Stephen Harper

[Pre-Budget Consultations, February 1st, 1994]

Mr. Speaker, I am rising today to participate in the debate in advance of the upcoming budget. In so doing I want to concentrate my remarks on the overall financial objectives of this organization which must decide these things for the Government of Canada.

The Government of Canada is the largest organization in the country. Like any other board or management we are well advised to keep in mind our central function of overall planning of our financial objectives. Historically that is one of the most important roles of this Parliament and recently it has been one of the most neglected. In my comments I want to take some time to review these objectives from the perspective of the Reform Party.

During the course of the election campaign our party campaigned on the necessity of setting the following financial objectives. In the life of this Parliament we would work toward the elimination of the current budgetary deficit without resorting to significant tax increases. That was called the zero in three plan. On that basis we went from being a relatively minor party to being the effective opposition today for most of Canada.

I want to review why it is an appropriate financial objective and especially ask government members to consider my comments. In light of the financial developments we will also be considering these things.

I am not going into the very good reasons that exist for stopping the growth of debt, for eliminating annual deficits, for not raising taxes or for not raising general price levels. My colleagues in the party have covered those topics very competently. I want to look at the timeframe proposed for our particular financial targets.

Why deal with the fiscal problems of Canada in the life of this Parliament? First, it is a modest objective because it is necessary to deal with far more important objectives in terms of our economic development. We cannot hope to deal with the problems of debt or significantly lower the tax burden until we eliminate the significant problem of annual structural deficits.

Second, the problem is political. We are all elected. We all know it is politically difficult to undertake the steps necessary to reduce this particular problem. The political will necessary for that will not sustain itself for very long and certainly will not sustain itself beyond the life of one Parliament. The previous government had two mandates to deal with this problem and was unable to do so. Third, there is a very good fiscal reason. Today the problem of the deficit is largely driven by the past sins of governments. We have accumulated an enormous debt on which we generate a huge amount of interest payments. Those interest payments are really today the essential problem in the annual deficit.

Every year that we fail to deal with this we add to the debt burden and by implication we add to the future stream of interest payments. If we deal with this problem only gradually we will find that our actions year by year are offset by the very tax burden that we create.

Fiscal gradualism does not work. This was the policy of the former PC government and it illustrated it in spades. Year after year we had nine budgets with incremental measures to deal with rising debt. Every year the pattern of debt and interest payments served to offset those actions and to offset the deficit targets and we find ourselves more or less in the situation we were 10 years ago.

Of course the former government complicated that situation by resorting to other measures. Once it recognized fiscal gradualism was not working it got into a pattern of systematic overstatement of growth projections and eventually into the fiasco we had in the election which was deliberately misleading people as to the financial state of our country.

We know that today the Minister of Finance has spoken very eloquently about this. We are looking at a deficit this year of between $44 billion and $46 billion. That is $13 billion above the $32.6 billion that would have been indicated to us less than a year ago. That is more than just an off-shoot in projections.

On top of that we have the largely unprecedented situation where we have actually had to go back and revise the deficit from the year before, the year that ended over six months ago. Now we find we were $5 billion higher not on this year but on the year before this year when we were talking about the deficit during the federal election campaign.

I do not want to focus just on the last government. This is a pattern in the historical record of the failure of fiscal gradualism. If we look at the deficit from 1867 to 1992, and I refer members to chapter 5 of the Auditor General's report at the end of 1992, we had accumulated net public debt of $423 billion. Yet only $37 billion of that or less than 10 per cent was due to annual shortfalls. The rest was due to interest and compound interest generated by those mistakes.

This government has initially in its rhetoric recognized that we have a significant structural deficit program. It has switched from some of its campaign rhetoric to some of the rhetoric we heard from just about every government and every party that has been elected afterwards to recognize that this is a problem. Nevertheless the government continues to opt for a policy of fiscal gradualism.

The Minister of Finance repeated today in this House his target of 3 per cent deficit to GDP by the end of this Parliament.

I cannot understand the clear rationale for that. I can tell the House that even if that objective were achieved by this government that is a target above the annual trend growth rate of this country. In other words even achieving that target we will continue to see our debt burden and the relative burden of our interest payments continue to climb. We are already at dangerously high levels here. We all know the impact.

A previous speaker said that if interest rates were to go up one percentage point we would add $5 billion to the deficit. If they go up one percentage point we will be adding $10 billion to the deficit within five years as a consequence of the compounding of that error.

Fudging numbers and putting out false projections are not the way to go. I hope the government is not beginning to slip into that pattern.

Let me raise a point of concern. Today the minister made reference to financial projections for the next fiscal year. We in our party are trying to do an analysis of our situation to make the best proposals possible. In spite of those figures provided by the Minister of Finance, as late as this morning both his department and his ministry refused to provide my office with complete information as to the nature of those projections or the assumptions on which they are based.

I wanted to elaborate a little on that problem. Before the election we were projecting that we are at a level of spending in terms of current programs in this country that is about 15 per cent above the level we can sustain in the long run. This is why I am so interested in these projections. We know from the data we are getting that this situation could not possibly have improved. We are concerned about this.

In concluding the point I would like to make is that we can all rant and rave and rhetorically wave our hands-we are all politicians-about this situation being a problem, but if we cut a little fat, close a few loopholes, wait for growth or announce some strategic initiatives this problem will solve itself or it will not be as difficult.

This has not been the experience of the past. It is not true. It is going to happen. We know the experience in other countries with these kinds of deficit situations. If we do not deal with it, if we do not do something about it, something will be done about it for us.

I urge members on the other side to consider very carefully their objectives in this matter. I notice the minister has delayed. He is now saying that it will be next year's budget that deals with this. We do not have these kinds of timeframes or this luxury.

If this government fails to deal with this problem it will not only fail our country but the government itself will fail. It will fail not only economically but politically as well. I ask the government to give very careful consideration to these matters.

[Auditor General's Report, January 28th, 1994]

Mr. Speaker, with all due respect to the Prime Minister I am asking about the confidence convention and not confidentiality.

My supplementary question is for the Prime Minister. In his report the Auditor General said that Canadians want to feel that members of Parliament may vote freely, and they expect more free votes. How does the government intend to respond to that feeling regarding free vote and streamline the budget process?

[Auditor General's Report, January 28th, 1994]

Mr. Speaker, my question is for the Prime Minister and also concerns democratic reform.

In his annual report, the Auditor General identified the confidence convention as a major stumbling block in the reform of the budgetary process.

In view of the government's commitment to carefully examine and consider the Auditor General's recommendations, will the Prime Minister inform the House that he will relax the confidence convention and allow free votes in the upcoming budget?

[Speech From The Throne, January 27th, 1994]

Mr. Speaker, I would like to thank the member for Laurier-Sainte-Marie for his speech. I met him over two years ago, after his first election, and so far we have had a good experience, I think, working together on the Board of Internal Economy.

The member is an important person in his party and he made a couple of references in his speech similar to things that were said by his leader.

I would like to ask him on behalf of his party to clarify for me a couple of questions. I wish I could put them to his leader but the rules of the House do not make that terribly easy.

First, the member as well as his leader has stated that the federal system does not work and of course this Parliament is part of the federal system. Although he may believe the federal system does not work, does he and his party see it see it as their obligation in their role as members of this Parliament to do their best to make this Parliament work and by implication to make the federal system work as long as they play this role?

Second, I would like to ask him about his position in the future constitutional debate that may take place in Quebec. He has categorized that debate as between independence and the status quo as represented by the current constitutional arrangements.

If a referendum like that was rejected by the people of Quebec, would he follow through on the consistency of that argument and see that rejection as an acceptance of Quebec's role in Canada and of the 1982 constitutional arrangements?

[Registered Retirement Savings Plan, January 21st, 1994]

I have a supplementary question, Mr. Speaker.

We appreciate the opportunity to express our views and hope that the Prime Minister will use this opportunity to express his own views on this subject.

Is it the government's policy to go in the direction that we increase the dependency of Canadians on the underfunded and overburdened old age security system while undercutting their ability to provide for their own retirement?

[Registered Retirement Savings Plan, January 21st, 1994]

Mr. Speaker, I would also like to put my question to the Prime Minister.

Yesterday during debate the government member for Davenport suggested that the government should consider further limiting RRSP contributions. When asked about the possible repeal of the clawback of old age security, a measure which his party opposed in opposition, he suggested that everyone who pays into seniors' programs like OAS should benefit from them.

Is this the policy position of the government or are those options that the government would be considering?

[Speech From The Throne, January 20th, 1994]

Mr. Speaker, I would like to thank the minister for his speech and congratulate him on his perennial re-election in his constituency of Winnipeg South Centre along with his appointment to cabinet in an important post which reflects a great deal of confidence in him on the part of his party and leader.

We welcome the attempts that the government will be making to create a comprehensive social security system and to encourage open discussion of this in Parliament.

Recently the Ministry of Finance released a document that showed our unemployment insurance program to be one of the

most generous in the world. This can create serious disincentives to upgrade skills, to work and to move to find work.

I would like the minister to comment on whether he agrees with that assessment of the unemployment insurance system. Assuming he does, would he share with Parliament his view on what features a new comprehensive social security program would have to combat those problems in the unemployment insurance system?

[Speech From The Throne, January 20th, 1994]

Mr. Speaker, I would also like to congratulate the hon. member for Davenport on his re-election. He was an accomplished opposition member in the old Parliament. Now he obviously plays a different role on the government side. In that position I would like him to clarify his remarks on a couple of items.

He spoke about the need to preserve programs for seniors and also his opposition to tax breaks. Would he support his government's musings about possibly cutting seniors programs by cutting the RRSP? This is one seniors program that is well funded and secure in this country. Does he support that examination?

Also on the old age security, now that he is a government member does he support the previous Parliament's actions introducing a clawback to old age security? Does he expect his government to bring a repeal of that in the upcoming budget? If the government does not, would he be prepared to vote against that budget?

[Speech From The Throne, January 20th, 1994]

Madam Speaker, I thank the hon. member for his question and for his congratulations. I have known the hon. member for some time and it is a delight to be able to sit with him in this Chamber.

Of course there was not time in my speech to address all of the concerns that the hon. member would like me to address. If in future the rules of the House are altered so that I can speak at greater length, I would be delighted to do so.

The member raises the question of small and medium sized business and their access to capital. My supporters, particularly my association, are predominantly people who work in small and medium sized business and they voted for our party I suspect precisely because they share our concerns.

I would suggest to the government that certainly there are problems with access to capital in the banking sector. However, I would suggest that what the government should do before it starts figuring out how to run the banks and how to run small and medium sized businesses and all kinds of other institutions that it run itself so that small and medium sized businesses have access to capital.

According to the projections of the Minister of Finance, in this financial year we will be borrowing up to $45 billion in the financial markets. Certainly some of this money, if not a large part of it, would be available to small and medium sized businesses if the government would undertake the credible program of deficit reduction that is being advanced through our subamendment. If we do not do that, it would be ridiculous to try to alter the rules of the banking system if the capital itself is being tied up by the Government of Canada which is more than absorbing our domestic savings. That is all in the book his own government has put out.

I would suggest that the way to deal with the problem of capital access for small and medium sized businesses-and the message from the people in my constituency-is to deal first with releasing those funds through deficit reduction and only then should we deal with the problems in other institutional arrangements.

[Speech From The Throne, January 20th, 1994]

Madam Speaker, this is my first opportunity to address the House at length. I am sure you are getting tired of hearing that but two-thirds of us are new members. Many of us who have been here in the past are in new roles, as are you. I congratulate you on your appointment to that role.

At the beginning of these new roles or the beginning of our careers we have the opportunity to think longer term about the problems of our country than perhaps parliamentarians have done in the past.

Many people in my constituency have built successful careers, homes and families by thinking longer term in their affairs. Now they have taken a brave step this time in electing a new MP from a new political party to represent them for the next four or five years.

I want to take a moment to say I am greatly honoured by that election. It is an overwhelming honour and I plan to do my best to fulfil their expectations. We certainly know what happens when you forget who sent you here. The Prime Minister alluded to that yesterday. I hope that I and this Parliament do not let the people of Canada down, as I feel the last Parliament did.

In my particular case I was elected from an urban riding, a riding entirely within the city of Calgary that has 100,000 people. It is in the western suburbs of Calgary. We have a large military base. We have two post-secondary institutions.

In spite of that, my riding and our city reflect largely a private sector character. We do not have a federal or provincial government. We are one of the larger cities that does not.

Of course we have experienced the ups and downs that Alberta has had in the past decade largely through and because of our dependence on the oil industry. In spite of that there is a broadening of our industry in Calgary historically from agriculture to energy, now to services. This broadening reflects our entrepreneurial spirit in the west, in Alberta and in Calgary in particular.

This growth in the view of most Calgarians, I think I am safe to say, has been not so much with the help of government as in spite of it and in spite of the federal government in particular.

I was a newcomer to Alberta when a distant government imposed policies that brought an end to the boom times that brought me to Alberta to begin with. Of course I am referring to the national energy program. No Canadian can live through an experience like that without it influencing greatly his or her thinking about government and about our country. In spite of that thinking and in spite of the drain the federal government has often imposed on Albertans, Albertans have never wavered in their patriotism or in their optimism about the future.

Today the federal government presents not hopes but obstacles to economic recovery. The obstacles are most clearly represented by the national debt and the deficits adding to it which we are experiencing and have experienced in the past number of years. I am not going to recount the statistics. I am an economist and that would be economics and that is a dangerous

combination. Let me talk instead about what these numbers mean.

In the election campaign my colleagues and I in the Reform Party argued strongly about the need to understand the long-term link between fiscal mismanagement and economic recession and decline. We argued against the view that we should create jobs rather than fix the financial problem, not because we oppose creating jobs but because these are not conflicting objectives. They are the same objective.

Countries like companies or households that mismanage their financial affairs do not create jobs. They destroy them. Households, businesses, families and governments that mismanage their affairs do not fulfil dreams. Those who mismanage their affairs watch their dreams slowly slip away.

Many of my generation, young professionals, the backbone of the future of Canada, have left Canada, are leaving Canada or are thinking of leaving Canada because they fear the high taxes and the declining services that this mismanagement has brought about and may worsen in the future.

Let me not preach from the Reform Party policy manual. Let me quote the government itself. For members who have not read it, Canada's Economic Challenges contains a very good summary of our economic and financial situation. It lays out better than I could all the relevant numbers on the deficit and debt and the impact on our economy, such as the fact that it absorbs our domestic savings, increases our foreign indebtedness, worsening our current account, lowering national income, our potential growth, reducing our fiscal flexibility, threatening our social programs, increasing our tax burden, raising real interest costs and decreasing our competitiveness. It is all there.

Those are not short-term problems. They are not caused by the recession. A short spurt in growth or activity will not resolve them. The chapter is illustrated with dozens of statistics.

Why then would the same government that released this book also release the throne speech this week and turn its attention instead to spending priorities and in particular to the much ballyhooed infrastructure program. That is a $6 billion commitment, $2 billion sought from this Parliament to kick start the Canadian economy, as if it is possible to do such a thing as kick-start an economy.

On reading the briefing notes for the program it will be noticed there are no fewer than four program objectives and nine related criteria. There are in fact lots of objectives. There are no clear priorities. None of these objectives is new to the program spending that parliaments have passed before. We are therefore led to ask why the government believes that another $2 billion would kick start an economy in a way the first $160 billion of spending this year has been unable to do.

Let us be clear about the magnitudes involved. In the case of Alberta we are talking about $88 million against an economy of $70 billion and an infrastructure investment of at least $1 billion a year. These are hardly kick start kinds of numbers. That is the magnitude and context of the program.

I do not want to quarrel with infrastructure as a priority or even a higher priority than it has been in the past. What I want to do is simply suggest that it will not fulfil the objectives stated by the government and the raised expectations of consumers, taxpayers and investors. It is short-term thinking about jobs and activities that has long-term consequences in terms of employment and output and that has been the past generation as we have seen it.

I ask members, especially government members, to give strong consideration to this before they cast their votes on this matter and on the legislative program that will flow from the throne speech. Members opposite will be held responsible by the public for the performance of the Canadian economy in the next four years.

Possibly the infrastructure program will deliver some short-term benefits and some short-term visibility. But in the long term, by the next election-that at least we will talk about as our long term-the infrastructure program will long be passed and we will be stuck with the bills for it.

I suggest that until the government has contemplated a way to credibly finance these things and to fit these within the $153 billion spending cap that we suggest it should re-examine these priorities.

I ask government members to give strong consideration to this aspect of fiscal discipline, the subamendment we propose, to support and vote for it and to include it in the speech from the throne. On that basis we would be building a more successful government program, not just from our standpoint but also for the potential of their own re-election in four years.