Mr. Speaker, I welcome the opportunity to speak in this debate on the prebudget consultations.
These consultations, held annually by the Standing Committee on Finance, are an opportunity for Canadian taxpayers to comment on the budget being prepared by the Minister of Finance. Individuals, groups and associations come to testify before this committee which in turn reports on the hearings and submits a report to the Minister of Finance. The minister is to examine the report and take into account the concerns expressed by the witnesses.
That, in a nutshell, is the normal and transparent process that is supposed to give taxpayers a chance to have some input as the Minister of Finance prepares his budget. Unfortunately, that is not what really happens. Actually, neither the committee nor the minister seem to be really listening to what taxpayers have to say. The minister's budget plans are prepared behind closed doors, in the course of limited and private consultations. In other words, the game is fixed.
Every year in February, the minister pulls out his budget like a rabbit out of a hat. Every February, it becomes increasingly obvious that all these public hearings and consultations held across the country are a sham and just a way to make the federal government look open and transparent.
The committee seems to draw its inspiration from what is said by the minister during his annual visit. In fact, instead of reflecting the comments of a host of witnesses, the committee's reports, from which the Bloc Quebecois has always dissociated itself, more or less repeat what was said by the minister. In other words, the committee submits the minister's own recommendations to the minister. How is that for an open and transparent process?
Basically, the sole purpose of this exercise is to legitimize the actions and decisions of the minister. I remember the big show our millionaire minister put on when he was about to bring down his first budget in February 1994. On the news we saw the minister getting out of planes on to a windswept tarmac and telling taxpayers: "You see, I am consulting across the country, and it will all be reflected in my budget". Fat chance. The 1994 budget, the one in 1995 and the one next February are all concocted behind closed doors in those ivory towers, well away from those so-called public consultations.
Only a small group has a say in the process, and it includes the richest taxpayers in this country, who are of course friends of the minister and buddy-buddy with the big decision makers.
We have here a kind of mafia whose members all know each other and have certain mutual obligations. This inner circle controls, decides and leads the way while protecting the assets, money and profits of its members.
This regrettable tendency to give certain interests an edge is obvious from every decision made by the Liberal government and especially by the Minister of Finance. The minister shamelessly attacks the average taxpayer and lets the wealthy and large corporations get off scot free. And yet this government says it wants to act in a way that reflects the principles of justice and fairness. I am not so sure it is prepared to do so. It is clear that this
government favours the principle of letting the rich get richer and the poor get poorer.
I remember, for instance, the cuts the government made in social housing. As soon as we took our seats in this Parliament, we condemned the federal government's withdrawal from this sector and more specifically, its decision to withdraw from direct financing of the construction of new social housing.
When members opposite were the official opposition, they made a big fuss and condemned the inhumane and immoral policies of the Conservatives.
Despite the pleas of the ordinary folk needing public housing and the most disadvantaged, who, in most instances, are obliged to spend more than half their salary on housing, despite their pleas to the government, the knife continued to cut. The result is that the disadvantaged really need housing, and the provinces are left picking up the pieces left by the federal government's departure. This sort of behaviour is shameful.
The minister's guidelines remain unchanged. They are easily spotted. They are aimed directly at cutting the deficit on the back of the small and medium taxpayer, while the deficit is being dumped in the backyard of the provinces. You do not need to be a specialist to see what the government is up to. The deficit is the bugbear of the Minister of Finance, and he will stop at nothing to get rid of it. One of his preferred ways to reach this goal is to dip into the unemployment insurance fund, which both employees and employers contribute to.
The surplus in this account, called the Unemployment Insurance Account, will help reduce the deficit by $5 billion. These $5 billion have come out of the pockets of employees and employers and off the backs of the unemployed, and yet there has been no word about creating steady jobs.
This amount is planned for 1995-96 and for each of the coming years as well. It is a tax, a hidden tax. So now we can call unemployment insurance, deficit insurance. The aim of the plan has been totally changed, indeed twisted, by the Liberals.
In this regard, a task force on unemployment insurance set up by the Canadian Institute of Actuaries wrote in its report that since the UI program is financed entirely through employee and employer contributions, the current formula distorts the government's budget results.
In short, the CIA maintains that the UI account balance should not impact on the federal deficit, as is now the case. The surplus for the 1995-96 fiscal year is $5 billion. If we adjust the deficit to allow for this surplus, the budget deficit will be $37.7 billion instead of $32.7 billion.
The Liberals' decision to take money from this account is unacceptable. Discontent is simmering in several regions of the country. The workers feel that this money belongs to them.
The Minister of Finance himself admitted that the annual surplus was used to reduce his deficit, thus contradicting our dear Minister of Labour who, not so long ago, was denouncing the federal government, who recently told Le Point that the government was setting this surplus aside and that it would not be used to reduce the federal deficit. What awareness. What a great demonstration of ignorance by our favourite minister, the Minister of Labour no less.
Another issue that is very much in the news these days is the old age pension. To reach its so-called target of reducing the deficit to $17 billion by 1997-98, the federal government will have to cut spending by several billion dollars. After presenting his economic and fiscal update, the Minister of Finance clearly expressed his intention of cutting old age pensions as part of the review announced in his last budget. Again, it is the little guys that will pay the price. The Bloc Quebecois is vigorously opposed to these cuts that will affect our seniors' living conditions.
It is clear that workers, the unemployed, seniors and the poorly housed will not be part of this circle of friends I referred to earlier. It is also clear that the federal government is not listening to these people or addressing their concerns. Except, of course, before an election, and especially before a referendum in Quebec. The Minister of Finance deliberately delayed his appearance before the finance committee this year, precisely because he did not want to upset these people. Political courage is certainly not a trademark of this government. There is a lack of backbone on the other side of the House.
Another Liberal strategy to reduce the deficit is simply to dump it into the provinces' backyards. The federal government is reducing its deficit by forcing the provinces to increase theirs. Instead of tackling the total deficit supported by taxpayers, it decentralizes it. The federal government's annual cuts of $2.4 billion in unemployment insurance have led to an increase in provincial welfare spending. And next year will be worse, with Ottawa making further cuts to UI totalling $2 billion.
Furthermore, cuts to transfer payments announced in the last budget will translate into a $2.5 billion shortfall to the provinces in 1996-97 and a $4.5 billion shortfall in 1997-98. Federal policies are forcing the provinces to either increase their deficit or reduce services provided to the public because cuts to UI make the provinces' expenditures go up while cuts to transfers make their revenues go down.
Given how dramatically transfer payments will be reduced, shovelling is hardly the appropriate word to describe what the federal government is doing with its deficit; it is literally blowing it
in the provinces' backyards. The government is no longer using a shovel, it is dumping the deficit by the truckload onto the provinces. But this approach does not seem to bother them. Quite the contrary; that is just what they wanted.
On this subject, I should read you a few lines of what Jean-Robert Sansfaçon wrote in last Saturday's edition of Le Devoir . Under the headline How clever'', Mr. Sansfaçon says that Ottawa is giving up its role as far as redistributing wealth is concerned. On the issue of budget management, and thus the deficit issue, he writes:The provincial government's task is never easy. Unlike Ottawa, the provinces cannot just decide what amount they want to put on the UI and pension cheques they write out. The provinces are responsible for most first line services, the main ones being health and education. At this critical stage of the deficit reduction effort, the provinces now see themselves forced to review the very framework of these services, a task the difficulty of which escapes federal mandarins''.
And he goes on to say that Pauline Marois was right when she pointed out that the future state of the province's finances is closely linked with cuts to federal transfers. While these cash transfer cuts may not affect Quebec, they will not result in a drop but rather in a shortfall of $650 million for Quebec next year.
Listen closely to this: "Note the intense lobbying effort carried out by elected representatives from the have provinces, through the federal cabinet, to get Ottawa to abandon its plans to use transfer programs other than equalization for wealth redistribution purposes. If Ottawa should give in to this pressure, budgets earmarked for social assistance and post-secondary education would not only be in free fall, as expected, but they would be distributed on the sole basis of provincial population. The Quebec government and every member from Quebec must oppose this Machiavellian way of redistributing wealth, since the per capita income is generally 25 per cent higher in have provinces than in have not provinces".
According to Mr. Sansfaçon, the UI reform in itself is a breach of the redistribution principle. The have provinces are the ones that stand to benefit the most, at least from a macroeconomic point of view, from the rollback of premiums paid by higher wage earners, who are concentrated mainly in have provinces, the integration of part time workers and the tightening of qualifying conditions.
The editorial writer of Le Devoir continues by saying that it is easy to identify the reasons why the federal finance minister is so optimistic in terms of meeting his goal of a $32 billion deficit for this year. He writes: ``Revenues are increasing, the clean-up in the departments has just begun, and most of the cuts were passed on to the provinces and to the UI account. Later, of course, pensions will also be targeted. The UI surplus alone will allow Ottawa to reduce its annual spending by five or seven billion, between now and the next recession, with no equivalent reduction in the contributions made. This is like a jackpot. This is another way, although certainly not progressive or productive, of collecting taxes''.
He continues in the following manner: "The more time goes by, the more the Martin method becomes clear. Ottawa will reach its budget goal without too much difficulty. That goal seems rather modest, considering that the way to meet it consists in forcing the provinces to tighten the belt of their people, forcing the unemployed to work, and forcing small businesses to pay for a UI program whose surplus will primarily be used to reduce the deficit. It was simply a matter of thinking about it".
Do we need to add anything more to an article that so clearly tells us about the intentions and the ways of the finance minister? Social justice and tax fairness are not compatible with the Liberals. Not everyone, and I am referring to the rich and the companies that get away with not paying any taxes, is being asked to contribute to the deficit reduction effort. The deficit is being reduced at the expense of the masses, and that includes the poor, the have nots, as well as the low and middle income workers.
It is the provinces that have to do the dirty work, since they are stuck with the every day reality and must provide the essential services to the public. Yet, in spite of cutting in the transfers to the provinces, the central government continues to impose its guidelines and national standards to the provinces. This becomes unbearable and unacceptable.
To counter the federal way of doing things, Quebec's finance minister, Pauline Marois, suggested two days ago to her federal counterpart that his government withdraw from the social assistance, post-secondary education and health sectors. Under Quebec's proposal, the federal government would give the province tax points instead of an annual cheque, which gets smaller every year.
An interesting suggestion, one I might even call it an intelligent one. The Minister of Finance is always being asked for suggestions, and he got one, but unfortunately for Quebec he clammed up afterward. A great pity, for everyone could have learned more about what to expect in coming years in those areas of activity.
Let us keep in mind that this suggestion would have allowed the provinces to do away with much of the overlap and would have given Quebec more leverage for creating an integrated job creation policy. In Quebec alone, duplications account for $3 billion annually, a real waste of money, but a waste that the federal government seems to absolutely insist upon.
The federal government's rejection of Quebec's demands is deplorable, since its role in these matters does not make much sense. It collects taxes, then it gives them back to the provinces, but sets certain standards for them. Before the referendum, Quebecers were promised change. Great possibilities were dangled before our eyes. This suggestion by Quebec offers an opportunity to fulfil those promises. But, unfortunately, the promises dwindled into meaningless noise.
The Bloc Quebecois has nothing against reorganizing public finances, but we do disagree with the approaches the Liberals are taking to that reorganization.
We have always asked the government to review the entire taxation issue, among others, in order to reach some form of equity. Far from complying, the Liberals are instead heading off in the opposite direction, as I have already shown.
My colleague from Saint-Hyacinthe-Bagot has brought to my attention the fact that, 40 years ago, 50 per cent of the taxes collected by the federal government came from businesses, and 50 per cent from individual taxpayers. Today barely 8 per cent comes from the business sector and the rest, 92 per cent, comes from the pockets of individuals. This is a scandalous and unfair situation, and what is even more scandalous is the federal government's lack of action to correct this totally imbalanced situation.
On top of the imbalance that exists between the corporate and the individual taxpayers, there are great injustices and inequities within those groups. Where businesses are concerned, the last federal list of those companies who paid no tax came out in 1987. No wonder it was the last one, since it was becoming an embarrassment to the government. The list included the names of more than 90,000 businesses that did not pay a cent in taxes. Not one cent. In 1990, according to the federal Department of Finance, 77,000 businesses that made a profit managed to avoid federal taxes.
The Bloc Quebecois has constantly asked the federal government to introduce a real minimum tax on corporate profits. The minimum tax is not aimed at increasing the tax burden of businesses. It is only intended to deal with profitable businesses that manage to avoid paying taxes altogether. It's purpose is also to be fair to businesses that pay taxes and, as good corporate citizens, do not try to evade that responsibility.
We see the same problem with individual taxpayers. The wealthy can take advantage of every loophole in the tax system and legitimate provisions such as tax shelters as well, to evade the obligation to pay their share of the government's revenue requirements. Such opportunities are of course not available to the average wage earner and the middle class.
The Bloc is asking the government to proceed with a complete review of the tax system, the purpose being to simplify and restore equity to the tax system by eliminating tax provisions that give big corporations and high income taxpayers an unfair advantage. The whole issue of tax conventions with countries that are considered to be tax havens should be reviewed as soon as possible. According to the auditor general, hundreds of millions of dollars in tax revenue are lost to the government as a result of these tax treaties.
These are suggestions the finance minister should act on without further delay. The minister should get rid of all these tax loopholes pronto, but he does not seem to be very anxious to do so. The minister is like Santa Claus, sporting the Liberals' colours and exuding their generosity as he hands out presents in the form of family trusts, tax havens and tax shelters of all kinds.
We have to look at where he comes from. He is not from the North Pole, as people might think, but, rather, from the Power Corporation Pole. I think that has some effect on his intentions and decisions.
We have proposed other avenues to the federal government. We want it to cut the annual budget of the Department of National Defence by an additional $1.5 billion starting next year. The Bloc, because Quebec receives only 17.4 per cent of national defence expenditures, insists that cuts be made in such a way that Quebec will end up with 25 per cent of defence expenditures.
And what about the Hibernia project, with the government pouring hundreds of millions of dollars into it year after year? We call on the government to withdraw from this financial sinkhole.
Finally, it is vital the federal government and its Minister of Finance listen to the people. Come out of your shell and tune into reality. The provinces, Quebec among others, and the people of Canada are talking to you and making perfectly reasonable requests. Pay attention and get in gear. Stop pretending so stupidly in an effort to keep alive a federal system, which is off track and out of touch.
