Doug Peters

[Publishing Industry, March 14th, 1994]

Mr. Speaker, the question that has been raised is interesting. The decision was made in 1989 when the leader of the Bloc Quebecois was in the cabinet. Maybe he has some special information on the deal that he would like to share with the House. That was when the situation arose and that was the responsibility of the previous government. If the member is looking for responsibility, look right in the front row of your own party.

[Publishing Industry, March 14th, 1994]

Mr. Speaker, there was a very complete statement given on the Gin question by the Parliamentary Secretary to the Minister of Finance. The member will find it on page 1838 of Hansard . To summarize, we had a legal responsibility to enter into this contract and it was done. It was left to us by the previous government.

What our government did was get a better deal. It improved the deal by putting in Canadian content requirements, author requirements and distribution requirements. It was a great deal for Canada.

[Supply, March 14th, 1994]

Madam Speaker, the question raised by the hon. member is an interesting one. We did face those questions squarely in the budget.

There are definitely spending cuts but there are also job creation programs. It was a balanced approach of both job creation and fiscal responsibility. It was done because that was the only way that one could achieve an adequate result in deficit reduction.

The Reform Party's program that simply slashes and cuts will not work because it will backfire and we will get higher unemployment. We need a combination. We need to get both the jobs to pay the taxes and an efficient government.

As far as providing targets for unemployment, that is an interesting proposal. It is very difficult to target that item. There are so many variables that enter into the unemployment numbers.

We are looking at an unemployment rate that has dropped marginally since this government took office, but it is still very high. If one adds to that the discouraged worker effects and the other effects, one will probably get an unemployment rate close to 15 per cent which is a terrible number.

The speed with which the discouraged workers return to the workforce is unknown. It is very difficult to forecast that number. Therefore we could have a sharp drop in the unemployment rate and still many discouraged workers or we could have the discouraged workers moving very quickly into the workforce and have rising unemployment even though job creation was growing at a substantial rate.

We do not have a target in that but my personal feeling is that the only acceptable target for any political party is that every Canadian looking for work should have a job available to them. That is a long way off but that is the political target.

[Supply, March 14th, 1994]

Madam Speaker, there are a number of items in the question.

On monitoring the revenue projections and the expenditures, this is done very easily by the publications put out monthly and quarterly by the Department of Finance. These are published and made available widely across the country. Any member can follow those projections easily.

The question of whether the revenue projections will be off track is a question that concerned us in the preparation of the budget. That is why we took a very prudent view of the forecasts this year. We took the lower end of the private sector forecasts. The private sector forecasts for this year ranged from 2.9 per cent to 4.3 per cent economic growth. We took a 3 per cent number in our projections and we did the same lower estimates for future years as well.

These are very prudent projections. These are taken at the low end. It is very likely that our revenue projections will be low, not high. It is very likely that our spending projections will be in line or lower as well.

As far as interest rates are concerned, the interest rate projections we used are again very prudent, we assumed higher than private sector estimates presented to us in December and since then by the groups of private sector economists. I have spent 27 years looking at interest rate forecasts. Believe me, if the hon. member would like to tell me exactly what interests

rates are going to be over the next 12 months, I would be glad to listen. If he did know he would not be sitting in the House. He would be out making himself a few million dollars.

I guess my message is we do not know what interest rates are going to be over the next year. Nobody does. We make a very prudent estimate of what they are. We have set aside funds to look after any errors on them. We will very likely come in on a deficit number well under the number we have projected.

[Supply, March 14th, 1994]

Madam Speaker, I welcome the opportunity to respond to the motion put before the House by the hon. member of the opposition.

Let me say that I appreciate the member's sincerity. But while his intent may be positive it seems that his view of the government budget plan, the range of economic challenges we had to address has been blinkered by deficit myopia. I say myopia because the real solution to Canada's debt and deficit situation will not come from short term and shortsighted hatchet work. Amputation is no way to restore Canada's fiscal health. We need a co-operative, consistent and comprehensive plan of action and that is what our February budget delivers.

The motion before us states baldly that "the budget plan of this government is not a solution to Canada's debt and deficit problem". It follows this up by urging four steps including a moratorium on spending such as the $6 billion national infrastructure program. I want to comment briefly on each of the unnecessary nostrums the motion advances. First let me step back and remind the House of the concrete plan for deficit reduction we have put in place.

There need be no question about our objective. Our goal is to eliminate the deficit. Our interim target is to reduce it to 3 per cent of GDP by 1996-97. The budget puts us on a course to meet that target. We will reduce the deficit to $39.7 billion in 1994-95, to $32.7 billion in 1995-96 and, with only moderate growth, to about $25 billion in 1996-97.

The motion before us intimates that these targets do not represent fast enough progress, but that view simply and dangerously chooses to ignore the destructive consequences that more drastic spending cuts would impose. Canada's economy is still in recovery. Unemployment remains unconscionably high. Consumer and business confidence, although improving since the government was elected, cannot be called buoyant. Industrial restructuring from the fisheries of the maritimes to the manufacturing heartland of Ontario to the farms and ranches of the prairies to the forests of B.C. remains a painful reality.

These are all part of the context within which our budget decisions were framed. These challenges demand that the government play its part in helping restore economic vigour, in restoring national confidence and job creation. They also demand that government continue to assist those in real need.

That is why our budget refused to take a slash and burn approach to government spending. That is why we are reallocating funding to the infrastructure program and to residential rehabilitation, activities that do not merely create jobs on their own but act as a catalyst to further job creation and renewed optimism.

The budget recognizes that sustained deficit improvement can only be achieved in a growing and healthy economy, an economy that is equipped with the skills and technology to meet and beat the challenges of global competition in today's information age. That is why the budget funds programs such as the youth services corps, the technology network and the engineers and scientists program that will help small business.

While the budget invests in jobs and renewed competitiveness it also applies, and I would like to underline this, the most significant net spending cuts of any budget in over a decade. We are reducing departmental operating budgets and extending the salary freeze for Parliament and the public service. The total savings from cuts in government operations will rise from $468 million in the coming fiscal year to $1.6 billion in 1996-97.

We are closing military bases and reducing other elements of defence infrastructure. Combined with the cancellation of the EH-101 helicopter program, savings over the next three years will total some $3.6 billion.

We are renewing our unemployment insurance system in order to make it more effective, more fair and more affordable. Savings here will reach $2.4 billion a year in 1995-96. We are also looking to change other aspects of Canada's social security system to produce savings of $1.5 billion annually in provincial transfers.

Yes, these actions will take time to achieve their full weight, but we make no apologies for refusing to rush helter-skelter into cutting simply for the sake of cutting. If that approach actually worked then the previous government's record would have been one of sustained deficit reduction instead of exactly the opposite.

It is the need for consistent, considered and co-operative action that explains why we have set future targets for savings in provincial transfers rather than imposing them overnight. Again this is a lesson that the previous government failed to understand. There is nothing to be gained by offloading the federal deficit on to Canada's provinces by unilaterally changing the structure of transfer payments the federal government makes to those provinces. That simply shifts the debt from the federal ledger to a provincial one.

Instead we firmly believe the two levels of government must approach their respective challenges through co-operation. That means consultation and deliberations before we act. This is the strategy the budget embraces.

I should also say that we are encouraged by the fact there is an unprecedented consensus today both nationally and provincially on the need to bring deficits down. Strong action is being taken across the country, and this will have a significant impact not simply on the federal deficit itself but on the national deficit overall. That in the end must be the ultimate goal.

Some people have said that we should simply cut spending by 5 per cent across the board. In a number of areas we went well beyond that and the results will be evident. There are other reasons why simplistic across the board approaches do not work. This ties right back to a fundamental principle of the budget's approach to deficit reduction. We do not believe that sustained success lies in treating symptoms that Canada needs to change.

That is why we have given notice of the need to modernize unemployment insurance and the federal-provincial social security system. We believe that a new design can be more effective and less costly. We have given ourselves and the provinces two years to succeed and have set out the minimum savings that must be achieved.

This needed change is not an option. It must happen and it will happen. There are due dates. There are deadlines. There are firm fiscal targets. This plan offers a real solution to Canada's fiscal challenges.

Let me emphasize this by drawing on some recent remarks by the Minister of Finance. He said: "We are not doing this simply to cut spending. We are doing it because Canada needs a new architecture for a new economy on the verge of a new century. But in the end the result is also going to be to get the financial monkey off our back. That is going to be one of the legacies of this Canadian government to its people".

To further explain our approach, I ask all hon. members to consider this. In difficult times would any sensible company manager simply cut operations across the board or would cuts be deeper in some facets of an enterprise and less in other areas of strategic importance for further growth? That requires prudent planning. It requires strategic analysis and sensible commitment, and that is exactly what the government has done in the budget.

I believe my remarks offer real reasons why the motion before the House is unnecessary and ill-considered. Let me just tie off some of the particular suggestions that the motion offers. It urges a moratorium on all new spending, such as the youth service corps and the infrastructure program. First, the motion fails to realize that virtually none of this is new spending. These actions are being funded by savings elsewhere or reallocation of existing funds.

That is not the real flaw in the suggestion. As I stated earlier in my remarks, such spending is a bottom line investment in job creation, restored confidence and long term competitiveness of our economy. Eliminating this investment would be a classic example of penny wise and pound foolish. It would hold back the economic recovery that will be essential to long term deficit elimination and debt reduction.

Incidentally those who would be hurt by such spending cuts would be Canada's young people and small businesses, communities that government and all Canadians should be doing all they can to nurture. I can hardly believe that punitive action here is what the hon. member really means by this motion.

The member's motion also proposes that the government establish effective spending caps. The budget by definition sets spending targets that represent the caps the government intends to apply to spending.

The previous government legislated a more formal cap process. This did not prevent it from falling substantially off its deficit track by tens of billions of dollars. Again the real answer to spending control is a consistent, comprehensive plan based on credible economic assumptions. That is what the budget delivers.

The member's motion also proposes that the government produce quarterly reports on the progress being made on deficit reduction. I am not sure if I understand or the member understands exactly what he is looking for. The Department of Finance already produces monthly and quarterly fiscal reports covering the most recent data available on revenues and spending. Perhaps he is not aware of that publication.

I should also point out that the Minister of Finance has committed to producing this fall a comprehensive statement laying out changes in Canada's economic and fiscal outlay. This is a major departure from the past and will help ensure that all Canadians have a clear understanding of our fiscal process and whether further action is needed.

Finally, the motion before us refers to committing to "corrective action using a spending contingency plan". I can see no reason why we need corrective action when there are no grounds to assume our plan will not deliver the objectives we have set out. The member may not be aware that we did build into our fiscal projections increased contingencies to ensure that our fiscal targets would be met.

If the member had been attentive, he would have realized that our revenue assumptions are very prudent indeed and that our interest rate assumptions are very prudent as well. The hon. member stated just a minute ago that political uncertainty is caused by elections. Surely the hon. member believes in elections. If we did not have elections none of us would be here today. However political uncertainty is certainly part of our democratic process.

In conclusion, all members concerned with regard to Canada's deficit and debt situation deserve an adequate response. It is a concern all of us in government share. That is why the government in its first budget took action that was both balanced and courageous, action that is delivering results now but also looks to the future, action that takes aim at spending where appropriate but also works to strengthen the economy and job creation.

More people working and paying taxes and a more efficient government are needed to reduce the fiscal deficit and that is exactly what the government delivered in its first budget. To me and to the government the bottom line is clear. We have put in place a budget plan that is credible, realistic and responsible, a plan that meets the needs of Canadians today and for our national future.

There is no reason for the motion with its pessimism, scare tactics and myopia to pass.

[Canada Oil And Gas Operations Act, March 11th, 1994]

moved that Bill C-6, an act to amend the Canada Oil

and Gas Operations Act, the Canada Petroleum Resources Act and the National Energy Board Act and to make consequential amendments to other acts, be read the second time and referred to a committee.

[Customs Tariff, March 11th, 1994]

moved that the bill be read the third time and passed.

Mr. Speaker, Bill C-5, an act to extend the general preferential tariff for another 10 years, received broad support during second reading.

This reflects, I think, a consensus within this House that Canada as a member of the international community of nations must continue to take an active role in advancing international economic development efforts.

I thank all hon. members for their informed commentary on this bill. As mentioned by an hon. member during second reading, although only one line in length, Bill C-5 has considerable impact through what it actually does.

To summarize, this bill will extend the tariff scheme that provides over 180 developing countries and territories with preferential access to the Canadian market. This is of direct benefit to the people of the developing world whose livelihoods are partly dependent on the performance of the often limited export sectors of their economy. Bill C-5, together with the related consultations on the structure and scope of the GPT program that this government will be undertaking over the coming months, reaffirms our commitment to encourage economic growth in the developing world.

Again I thank all hon. members for their support of this legislation.

[Customs Tariff, March 11th, 1994]

moved that the bill be concurred in at report stage.

(Motion agreed to.)

[Customs Tariff, March 11th, 1994]

Mr. Chairman, I am at a loss to see what further consultation we could have. If any standing committee would like to consider this, it could do so. It is perfectly natural for a standing committee to call it. It could call this question up and consider the GPT.

As far as consulting with the business community, yes indeed we have consulted widely and continue to consult on every issue that comes up with the business community that is affected. Any member of Parliament who hears from a businessman is quite free to bring that to our attention. I hope they will. They have done so in the past.

As a minister I cannot refer it to a committee. The committee has to ask the question and any committee may do so.

(Clause agreed to.)

(Title agreed to.)

(Bill reported.)

[Customs Tariff, March 11th, 1994]

Mr. Chairman, I would remind the hon. member that Mexico is now a NAFTA country and does not come under the GPT. It is under the North American Free Trade Agreement. Again let me stress that the GPT is only a minor part of our trade relationships. It is a minor part of our total foreign relationship with any country. Our foreign relationships with the developing countries are important through our CIDA grants, through our foreign missions and various groups. It is much more important to have close foreign relationships pursued there rather than through a GPT.

Only after all those other things have been done would the GPT be included with a major change. It could very easily be included. The legislation allows the changes to be made very quickly. It would not be effective to make a GPT change alone and say that is all we are going to do. We would want to do a lot of other things with it and there would be a lot of other questions.

I would suggest to the hon. member that the GPT at this level is low on our list of things in our total foreign relationships with any of the developing countries.