Ray Speaker

[Supply, May 2nd, 1995]

Mr. Speaker, very briefly, number one, I would fight and stand shoulder to shoulder with Quebec and any other province in this nation so that we are all treated equally. That is a very important principle.

I had the opportunity over the years to negotiate with the federal government and stand shoulder to shoulder with ministers from Quebec to fight for our fair share of health payments: social service payments, housing grants and moneys from the federal government. The province of Alberta and the province of Quebec at the negotiating and bargaining table over and over again, and I can say this without exception, always had the same point of view. We were partners in negotiating with the federal government to get our respective share of either federal funds or legislation that was required to carry out our responsibilities.

We were never in conflict with our objectives. That was part of the federation that was very important. A part that is often overlooked by Quebec and by other people in Canada is that Quebec did have allies in Canada fighting for the same cause and the same purpose. That should continue in this federation. I would be disappointed if it did not.

[Supply, May 2nd, 1995]

Mr. Speaker, in response to the hon. member I want to say this. In this federation we are trying to build it is time that we start to trust our partners. The partners we must trust are the provinces. The 10 provinces of Canada must be trusted to take on responsibilities to meet the needs of their citizens, determined by the priorities of the citizens in their respective provinces.

I have witnessed in my political career for 32 years situations where provinces often had a greater care and a greater compassion than the federal government with regard to the priority needs of the provinces.

When I come to this House it is disappointing to hear someone who has been around this assembly for some period of time and to hear the Liberal government, which thinks it has all of the answers and wants to centralize everything in a centralized bureaucratic system, tell the provinces what to do. They think

that under that system they are going to meet the needs of the citizens. We will not build federalism with that kind of mistrust.

[Supply, May 2nd, 1995]

Mr. Speaker, I am glad to have the opportunity to speak to the Bloc's motion concerning the Canada health and social transfer.

While its wording is a little extravagant and its claim somewhat exaggerated, the motion's analysis of the CHST that it does not go far enough toward the decentralization of health, advanced education and social assistance is one that we as Reformers could agree with.

Like the Bloc, Reform believes that the federal government must give the provinces, which have exclusive constitutional jurisdiction over the programs, more freedom to design and administer social programs. We share the Bloc's belief that programs of this nature should be delivered by levels of government closest to the people rather than by distant federal bureaucrats. Unlike the Bloc, however, Reform differs in how to decentralize the powers.

The Bloc has only one solution to our nation's problems, separation, but we in the Reform Party do not want to destroy Canada. We want to build it.

Reform believes that the solutions to our problems lie not in separation but in legislation and negotiation. Our Constitution already grants us the flexibility we need. Over its first 128 years the Canadian federation has proved to be extremely malleable. It has bent and reshaped itself to meet the needs of the day. Even in the absence of full scale constitutional reform I am confident our federation will adapt again to the needs of circumstances in the next 128 years.

In defence of the government, the Canada health and social transfer is a modest example of rebalancing the federation through legislation. While the government's primary motive in creating the Canada health and social transfer was to save money. a secondary intention is undoubtedly to further decentralize programs. The most promising element of the CHST is the government's decision to remove all federally imposed restrictions on welfare funding except the residence requirement.

By shifting to unconditional block funding the federal government gives the provinces more freedom to experiment and to innovate. It will allow the people of each province to decide how best to deliver the services the citizens want. Unfortunately this decentralizing thrust is not extended to health care and advanced education, the other two components of the Canada health and social transfer.

The federal government's refusal to amend or reinterpret the Canada Health Act and the pooling of health, welfare and education funds into a single transfer payment give Ottawa an even bigger stick with which to beat the provinces into submission. It is a backward step that will make it more difficult for the provinces to control their health care costs.

This aspect of the Canada health and social transfer is a perfect example of the federal government trying to have its cake and eating it too. In the budget the Liberal government unilaterally reduced its cash transfers for health, education and welfare by some 40 per cent, yet at the same time it is continuing to insist that the provinces play by its rules.

This just is not right. If the federal government wants to set the ground rules in areas of provincial jurisdiction then it has to pay its share of the burden. If it is no longer willing or able to put up the dollars, which describes the present situation in Canada fairly accurately, it must be prepared to step aside and let each province decide how best to provide for its citizens' health care needs.

The truth is that the federal government cannot afford to use its spending power the way it did in the 1960s, the 1970s and the 1980s. The country is broke. It does not have the funds to deal with the programs as it has in the past. The federal debt, as we all know, is somewhere around $550 billion.

Just as important in political terms, further centralization is a non-starter all across Canada, not just in Quebec as the motion indicates. People are demanding the power and decision making be pushed down to the lowest level of government, to the grassroots. The Liberals are strong believers in central government. We can believe in rigid national standards but we can simply no longer afford them either fiscally or politically. Nor are they administratively responsible at this time in our history.

There is an alternative path we can follow toward a more flexible and decentralized federation which will offer provincial governments the freedom they need to make the choices they want for their respective citizens. To illustrate the alternative vision I look at the Reform taxpayers' budget that was presented to this assembly.

An amazing fact that no one picked up on in the budget is that the Liberals, the party of compassion, cut almost twice as much from the programs that make up the Canada health and social transfer as Reformers recommended in their alternative budget. In our taxpayers' budget we recommended reductions of $800 million in health, $200 million in education and $2.5 billion in welfare, for a total of $3.5 billion of expenditure reductions over a three-year period. In contrast, the government's budget reduces the cash transfer components of the Canada health and social transfer by $6.6 billion over the same three years. Who

has the most compassion in terms of the social needs of Canadians?

What distinguishes our proposal from the Canada health and social transfer is the decentralizing aspects of the taxpayers' budget. I would like to talk briefly about one element of the decentralizing initiative, the unconditional transfer of tax points to the provinces, which the budget of the Liberal government denies the provinces and Canadians.

The most significant difference between the CHST and our own Reform proposal is that we would transfer additional tax points to the provinces, whereas the Liberal budget would not. This is important for two reasons: first, because it provides increased flexibility and, second, because it ensures the stability of funding for the provinces.

On the first point, we all realize that the federal government can no longer continue to spend money it does not have. We in the Reform Party have openly acknowledged that and have stated publicly that as part of the Reform's deficit elimination plan we would cut $3.5 billion over a three-year period in the areas of health, education and welfare. Reformers also realize that if provincial governments are to absorb reductions of this magnitude they will need the freedom to innovate and to discover more efficient ways of delivering services.

That is why our tax point transfer is unconditional, with no strings attached. It is designed to provide maximum flexibility to the provinces of Canada.

On the second point, if provincial governments are to effectively provide these services then they must be given the resources to fulfil their responsibilities. They must be able to count on stable, long term revenue resources. Yet under the CHST this security does not exist. The federal government can unilaterally, at any time, reduce or alter the transfer to the provinces. This provides provincial governments with neither stability nor security.

Under the Reform's tax point transfer alternative, provinces would no longer have to guess how much Ottawa was going to send to them; they would know. This would allow them to extend their planning horizons, confident that money is going to be there. In addition, since the value of the tax points grows along with the economy, Reform's proposal would effectively increase funding for these programs over the medium and the long term.

In conclusion, Reform and the Bloc agree on the need for greater decentralization of powers to local and provincial governments. We also agree that the government's new Canada health and social transfer does not adequately meet this need. However, unlike the Bloc, we do not advocate destroying the country; we advocate rebuilding it. I would hope the suggestions we offer as the Reform Party here today, including the concept of transferring additional tax points to the provinces, will mark a positive beginning in this rebuilding process in our Canadian social fabric.

[The Economy, April 27th, 1995]

Mr. Speaker, on the surface the Canadian economy appears to be sailing smoothly. Yet, as the Moody's downgrade revealed, the buoyancy is deceptive. Three indicators are pointing to rough seas ahead.

The first is our sinking dollar. Since the release of the government's first budget our currency has lost more than 20 per cent of its value versus the yen and the mark. The Bank of Canada has only kept it afloat through high interest rates.

However, it is these high interest rates which have knocked the wind out of our sails, housing sales, that is, which hit a 13-year low in March.

While the combination of high interest rates and a depreciating currency roil the waters, the third storm cloud has appeared on the horizon. Inflation is re-emerging which will prevent the Bank of Canada from offering the interest rate relief we all need as Canadians.

The message is clear. Unless the government charts a new fiscal course for deficit elimination, not deficit reduction, our economy will end up on the rocks.

[The Economy, April 24th, 1995]

Mr. Speaker, some of those are short term goals that certainly do not fit a long term fiscal plan which must deal with the problems of Canada.

The Prime Minister should recognize that since the government came into power, higher interest rates have hammered the housing industry. Resales for March were down 42 per cent from a year ago. At the same time a rising inflation rate of some 2 per cent for the month of March is forcing the Bank of Canada to continue to keep interest rates relatively high.

Does the Prime Minister not realize that his government's weak fiscal policy is forcing the Bank of Canada into the impossible position of trying to support the dollar, contain inflation and bring down interest rates all at the same time?

[The Economy, April 24th, 1995]

Mr. Speaker, the government keeps telling Canadians that everything is okay yet in light of Moody's downgrade it should be obvious it is not.

If the government's fiscal plan is so good, then can the Prime Minister tell us why since the government's first budget interest rates have risen by more than 400 bases points? Why have five-year mortgage rates risen more than 2 per cent costing homeowners an extra $300 per month on a $100,000 mortgage? Also, why has the dollar lost over 20 per cent of its value versus the yen and the mark?

[Budget Implementation Act, 1995, April 6th, 1995]

Mr. Speaker, I am glad to have the opportunity to speak to Bill C-76, the budget implementation act.

My Reform colleagues have already addressed the various components of the bill. I would like to broaden the focus and look at the budget as a whole. I want to go through the Liberal government's what I call smoke and mirrors show or budget and show Canadians exactly what was cut in the budget and where it was cut.

Members of the government are misleading the people of Canada in several very important aspects. They are being dishonest in selling the budget. To date they have got away with it. Unfortunately Canadians have not recognized what has happened.

Today I will expose two blatant mistruths I believe are in the Liberal budget and have not been clearly defined to Canadians.

Canadians have been led to believe this was a tough budget which cut spending some $25 billion and that provinces got off easy relative to the cuts the government made in its own backyard.

Reform announced its plan to balance the budget by 1998. We told Canadians in order to do this we would have to reduce spending by some $25 billion, $15 billion of which would come from social program spending.

What was the Liberal reaction to this? The Prime Minister said such a plan would throw Canadians into a deep recession or perhaps a depression. The finance minister called it fiscal savagery and said our plan would gut the nation's social programs. The Minister of Human Resources Development said we would be blow torching the poor.

One week later the Liberals released their budget. On page 65 it says expenditure reductions due specifically to the actions in the budget total $4.1 billion in 1995-96, $9.3 billion in 1996-97 and $11.9 billion in 1997-98. In other words, $25.3 billion would be in spending cuts.

Clearly there is some double talk. When Reform proposes $25 billion in fiscal spending cuts it is fiscal savagery which will hurl the country into depression and throw widows and orphans out on the streets. When the government makes the same proposal it is acting in the best interest of Canadians. It is acting in the best interest of the country. It is being tough but it is being fair. Cutting the deficit is said to increase economic growth in the long run.

The government is not completely hypocritical when it is doing this. It does not actually cut $25.3 billion. It wants the financial markets to believe this, especially Moody's which is still trying to decide whether to downgrade Canada's credit rating.

The truth is these are $25 billion in what I call make believe cuts. They are cuts to money that was never spent and will not be spent. The Liberal budget makes real spending cuts of only $15 billion. This explains why Reform Party's $25 billion in cuts in the taxpayers' budget will eliminate the deficit in three years and why the Liberal budget will leave us with $24 billion of deficit. Clearly the budget was not as tough as the government would have us believe it was.

The second mistruth is that government cuts in its own backyard first and does not offload its deficit problems on to the provinces. Is that true or not? Let us look at it.

It says this on page 65 of the Budget Plan:

The expenditure cuts fall primarily on federal government operations, rather than transfers to provinces or to households-demonstrating that the government's priority has been to get its own house in order first.

Let us look at that statement. Is this true? Do the provinces get off lightly in comparison to other cuts in the budget? The answer

is no and I would like to explain why. Let us look at how much was really cut from the provincial transfers.

On page 51 of the Budget Plan, it shows total transfers falling from $37 billion in 1994-95 to some $34 billion in 19997-98, for a reduction of approximately 4 per cent. This is less than cuts to other areas of spending, which are reduced by some 7 or 8 per cent.

What is hidden in these numbers is the fact that tax point transfers were included in the calculation of the value of the transfer. This is completely misleading to Canadians and is a misleading statement in the budget.

These tax points were given to provinces in 1977. In that year, the measure affected the budgetary position by creating a one-time reduction in revenues. Since that time, these tax points have not added one cent to the annual deficit. They ceased being a budgetary item.

If one looks at the 1994 budget, one will not see any mention of tax points. Indeed, one will not see them in any other budget since 1977. They were included this year solely to confuse Canadians so that they would not realize the magnitude of the cuts that were being made.

Since we have peeled off this tax point veneer, what lies underneath? What is the real truth? Total cash transfers to provinces, which include payments for equalization, health, post-secondary education and welfare will be reduced from $25 billion in 1994-95 to $20 billion in 1997-98.

This is a reduction of $5 billion or 20 per cent. Compare this to cuts being made in two other major areas of spending. The $38 billion in transfers to persons were virtually untouched being reduced by only $500 million, a minor amount.

The $52 billion in departmental spending, which fell under what is called government's program review, will be reduced by a little less than $10 billion or 18 per cent. Clearly the provinces did not get off easy in the budget. They were the biggest victims of the budgetary cuts. They took the major hit.

What is even more amazing is how much was cut specifically from health, education and welfare, the three programs that have been folded into what is now called Canada health and social transfer. Cash transfers for these three programs will fall from $17 billion this year to $10 billion in 1997-98. There will be a reduction of some $7 billion. This represents a major reduction, a 40 per cent reduction in federal cash transfers for health, education and welfare.

Can members imagine what the Liberal opposition would say about a Reform government if it attempted to slash medicare by 40 per cent? This is what the Liberals have done and nobody has picked up on it. The Liberals will still paint the Reformers as fiscal savages. They should look at the brush themselves.

In closing, let me clarify the purpose of my remarks. My intention is not to say that deep spending cuts were inappropriate. To the contrary, the government's budget did not go far enough. There will still be a $25 billion deficit when this party leaves office. In other words, more remains to be done.

It is my sincere hope that once Canadians get beyond the government's smoke and mirrors, we will be able to begin a very serious dialogue with regard to fiscal policy. I hope over the next two to three years people will look at our taxpayers' budget and at the Liberal's budget and debate the strengths and weaknesses of both.

If that can be accomplished, if we can elevate the national debate, the country will be much better off.

[Health Care, April 4th, 1995]

The hon. member for Calgary Southwest.

[St. John's West, April 3rd, 1995]

The question as it is posed is out of order, as it is hypothetical. I will permit the hon. member to try to rephrase his question.

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

The hon. member will have the floor when we resume debate at the end of question period.

It being 11 a.m. we will now proceed to Statements by Members.