Herb Grubel

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Madam Speaker, I point out four facts to the minister about the unemployment insurance system. First, at the moment 23 cents of every dollar collected in premiums, clearly identified on the tax returns as premiums going to the unemployment insurance fund, are going toward fighting the general deficit.

Second, in 1997-98 the deficit of the general government is expected to be $17 billion. In that same year his budget document indicates that the unemployment insurance fund will run a $5 billion surplus.

That $5 billion surplus is of questionable appropriateness. I do not want to use the word legality. I have asked the unemployment insurance council what the law says. I did not get a clear cut answer out of this and therefore I will not use the word here.

I remind the minister the $17 billion deficit would balloon to $22 billion if this government behaves the way other governments behaved in the past with respect to the unemployment insurance fund and did not use a $5 billion surplus in order to reduce the general deficit.

During the very prolonged slump from 1990 to 1993 the accumulated deficit was $6 billion. According to his figures and the figures in the budget, the cumulative surplus accumulated will be $20 billion.

When is enough enough in order to cover for the contingency overcoming slowdown in economic activity, $20 billion in light of the fact that $6 billion was used during the prolonged, deep recession in the early 1990s?

The treatment of unemployment insurance funds at the moment is a ticking time bomb. If the minister is to be in this position come the next recession the general deficit will increase rapidly because of all the funds that have been devoted to pay the unemployed.

It is a two-edged sword. I do not believe it is in the interest of Canada to use an independent insurance fund for reducing general revenue in order to make it look good to avoid the necessary cuts all Canadians know have to be made.

I have another question for the minister. Following our earlier discussion, if I may summarize, there is $25 billion in extra tax revenue extracted per year at the end of this mandate according to his budget. That is exactly the amount by which the deficit goes down.

I ask the minister where the $14 billion in spending cuts went. He admitted it goes to paying more interest on the debt. Then I reminded him that was exactly what I expected him to say. He insisted it was not the government's fault that the $14 billion was going to service the debt.

I have the numbers here. When this government came into power the public debt was $508 billion. By the end of the expected cycle in this budget, the debt will be $619.7 billion. If calculated correctly, that is $115 billion in extra debt accumulated by this government.

That is exactly where the money saved from all the spending cuts is going, just to service the increase in the debt which was almost completely due to the fact that this government delayed the cuts. That is the point.

I have a question which I am sure the minister has been waiting for breathlessly. The government ran on the platform of jobs, jobs, jobs. The media and I have been looking and looking in this budget. We could not find any reference that was in all the preceding budgets as far as I know since the end of the second world war about what will be the level of jobs in Canada over the budget cycle and what will be the level of unemployment over the budget cycle. We found it very strange that a central promise of the election campaign was not even mentioned in the document which incorporates the centre, the focus of this government's program to deal with what it considers to be the most important issue.

I wonder whether the minister could tell the people of Canada why there was no mention of job targets or unemployment rates in the budget, or maybe I just missed that.

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Chairman, I hope the people of Canada will begin to realize that all of those painful spending cuts were used up to pay more interest.

Was the higher interest on the debt which was inherited or was it on the debt which was created by delaying the spending cuts? That is what I was driving at.

The Liberals inherited a certain debt which had a certain cost. However, that cost has risen by $14 billion. Why did it increase by $14 billion? It increased because the government added to the debt when it simply slowed down the rate at which it cut its expenditures.

I can understand all the political rhetoric about setting targets and so on, but what this minister has just admitted is that $14 billion increase in interest he had to pay by taking it out of the hides of Canadians is due to not having quicker targets. That is the criticism the Reform Party has made of the approach of having targets that are too low. If the same cuts had been made more quickly all those cuts would now have produced a balanced budget.

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Chairman, I thought we would keep it between two fellow economists. I am very disappointed at receiving such an unsatisfactory answer.

The hon. minister cannot deny that the government plans two years from now to have a budget which will benefit from taking away from Canadians, partly through economic growth, partly through gasoline tax increases and other surcharges on corporations, another $25 billion. At the same time, that increase has done nothing but matched the reduction in the deficit. On top of that, $14 billion less will be spent on government programs in that two-year period.

I ask the minister again, where is that money going?

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Chairman, I give up. I am obviously not going to get an answer that I think the workers and employers of Canada want to know. What will be a target for the accumulation of those funds? I never get an answer to that question.

I would like to turn to another one. Between 1993-94 and 1997-98 the deficit in Canada will have gone down by exactly $25 billion. I congratulate the government for this achievement. However, I find when I look at the extent to which revenues increased in Canada, including those coming somewhat questionably from the unemployment insurance fund, revenues during this period will have also increased $25 billion. Part of that increase has been taking place as a result of 22 separate and different tax increases.

In other words, the government over its mandate is planning to reduce the deficit by an amount exactly equal to the amount of increased taxes extracted from the people of Canada.

Whenever I tell this to Canadians they say that they are horrified. They say: "What happened to all the spending cuts that the government has undertaken that are hurting me so badly?" I say: "I looked in the budget. There were $14 billion worth of spending cuts". They say: "I don't understand this. What happened to those spending cuts? How come they did not result in a lowering of the deficit? Where did it all go?"

Please answer to Canadians what happened.

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Chairman, it is just nonsense when the minister says that he does not know what the income and outgo will be because the best he can make is in the budget. The best guess is that by the end of this budget cycle there will be a cumulative surplus of $25 billion. I am not be right on $25 billion. Maybe it is only $15 billion.

I ask the minister again, will it be $15 billion? Will it be $20 billion? Will it be $50 billion? At what point will the government go back to the tradition of the past and say the accumulation is large enough and lower the contribution rate? What criteria is the minister offering? What hope can he hold out to employers and highly taxed workers? When can we expect this cash cow to stop being used for reducing the general deficit?

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Chairman, I did not hear about any systematic objective measure being put forward for the workers who are complaining about this regressive job-killing tax. When is the government going back to the system that existed since the inception of the unemployment insurance system, namely, that the premiums would be lowered in order to limit the accumulation of funds. How big exactly does the minister think this fund should be allowed to grow?

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Speaker, it is my understanding I have about 20 minutes to question the minister on this budget. I would like to ask a number of precise questions which will require precise answers. I do hope that when I ask my first question the minister will have the courtesy of not taking the remainder of the time to prevent me from asking other questions. I hope we have this understanding, otherwise I will be forced to give a speech which would not be particularly productive.

I know how responsive, intelligent and well informed the minister is, especially since the Deputy Minister of Finance is sitting next to him and can help him with technical issues.

I will begin with one of the most puzzling treatments in this budget, the issue of the revenues gained from the unemployment insurance fund. We all know that the unemployment insurance fund was set up as an independently functioning system. The requirement was that during periods when the economy had slackened there would be an opportunity for the revenues to be smaller than the expenditures and for it to run a deficit. The cumulative deficit would then have to be eliminated when there was economic prosperity. Over time this account is to balance.

The question arising from these budget plans is that since 1993-94, the beginning of the mandate of this government, projecting forward to 1997-98, the end of this budget's cycle, there is a projected cumulative surplus in this fund of $23.1 billion. I am not entirely sure about the treatment of the accumulated deficit in the past, but it was clearly $6 billion which I think will come to $17 billion but I believe some of that $6 billion had already been repaid earlier. Therefore, we ended up with, let us say, a planned surplus of $15 billion. That $15 billion is clearly a very large sum relative to the total expenditure of the entire fund. In fact it covers practically one year's outlay.

I would like to point out one other fact. Between 1996-97 and 1997-98 budgetary revenues of the Government of Canada are planned to increase by $6 billion. When these are broken down we find that $5 million of that comes from the surplus generated by the unemployment insurance system. In other words, this is an improvement in the deficit, a moving toward the target of 2 per cent of GDP being financed to the tune of more than 80 per cent out of surpluses generated by the unemployment insurance system, a surplus which is not by statute supposed to go toward financing general deficit.

Does the minister have in place any rationale for explaining why suddenly the unemployment insurance system should be made into a cash cow to improve the general deficit when clearly the legal system is, the system of the unemployment insurance system is, that it be balanced over the long run? What criteria is he using in deciding when enough is enough?

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Speaker, I cede my place to the hon. member for Red Deer.

[Borrowing Authority Act, 1996-97, March 21st, 1996]

No, Mr. Speaker.

[Petitions, March 21st, 1996]

Mr. Speaker, I have a petition signed by 3,000 of my constituents. They urge the government to appeal the verdict of not guilty against Ryan Reed for negligence causing death in the car accident on the Whistler highway in 1994 that took the life of Jason Wulf, Devon Hedin and Dale Ethier of Squamish, B.C.

My petitioners also urge this government to enforce stricter laws for drivers convicted of impaired driving causing death.