Mr. Speaker, I am very pleased to speak on this motion which originally read as follows:
That the House call upon the government to immediately extend the expanded benefits of the recent Atlantic Accord to all of the provinces since the existing equalization claw-back on non-renewable resource revenues severely curtails the future prosperity of Canada by punishing the regions where the economy is built on a non-renewable resource base.
Before I begin my speech, I would like to take a moment to pay tribute to our Saskatchewan caucus members, who have come together today, one after one, to make very poignant arguments as to why the current equalization formula needs to be changed to better reflect the finances and aspirations of their great province.
Now I come to the issue of equalization.
Last weekend, supporters gathered at the Conservative Party policy convention in Montreal adopted the following policy on equalization:
Equalization is an essential component of Canada's nation building efforts.
The Conservative Party supports changes to the equalization program to ensure provinces and territories have the opportunity to develop their economies and sustain important core social services.
We will remove non-renewable natural resource revenue from the equalization formula to encourage the development of economic growth in the non-renewable resource sectors across Canada.
The Conservative Party will ensure that no province is adversely affected from changes to the equalization formula.
It is extremely important that the provinces currently receiving equalization payments do not suffer financial hardship as the result of any changes to the equalization formula.
One of the problems with the current financial agreement between the federal government and the provinces is that the Liberal Party is afraid to tackle this issue head on.
The Prime Minister is working against the aim of equalization by failing to collaborate with the provinces to establish a program that would enable them to build a better economy.
The Prime Minister should have dealt with the problems posed by the equalization formula back in October at the first ministers meeting. Instead, he signed side deals and adopted policies that have set one province against the other.
To promote harmony among the provinces, it was suggested that the motion be amended to ensure that any change to the equalization formula will come with a transition adjustment measure for those provinces whose compensation will not see sustained growth.
To promote harmony among the provinces, an amendment was made to this motion to ensure that proposed equalization formula will include a period of transition and adjustment so that the provinces to whom these expanded benefits do not apply can receive fair compensation.
The purpose of this amendment is to ensure that changes made to the equalization formula take more fully into account provinces that have both renewable and non-renewable resources, like Quebec and Manitoba, both of which are rich in hydro power.
With this amendment, the future equalization formula will more closely reflect the actual financial situation of provinces that have renewable and non-renewable resources, provinces like Manitoba and Quebec, which both have water resources.
This way, Quebec will continue to fully benefit from the current system in order to pursue its economic and social development.
Equalization and the growing fiscal imbalance show the Liberals' weak commitment to improving relations between the federal government and the provinces and territories.
The federal government continues to rake in way more money than it needs to meet its constitutional obligations, while the provinces cannot put enough together to meet their obligations.
This is crystal clear when the financial situation of the federal government is compared to that of the provinces. The federal treasury is accumulating surpluses year after year, while the provinces are struggling to balance their books and several are actually in a deficit position.
I will note that I am going to be splitting my time with the member for Souris—Moose Mountain.
How can it be that Ontario, one of the strongest and most important economic engines of the country, must carry a 2004-05 deficit of over $6 billion while the federal government rakes in an $11 billion surplus?
Just to focus on Ontario for a moment, there is a great divide between the McGuinty Liberals and the Prime Minister right now. With the new floor in equalization, have not provinces reached an important guarantee that equalization payments will not be scaled back or taken away in the event of a downturn in the Ontario economy.
However, the agreement reached could actually hurt Ontario. If the Ontario economy begins to falter, and there is growing evidence that it is, Ontario will not be able to afford to pay into equalization and fund important social programs for Ontarians.
How could it be that our provinces, charged under our Constitution with carriage of our most valued social programs, cannot financially scrape by, while the federal Liberals, rolling in cash, waste Canadians' hard-earned tax dollars?
It is partly a reflection of the fact that the provinces are responsible for expensive but important social programs, especially health care and education, but it also reflects the fact that the federal government is taking up too much tax room.
The provinces, facing increasing costs and growing deficits, must come to the federal government pleading for financial assistance. The Liberals, reluctant to hand over the fruits of their overtaxation, use the surplus as political leverage and force the provinces to accept conditions and targets that reflect Liberal policy priorities, not the priorities of Quebeckers and Canadians.
I believe that both the original motion and the amendment serve to address some of the problems raised by the provincial governments.
To conclude, the Conservative Party believes the equalization program should treat all provinces fairly and equitably. We recognize that the current formula presents many problems, but we also understand it is imperative that no province currently receiving equalization payments will be worse off financially if any changes to the structure of the formula are made.
It is extremely important that the provinces currently receiving equalization payments not be financially penalized by any changes whatsoever made to the equalization formula.
The Prime Minister has shown a lack of leadership on intergovernmental relations and has pitted province against province. This is no way to strengthen the federation. Saskatchewan, Ontario, Quebec and all the provinces and territories should be treated equally by the federal government.