics like we would like to do sometimes.

The financial community will indeed look very carefully at what is going on in Quebec and in Canada compared to international markets.

My main concern right now is that Canada is probably ill-prepared to face what may happen over the next year. Perhaps it will be Canada's credit rating that will suffer the most, which is not desirable. As Quebecers, we do not wish to see Canada find itself in a difficult situation because it will be our neighbour and we want it to be economically healthy. The member for Bonaventure-Îles-de-la-Madeleine certainly wants the same thing we do.

We are told that 80 per cent of the present deficit is due to structural problems. I will talk about structural problems and about reports on competitiveness that were prepared by people who are not necessarily members of the Bloc Quebecois, but are world renowned specialists. They tell us that we have weaknesses in adjusting rapidly to the modern context. Problems in manpower training were also pinpointed. All Quebecers, federalists and sovereignists alike, think Quebec should have jurisdiction over manpower training, but no. Simple and basic demands like that are just ignored.

That is why more and more Quebecers, including those in the riding of Bonaventure-Îles-de-la-Madeleine, have undertaken a positive thought process, and, within a year, will make a decision to improve their economic situation, both for them and for future generations, in order to build a thriving Quebec, next to countries who hopefully will also prosper, Canada and the United States.

[Budgetary Policy, November 28th, 1994]

Mr. Speaker, it gives me great pleasure to teach the hon. member for Bonaventure-Îles-de-la-Madeleine some economic concepts.

[Budgetary Policy, November 28th, 1994]

I hope that they will see fit to deal with the top of the pyramid and address the squandering going on at that level.

I see that I have only a few moments remaining in my speaking time. Let me briefly touch on taxation, just to say that a major confidence-building factor is missing at present. When you look at outstanding tax accounts totalling $6.6 billion. But 82 per cent of this amount is owed by 25 per cent of the taxpayers who have tax accounts oustanding. Yet the Minister of National Revenue is pleased to tell us: "We are much more efficient; we recover a much greater number of accounts". What he does not say is that they go for the small accounts. The large ones, they do not touch them. In the private sector, we go for the big accounts, we do not deal with the small ones first. Efforts are made in both cases, but here you are less efficient; you start with small accounts and large accounts. After a while, you have all kinds of problems on you hands. I am not talking about accounts in dispute, because then you could add another $2.5 billion. The Department of National Revenue generally wins most of these disputes. This means that, eventually, a few more billions can be expected to be recovered.

To this we can add the GST with overdue accounts in excess of $1 billion. The total amount owed the government is close to $9.5 billion. Why? Because people do not trust the government, because they feel that they are paying more than their fair share and are increasingly turning to the underground economy. More and more of them are rejecting and revolting against our tax system. What are they doing about this? Nothing yet. They do not even have the will to tackle the problem. They do not even talk about it. That is unacceptable.

The Bloc Quebecois will include its suggestions in the report to be submitted by the finance committee. They must remember one thing: They were elected to make decisions. They must stop hiding behind all the consultations they are holding to help them make decisions. They are paid to make decisions. The Minister of Finance was appointed by the Prime Minister to make decisions. He is not going to hide behind committees that will support his comments or tell him not to do this or that; it is up to him to decide. In any case, people will soon get fed up with these phony consultations. People are very skeptical, and with good reason, as we will see if they listened to what the people they consulted had to say about RRSPs.

I will close by addressing the issue of competitiveness. I will limit myself to four points out of many. We have our strong points, the areas where we rank in the middle, and our weaknesses. Since we want to improve, let us look at the weaknesses. Since I have only two minutes left, I will close on this. Some companies do not provide their employees with adequate training. This sounds to me like a training problem. The education system is not in line with the business world. This also sounds like a training problem. We are told of weaknesses in our education system. True, it is a provincial jurisdiction. Quite so. But here the provinces get money in the form of transfer payments. Suddenly they are told that their aid will be cut and that their students will have to go into debt. The government can no longer afford it. Students will have to go into debt. In addition to having to bear an incredible tax burden in the coming years, they will have to go into debt personally to pay for their own education. We benefited from the education system; now it is their turn to pay the bill for it and pay and pay and pay.

They take us for a bunch of idiots. What they are trying to do is unacceptable. It amounts to several billion dollars. Besides, we have learned that they even want to touch the tax points which Quebec acquired in the past; they will find obstacles in their path. We will block their way.

Two more points. We hear that governments have trouble adapting to new economic realities. In the present context where we must adjust quickly to markets, we need flexible, responsive, efficient political entities. What we have here is a political system that is completely paralyzed and has trouble moving; it consults and consults. How many consultations has it done? The Liberals are going over the same ground as the Conservatives did in 1984, with consultations on the same subjects. Why? Because finding a consensus in Canada is very difficult.

And then they tell us that we are out-and-out demagogues when we talk about sovereignty. It is a model which they should consider seriously. If they were honest, they would tell people across Canada that it is an option worth considering. I conclude with this: People are ready to make sacrifices, to the extent that they feel it is fair and everyone is doing their share, starting with the top of the pyramid. In terms of spending, this is the top of

the pyramid and we must cut spending. When that happens, people will really start to gain confidence.

[Budgetary Policy, November 28th, 1994]

Mr. Speaker, before going on to my speech as such, I cannot help answering the Liberal member who just concluded by saying that we should be a "Bloc Canadien"-what a slogan. Maybe he should take the time to think about why we are proposing sovereignty for Quebec and why we were elected and realize that it is probably in the best interest of Quebec and Canada.

I would like him to take just a few minutes to think about it and see what kind of partnership there could be in future and maybe then he would start thinking more positively about it. Now, to reassure him, I entered politics for two reasons. Of course, I wanted to help Quebec fulfil its rightful destiny as a sovereign country, but I also wanted to improve the government's finances.

It is not true that we will continue to go deeper into debt year after year, because whatever happens on the political front, we must improve the government's finances in the short term. The Minister of Finance has not done much about it in the past year. When he presents his next budget, I expect him to rise in this House and say, "We have achieved our forecast; we will end the year with a deficit of $39.5 billion". And then you will see his colleagues rise and give him a tremendous ovation.

They will be proud to have such a high deficit, although the deficit was $41 billion last year and only the surplus in the unemployment insurance fund has made it possible for them to reduce the deficit this year, and by so little, $2 billion, just from the UI fund. Those people will be happy, they will be proud, they will feel like they are in control of the nation's finances.

To give an idea of the size of the problem, let us talk about the OECD. You know, the OECD compiles statistics. It is not the Bloc Quebecois but a very reputable economic organization and I want to give you some statistics from the OECD. You know, it is not true that we can explain what is going on here by saying that it is happening throughout the world. That is not true.

Canada's indebtedness is much greater than other countries'. I tell you that the net debt is rising much faster here.

Between 1985 and 1993, the ratio of the net debt over the GDP for the governments of OECD members, that is 15 countries including the G-7 nations, increased by 22 per cent. This is already pretty serious. However, for Canada, the increase for the same period was 77 per cent. I can just hear the Liberals say "There you go; this is what the Conservatives did". Well, let us look at another statistic. The national debt essentially increased between 1970 and 1985. If we use the same indicator again, that is the ratio of the deficit over the GDP, we went from a surplus of 0.3 per cent in 1970, to a deficit of 8.7 per cent in 1985, at the end of the Liberal government years.

This was an unprecedented high which has not been equalled since. Now that the Liberal Party is back in office, its Minister of Finance launches an unprecedented consultation exercise to say that the government will hit hard. That consultation might be something new, but the message conveyed is certainly nothing new. In the two years preceding the arrival of the current finance minister on the scene, his predecessors said the same thing, only to end up with timid measures in the budget itself.

For all sorts of reasons, people are skeptical about the minister announcing this year the cuts which he intends to make to reach his objectives. Indeed, there is such a thing as a political context and the government must show that the federal regime is good and that it benefits every Quebecer. Consequently, the Minister of Finance will once again only announce timid measures to slightly reduce the deficit.

But wait until after the referendum. This is when the major cuts will be made. Last Friday, I listened with great interest to the finance minister, who was Jean-Luc Mongrain's guest on his very popular program in Quebec. The Minister of Finance, who looked very serious and deeply concerned by the magnitude of the deficit, said: "This time, Mr. Mongrain, we have no choice and nobody will be spared". I will come back to this "nobody will be spared" later.

Now, all of a sudden, he says that we must reduce the deficit in order to improve the employment situation. He is saying the exact opposite of what his party promised during the election campaign. I must admit that I have not followed, day in and day out, all the statements made by the Liberals, but I seem to remember what the public has remembered, and that is the slogan they used and the fact that they were always talking about "jobs, jobs, jobs". They assured us that job creation would restore dignity. They have now found out that they must first deal with the deficit, and that will help to improve employment.

That sounds like what the Conservatives used to say. That is what the Minister of Finance used to say, and since the Minister of Finance is still at the helm, whether he is Liberal or Conservative does not change anything, the statements are all the same and Paul Martin, as Minister of Finance, is making the same old statements. Nothing has changed, except maybe for the colour of the cover page. He now tells us that, yes, these are the measures the government has to take.

The same thing goes for the monetary policy. It is amazing to see how members change their minds when they change sides in this House. The Liberals ferociously criticized the monetary policy put forward by the Conservatives, but now that they are in office, they keep quiet on this issue. They keep going in the same direction as their predecessors; all they have changed is the director, the Governor of the Bank of Canada, to replace him by someone who thinks alike.

Some experts, including Pierre Fortin, an economist at UQAM whom a Liberal member quoted extensively earlier, have told the finance committee that the government still has some leeway to toy with the short-term interest rates. The inflation rate is low, very low, in Canada, and the difference between the rates in Canada and the United States is still relatively high, compared to what it could be. Inflation is beginning to be felt a little more in the United States.

But we keep following the same restrictive monetary policy. Worse, we are now being told that both policies, the monetary policy and the fiscal policy, will be restrictive. This monetary policy, and especially the short-term interest rates, give you something to think about. But now they have gone back to their offices at the Department of Finance, and that is it.

Earlier, a Liberal member said, and this is typical, that economic growth would take care of everything. There is something fundamentally wrong about this reasoning. The figures we get from their own Department of Finance tell us that 80 per cent of the current deficit is due to structural problems. The structural unemployment rate is 8.5 per cent. This means that even with strong economic growth, the current deficit cannot be reduced by more than 20 per cent and the unemployment rate cannot be brought below the 8.5 per cent mark.

As far as structural problems are concerned, and I will get back to this later before I finish, the World Competitiveness Report provided some interesting information on Canada's competitive position and contained references to structural problems. I agree, these are complex issues which are not easy

to explain, but the people who are running the government should understand.

Here again, we see very little change from the previous government. So what is happening as far as the next budget is concerned?

I would like to comment briefly on the prebudget consultations. I was involved from the very beginning. I went on the tour of the Western provinces, and I wonder who was talking to whom. These prebudget consultations were planned some time ago, but the groups that appeared before the committee were informed only two or three days ahead of time. They appeared at the last minute and apologized, saying they had been invited on very short notice. How come? This was supposed to be the widest ranging consultation in the history of the Department of Finance, and people hardly knew about it. They were unable to make a good presentation, because they were pressed for time.

At this time of the year, the next budget is already at an advanced stage. One wonders how significant the committee's contribution can be, when we consider that from today onward, every day is almost a whole day too late. There will be a postponement until December 7. It could have been much later, but there definitely was pressure not to go any later than December 7.

I will now discuss the feelers put out by the Minister of Finance concerning RRSPs. It is incredible the kind of concern we are now seeing about RRSPs. All options were open, when I put the question to the minister on a number of occasions here in the House. Did he intend to tax capital accumulated in RRSPs? Reduce the maximum annual contribution? The total accumulated contributions? Not a word. The door is wide open.

One of Canada's weak points as far as its competitive position is concerned is its level of savings. In your first course in macroeconomics, you learn that one of the key variables that generate investment is savings. When you buy an RRSP, this is money you save which is then reinvested. If the Minister of Finance wants to play around with the savings of Canadians which are already very limited, we are not going in the right direction.

That is the signal he is giving people for next year. People will be concerned when it comes time to contribute to their RRSP. They will say to people who want to sell them RRSPs: "Yes, but if I put the money in, you say that it is a good vehicle, because it helps us improve our tax planning and defer paying taxes on our income until we are retired. But now, I am not so sure, because there are rumours the Minister of Finance is going to tamper with that". Even if he does not do it in the February budget, we have no guarantee he will not do so the year after. He should send a clear message to the public that he will not tamper with this vehicle and that it would be useless for him to do so. All he would be doing is siphon money out of retirement funds. At the present time we are borrowing, but this would drive us to borrow even more in the future.

What is going to happen when these people retire if there is less money in their retirement funds? What is going to happen? It will be a disaster. It is a very strange reasoning, especially when one considers that family trusts can defer paying any capital gains tax until the death of the last beneficiary, that is to say for 80 years if we limit ourselves to normal life expectancy. We are told: "No, we are not considering actualization every 21 years, as it was done previously. No, it is out of the question, it would be bad for the economy. It would serve no purpose". Yet, the government wants to impose it on individuals, middle-income taxpayers. They are told: "We are going to tax your future income right away".

There is a great lack of consistency there. This is a very skewed reasoning which will have to be explained. Of course, the government keeps the door open by saying: "Yes, we did not do it, but wait for the next budget. This is not too serious". We could have healthy consultations if people knew where we were heading. At present, everything is open, in any direction. It is not necessarily a bad thing to open everything for review, but when we look at the papers that the minister publishes, we see very strange things. Take fiscal spending for example, tax credits for charitable donations are considered almost like wasteful fiscal spending, when they are actually very good for the economy. They actually reduce the amount the government would otherwise have to pay. Expenses are only dealt with in terms of personal income taxes, not corporate taxes.

I would like to present a few statistics illustrating the depth of the challenge facing us since cuts are so often mentioned.

Let us have a look at the distribution of the population in terms of income brackets. This is based on income tax returns. About 20 million taxpayers file a return. It is rather shocking to see that 50 per cent of the population has an annual income of $20,000 or less; 50 per cent. If you go up to $25,000, you find that 60 per cent of the population has an income of $25,000 or less.

To balance the budget and bring the deficit under control, that means $2,000 for each and every person. Twenty million taxpayers at $2,000 equal $40 billion. Of course we could take the economic growth into account. However, we must keep one thing in mind, the interest on the debt is increasing because we are going deeper into debt. Every year, we must pay more interest. Economic growth allows us to generate additional revenues to pay increasing interests.

Now we are told that we must bring this problem under control, so the government targets the middle of the pyramid or the bottom half, where 60 per cent of the population is.

Cutting expenditures may affect everybody in pretty much the same way. But proportionally, it is those with an income of $25,000 or less who are going to be hit the hardest. You can see

right away that, if this is the way the government decides to go, it is going to be impossible, inhumane.

What is the alternative? Why not target the top of the pyramid? The middle class is not part of this picture yet, but if you want to go higher, you will find that 20 to 30 per cent of the population is in the $25,000 to $55,000 bracket. Right away, you can see what a huge challenge this is going to be; reduced spending alone will not be enough. We should take a look at fiscal expenditures. Now you should see how hard it is to get information. It is complex, it affects the economy, it hurts, whereas it does not hurt to attack the underprivileged, to cut benefits paid to the unemployed. They do not consume goods and services, therefore they do not contribute to the economy in the eyes of that party. Only the rich contribute to the economy. That is the myth. And the Reform Party is in total agreement. They think alike on this issue. They think that the rich drive the economy, not the middle class. This is a terrible thought.

[Budgetary Policy, November 28th, 1994]

Mr. Speaker, I listened to the Reform member mention the wealth in family trusts and that it would amount to taxing wealth, as if wealth was a concept that applied only to the rich, because we could not care less about the wealth of the poor. Therefore, it is not a problem to tax them, increase their burden, reduce the services provided to them.

My question is this: He knows full well that the Bloc Quebecois has been asking for information on family trusts, that is to say that family trusts should declare their assets, rather than only their revenues. Why is he opposed to the finance minister saying in his next budget: This year, everybody with a family trust will have to declare the assets in the trust. How else can he justify his being opposed to this but to preserve the freedom of those who have family trusts? How could such a measure be catastrophic for these people?