Ralph Goodale

[Canada-U.S. Relations, March 23rd, 2005]

Mr. Speaker, I have no intention of explaining it because the hon. gentleman is just flat wrong.

What the countries of North America are seeking to achieve is greater security for the continent, greater prosperity for all of our citizens, a better quality of life for Canadians, and the bottom line for Canada is absolute Canadian sovereignty.

[Ways and Means, March 22nd, 2005]

moved that a ways and means motion to implement certain provisions of the budget tabled on February 23, 2005, be concurred in.

[Supply, March 22nd, 2005]

Mr. Speaker, I was taken by the tone in the hon. member's remarks at the very beginning when she sounded terribly gloomy about the future of Canada. It was a very negative message. I contrast that with the news clippings that I have been reading recently in Saskatchewan.

There is one today from the Canada News Wire that says “RBC forecasts healthy economic growth for Saskatchewan”. There is another one from the CanWest News Service that says “Scotiabank bullish on Saskatchewan economy”. There is another from the Regina Leader -Post that says “Saskatchewan has an effervescent economy”. There is another one from The StarPhoenix in Saskatoon that says “Saskatoon finances are world class”. There is another from The StarPhoenix that says “The city and the province benefit from federal largesse”. There is another from that same newspaper that says “Saskatchewan stock index shows strong growth”.

There is lots of indication that the economy of Saskatchewan has turned an important corner and that there is some cause for optimism. That is not to say we take anything for granted, but surely the good news is news should be acknowledged and celebrated.

I note from the position the hon. member has taken today that she directly contradicts the NDP Premier of Manitoba with respect to this matter. Could we have a specific reply on this? Does the NDP in the House support Premier Calvert in his ambitious plan to develop Saskatchewan's heavy oil resources?

[Supply, March 22nd, 2005]

Mr. Speaker, I believe the arithmetic that the hon. gentleman is using is arithmetic which, for the purposes of the argument, eliminates the impact of non-renewable resources in the calculation of the figures. This is one of the thorny questions the expert panel will have to grapple with.

In my experience over the last number of years, there have been three issues in particular that have bedevilled the equalization system and have raised questions of equity, not just involving Saskatchewan but involving a variety of other provinces. The first is the treatment of property taxes. That hits in different ways in different parts of the country. The second is the extent to which user fees are considered to be sources of revenue and therefore are or are not included in the formula. The third is natural resources, both renewable and non-renewable.

Because we recognized the complexity of all of this and the issues that cut in such different ways in different parts of the country, we started to reform the equalization system last year. We did this first by making more money available to it, putting a floor under it to try to give every province a leg up while we were going through this period of transition. We also created a panel of impartial, non-partisan, independent experts. I mentioned their names in my remarks. They will do the government, the opposition and the whole country, including all of the provinces, a great service by analyzing these bedevilling questions and giving to all of us the best advice about how to fix this incredibly complex formula and to do so in the interests of Canadians everywhere.

[Supply, March 22nd, 2005]

Mr. Speaker, in previous debates I have made the references to which the hon. gentleman refers simply as a matter of putting the current situation into some context. While the debt load in Saskatchewan is relatively low compared to most other provinces, at about 25% or thereabouts of provincial GDP, the fact of the matter is that the debt load today would be a much lighter burden if the course of events in the 1980s had gone in a different direction. That is just historical context.

That is not to say that Saskatchewan should not be entitled to all the benefits of federal legislation and federal programs like equalization and all the others. It is simply to put the matter in context. There is no argument being made here about punishing the province for the previous failures of a previous administration. It is simply to explain why some of that burden exists now 15 or 20 years later.

On the matter of the payments that were made to Saskatchewan last year, I am very pleased that those payments were made. I think Professor Courchene, who was referred to earlier, performed a valuable public service by doing the kind of analysis that he did in pointing out in particular the problem with crown leases and for last year a payment of $120 million was made in order to correct the deficiencies in those old calculations about crown leases.

I would also add that we made the commitment to Saskatchewan to keep that analysis of previous errors in calculation methodologies going and to bring it up to date constantly. In fact this year we will be making another payment to Saskatchewan in respect of that same problem, in the order of about $6.5 million more, intended to get rid of those old issues and to make sure that the excessive clawbacks to which the hon. gentleman referred are fully corrected.

On top of those corrections, we have added $590 million more because of the floor we have put under the system for this year. I hope that the good work of the panel will give us valuable advice about how to adjust this system for the future so old problems do not occur and that all provinces, including Saskatchewan, will be treated fairly based upon the panel's advice.

[Supply, March 22nd, 2005]

Mr. Speaker, given a topic as complex and contentious as federal transfer payments and interprovincial equity, it is only to be expected that there would be points of both agreement and disagreement in connection with the opposition motion that is before the House today.

For example, the motion calls for “expanded benefits” to flow from the Government of Canada to all the provinces. In fact, we are already doing that under the equalization program and under virtually every other federal transfer payment program. Federal transfers are now at an all time record high and they are rising year after year.

Let us look at some of the actual numbers. Equalization payments this coming year will total $10.9 billion, matching the highest level ever. The pool of federal equalization dollars available to help the less wealthy provinces will continue to go up at the annual rate of 3.5%. Over 10 years, the cumulative provincial gains will total more than $33 billion.

The Canada health transfer this coming year will total $19 billion in cash. Again, that is the highest level ever. It too will keep increasing by 6% per annum over 10 years. The cumulative provincial gains in cash for health care will total more than $41 billion. To that total we have to add also health related tax transfers from the federal government to the provinces, which today are worth about $11.5 billion per year. They too are rising.

Then there is the Canada social transfer. This coming year it will total $8.4 billion in cash, plus another $7 billion in tax transfers, and again it is on the rise.

In addition, there are several other existing federal transfers to help provinces with immigration, public infrastructure, ongoing social housing services, new affordable housing projects and much more.

Plus, we are currently adding two new federal transfers for child care and for municipalities, which will bring a further $5 billion each in new federal support for or through provinces and territories over the next five years.

Therefore, on the issue of bigger federal benefits obviously we are already moving in that very direction and the dollar values involved are very large.

In structuring all of this, the Government of Canada is constantly striving for fairness, but in a country as big and diverse and complicated as Canada, fairness is not a simple matter of one size fits all. The various provinces and territories unfortunately do not share the same geography, the same history, the same population bases, the same physical resources, both renewable and non-renewable, or the same level of economic development or future potential. A cookie cutter approach from province to province or from region to region has never worked in Canada and it likely never will.

With respect to the arrangements concluded earlier this year with Newfoundland and Labrador and with Nova Scotia under their pre-existing Atlantic accords, which are separate and apart from equalization, the straight extension of these arrangements to every other province, as appealing as that might sound, would not in fact increase benefits to all, nor would this apparently easy approach necessarily improve equity among provinces.

For example, the Atlantic arrangements are applicable only if a recipient province is already eligible to receive equalization payments. In other words, their internal provincial revenue-raising capacity must fall short of the national equalization standard, which last year was about $6,200 per capita. This means by definition that four provinces, British Columbia, Saskatchewan, Ontario and Alberta, would be missed by the opposition's specific proposal.

Second, for the Atlantic arrangements to continue for the longer term, a recipient province would have to carry a provincial debt burden that is among the four worst in the country. By definition that would leave out the other six.

To illustrate where things stand at the moment on debt loads, the debt to GDP ratio in Nova Scotia is close to 43%. In Newfoundland and Labrador it is a whopping 63%. These are the two most heavily indebted provinces in the nation.

The average for all the provinces is some 25% and that is about where a province like Saskatchewan stands, better actually than the debt ratio of the Government of Canada, which is about 38%.

In this search for fairness and equitable treatment, which we are all in the House concerned about, it is not as simple or as easy as just extending the Atlantic arrangements. On the issue of equalization clawbacks, as mentioned in today's motion, it must be noted that such a mechanism applies in the present formula to all so-called overpayments under the equalization system, not just to those that result from non-renewable natural resources. It would therefore be difficult for a majority of the provinces, as things stand now, to accept a clawback exemption or exception for only non-renewable sources of revenue.

Indeed, Premier Hamm of Nova Scotia, Premier Binns of Prince Edward Island, Premier Lord of New Brunswick, Premier Charest of Quebec, Premier McGuinty of Ontario and Premier Doer of Manitoba, to be precise, three Conservatives, two Liberals and a New Democrat, are all on the public record clearly opposing this approach that is embedded in the opposition's motion today.

I make this point not to be critical of the benefits, which the opposition wishes to see extended, but to underscore the complex challenge of accomplishing that objective in a way that is perceived by all to be fair to all. Change in this very difficult area must be accomplished in a careful and thoughtful way.

That is why, before we began to tackle the various issues related to the equalization program through back to back first ministers' meetings last fall, we gave the provinces some guarantees about what would happen during a two year transition period. The equalization receiving provinces had at that time just experienced a sudden drop in their benefits in one particular year. It caught everybody by surprise. They complained that the program was too complicated, too unpredictable and not adequate to meet their needs. They said that they could not conclude a reasonable deal on health care unless they knew where they stood on equalization.

To accommodate all of that, we put a floor under the program to overcome that previous shortfall, bringing the benefits of equalization to $10 billion this year, then up to $10.9 billion next year and then indexed annually thereafter, as I mentioned earlier. We also eliminated the clawback effect for this year and for next year. We are distributing the available dollars according to an interim formula, pre-negotiated and agreed in advance with all of the premiers. That is for 2004-05 and 2005-06.

For the future we have commissioned a team of acknowledged, independent and impartial experts to consult with all the provinces and with others and to report back by the end of 2005 on the best possible allocation of equalization entitlements, ways to make these payments more stable and more predictable, the most appropriate methods of measuring disparities among the provinces, and the proper way to treat various provincial revenue sources, such as natural resources, property taxes and user fees, all of which have been the subject of interprovincial disagreements from time to time.

That gives a flavour of the difficulty and the complexity of dealing with this issue. At any given moment in time the equalization program has 1,320 moving parts, spread over four fiscal years, so one can imagine the difficulty in trying to achieve genuine fairness and equity out of that very complex picture.

The five distinguished Canadians who will be serving on the expert panel on equalization are: Mr. Al O'Brien, a retired deputy provincial treasurer from Alberta with a 35 year career in the provincial public service; Elizabeth Parr Johnston, a private consultant who formerly headed up both Mount St. Vincent University in Nova Scotia and the University of New Brunswick; Dr. Robert Lacroix, the much respected rector of the Université de Montréal; Fred Gorbet, a public policy adviser with 24 years of experience in the federal public service; and Michael Percy, the dean of the School of Business at the University of Alberta. Their nominations to serve on this important panel have been very well received. I sincerely thank each and every one of them for taking on a difficult but crucial assignment to make the equalization system better.

While we await the panel's advice on how to make equalization as effective and timely as possible, there are many other fronts upon which we can make and are making progress. The success and well-being of Canadians is not solely a function of intergovernmental fiscal transfers. They are important, obviously, but there are many other important ways in which the Government of Canada contributes to the provincial and regional strength and prosperity of this country.

For example, in the 2005 federal budget the Government of Canada is investing more than $1 billion over five years in Canada's regional development agencies. We are putting another $1 billion toward maintaining the momentum of our innovation strategy ensuring that all Canadians, east, west, north and centre, are fully a part of the knowledge based, technology driven and highly skilled world of the 21st century.

In British Columbia, among other things, the innovation agenda includes world leading particle physics research through the TRIUMF project.

In Atlantic Canada, it is a host of new initiatives under the Atlantic innovation fund and the NRC's Atlantic technology clusters.

In Quebec, among other things, it includes major new work in the field of genomics research and through the Canadian Space Agency located in Montreal.

In Saskatchewan, it is the Canadian light source Syncrotron, the new InterVac Vaccine Centre and the Petroleum Technology Research Centre which houses probably the world's most useful science on mitigating the effects of climate change.

In Ontario, it is more federal funding to the automotive sector and through all of our science granting councils and more help to universities to defray their indirect costs of advanced research in Toronto, Guelph, Kitchener-Waterloo, at Western and the list goes on.

We are also investing in vital public infrastructure in cities and communities, both large and small, in every corner of Canada. This includes $3 billion in the direct infrastructure initiatives for municipal and rural projects, for strategic projects and for border projects that are already up and running; plus $300 million more in the budget for the green municipal funds administered by the Federation of Canadian Municipalities; plus $7 billion more over 10 years through the full GST rebate to all municipalities; plus $5 billion more ramping up over the coming five years through the sharing of the federal excise tax on gasoline, and then an ongoing $2 billion per year thereafter for cities and communities from the Government of Canada.

I mention all these examples to underscore the point that federal investments in fairness and in equity and federal support for regional growth and strength is not limited to transfer payments. It goes far beyond that, billions and billions of dollars beyond equalization and other transfers to the benefit of Canadians everywhere.

Since the mover of the motion today and I both come from Saskatchewan let me close my remarks today with a couple of points specifically about my own home province.

Since 1957, since equalization first began, Saskatchewan has had to rely on these payments to keep its head above water. However recently that is beginning to change partly because of the adjustments that we made to the equalization program last year which brought an extra $710 million into Saskatchewan from the Government of Canada, and that is the biggest equalization bonus to Saskatchewan ever in history.

However the truly good news is that Saskatchewan does appear to be graduating from its historic reliance on equalization for a big chunk of the provincial government's annual budget. Not including equalization, Saskatchewan is now collecting its biggest provincial tax revenues in history and has joined the ranks of the three or four most fiscally secure provinces. Commodity price forecasters are projecting strong ongoing markets for oil and gas supplies worldwide and that augers well for Saskatchewan's fiscal future.

If this province needs to fall back upon equalization once again, the program will be there to help, hopefully an improved program as a result of the work of the panel.

Rather than struggling with the perpetual uncertainty and the minimized ambitions that such reliance upon equalization implies, Saskatchewan, happily, is increasingly in the position to break free from its historic limitations and to move boldly ahead. As the reform of equalization continues to unfold, I want to ensure that Saskatchewan is in all respects treated fairly just as I want every province in this country to be treated fairly.

The expert panel, for instance, will be asked specifically for its advice about how to deal with natural resources in the equalization formula. The cases to be made by Saskatchewan about how to adjust the formula for the future will be afforded a full and fair hearing.

At the same time, as we all strive to make equalization as robust and as fair as possible for Saskatchewan and for every other province, let us keep our eyes equally upon economic growth, investment, new business development, new jobs, the things that could propel Saskatchewan beyond the status quo of the last 50 years to a new kind of future, not boxed in by history or geography, distance or climate, politics or defeatism.

The Government of Canada must invest in Saskatchewan and in other parts of the country in more than just equalization. For example, it must invest in a bold plan about water development for the future, in energy development, in new innovations, science and technology, in value added in the livestock sector, and in social and economic infusion, particularly to attract new Canadians to Saskatchewan and to better engage our aboriginal population.

I am an optimist about Saskatchewan. This is the centennial year of the province, 1905-2005. While paying proud tribute to our past, we need to be equally focused on our future and we need to build that future. Would it not be great for the historians 50 years from now to analyze this time, to look back on these early years of the 21st century and say, “That's when Saskatchewan regained its momentum. That's when it gained its traction, its self-confidence. That's when Saskatchewan moved beyond old dependencies and limitations. It focused on growth. It believed in itself. It seized its future and it never looked back”.

[Ways and Means, March 21st, 2005]

Mr. Speaker, pursuant to Standing Order 83(1), I wish to table a notice of ways and means motion respecting an act to implement certain provisions of the budget tabled in Parliament on February 23, 2005.

I ask that an order of the day be designated for consideration of this motion.

[Taxation, March 21st, 2005]

Mr. Speaker, explicitly the answer to the question is no, that is not the reason. This issue is a challenge for all developed countries. Similar trends to the ones identified by Statistics Canada in fact are observed in the United States and in the United Kingdom. It is one of the unfortunate trends that comes with globalization.

We need a concerted international effort to deal with this. That is why the Government of Canada has raised this issue at the G-7, the G-8 and in a number of international forums, to make sure we can have a coordinated international approach.

[Foreign Affairs, March 11th, 2005]

Mr. Speaker, I was very honoured to serve on the commission for Africa. It is a United Kingdom initiative that builds upon what Canada began at the Kananaskis summit in 2002.

The report is both useful and challenging and covers a broad range of subjects. Canada is responding in many ways. We are leading the world in debt relief proposals. We are increasing Canadian support in the battle against AIDS, malaria, tuberculosis and polio. We are doubling our support for Africa over the next three years.

All of those things were in the budget on February 23.

[Question No. 71, March 9th, 2005]

Mr. Speaker, on February 1, 2005, the Government of Canada announced how it plans to share a portion of federal gas tax revenues with municipalities to make investments in sustainable infrastructure. Beginning in 2005-06, the funding will ramp up over five years, for a total of $5 billion. By 2009-2010 the funding flowing to municipalities will amount to $2 billion, the equivalent of 5 cents-per-litre of the federal gas tax. This represents a strategic investment in Canada’s cities and communities.

Funding will be allocated to the provinces, territories, and First Nations, on a per capita basis, with $37.5 million, equivalent to 0.75% of total funding, assured for each of Nunavut, Northwest Territories, Yukon and Prince Edward Island. This recognizes the need for less-populated jurisdictions to have sufficient funds for significant infrastructure investments, and the increased costs associated with infrastructure in northern and remote areas.

The Minister of State (Infrastructure and Communities) is presently negotiating bilateral agreements with the provinces and territories, which will further outline details of how the federal gas tax funds will be spent within each jurisdiction, including the allocation to municipalities.

The 5-year funding profile for the sharing of the gas tax revenues was announced in the budget presented to the House of Commons on February 23, 2005.