Tuesday, February 1, 1994
Bill C-204. Motions for introduction and first readingdeemed adopted 677
Bill C-205. Motions for introduction and first readingdeemed adopted 677
Bill C-206. Motions for introduction and first readingdeemed adopted 677
Bill C-207. Motions for introduction and first readingdeemed adopted 678
Motion for concurrence in first report 678
Mr. Martin (LaSalle-Émard) 678
Mr. Mills (Broadview-Greenwood) 690
Mr. Tremblay (Rosemont) 692
Mr. Mills (Broadview-Greenwood) 695
Mr. Mills (Broadview-Greenwood) 706
Mr. Mills (Broadview-Greenwood) 710
Mr. Martin (Esquimalt-Juan de Fuca) 713
Mr. Gagnon (Bonaventure-Îles-de-la-Madeleine) 714
Mr. Chrétien (Saint-Maurice) 715
Mr. Chrétien (Saint-Maurice) 716
Mr. Chrétien (Saint-Maurice) 716
Mr. Chrétien (Saint-Maurice) 716
Mr. Chrétien (Saint-Maurice) 716
Mr. Martin (LaSalle-Émard) 716
Mr. Martin (LaSalle-Émard) 717
Mr. Martin (LaSalle-Émard) 717
Mr. Martin (LaSalle-Émard) 718
Mr. Martin (LaSalle-Émard) 718
Mr. Martin (LaSalle-Émard) 718
Mr. Martin (LaSalle-Émard) 718
Mr. Axworthy (Winnipeg South Centre) 719
Mr. Axworthy (Winnipeg South Centre) 719
Mrs. Payne 720Mr. Tobin 720
Mr. Harper (Simcoe Centre) 720
Mr. Chrétien (Saint-Maurice) 720
Mr. Harper (Simcoe Centre) 720
Mr. Chrétien (Saint-Maurice) 720
Mr. Chrétien (Saint-Maurice) 723
Consideration of motion resumed 723
Mr. Speaker (Lethbridge) 731
Mr. Harper (Calgary West) 733
Consideration resumed of motion 738
Mr. O'Brien (London-Middlesex) 738
Consideration resumed 750
Motion agreed to on division: Yeas, 167; Nays, 104 750
(Motion moved and agreed to.) 751
Consideration resumed 752
Mr. LeBlanc (Cape Breton Highlands-Canso) 759
The Acting Speaker (Mr. Kilger) 771
Mr. Bernier (Mégantic-Compton-Stanstead) 777
Mrs. Tremblay (Rimouski-Témiscouata) 778
Mr. Martin (Esquimalt-Juan de Fuca) 783
HOUSE OF COMMONS
Tuesday, February 1, 1994
The House met at 10 a.m.
Mr. Don Boudria (Glengarry-Prescott-Russell):
Speaker, in accordance with Standing Order 34, I have the
honour to present, in both official languages, the report from the
Canadian Branch of the International Association of
French-Speaking Parliamentarians concerning the 10th session
of the Assemblée régionale for America meeting held in
Lafayette, Louisiana, from September 15 to 19, 1993.
* * *
Mr. Peter Milliken (Parliamentary Secretary to
Government House Leader):
Mr. Speaker, I have the honour to
present, in accordance with Standing Orders 104 and 114, the
first report of the Standing Committee on Procedure and House
Affairs concerning the Standing Committees' membership list.
I should advise the House that this report is of the permanent
members of the committees and not of associate members as
required by the standing orders.
If the House gives its consent I intend to move concurrence in
the report later this day.
The Speaker: Is there unanimous consent?
Some hon. members: Agreed.
* * *
Mr. Tom Wappel (Scarborough West)
moved for leave to
introduce Bill C-204, an act to amend the Consumer Packaging
and Labelling Act (nutritional value of food).
He said: Mr. Speaker, the purpose of this bill is to amend the
Consumer Packaging and Labelling Act to provide that foods
sold to consumers across Canada have certain nutritional
information stated on the label, including the vitamin content,
carbohydrate content, the fat content and the caloric amount per
portion. This information is very common in the United States
but is voluntary in Canada. This bill would make it mandatory.
(Motions deemed adopted, bill read the first time and
* * *
Mr. Tom Wappel (Scarborough West)
moved for leave to
introduce Bill C-205, an act to amend the Criminal Code
He said: Mr. Speaker, the purpose of this bill is to add a
definition of the term human being to the Criminal Code. The
purpose of that definition is to focus the debate on the vexing
issue of abortion and the question that has heretofore not been
addressed, whether society wishes to extend protection to the
(Motions deemed adopted, bill read the first time and
* * *
Mr. Tom Wappel (Scarborough West)
moved for leave to
introduce Bill C-206, an act to provide for the relocation and
protection of witnesses.
He said: Mr. Speaker, thousands upon thousands of people
have signed petitions asking this House to set up a witness
protection program that has been mandated and is the
responsibility of this House through the minister in charge. That
currently is not the practice.
There are ad hoc witness protection plans across the country
run by various police forces, including the RCMP. This bill
proposes to formalize the arrangement and have it administered
by the federal government.
I urge the Solicitor General and the Minister of Justice to
proceed with the witness relocation plan immediately.
(Motions deemed adopted, bill read the first time and
Mr. Jean-Robert Gauthier (Ottawa-Vanier)
leave to introduce Bill C-207, an act to amend the Auditor
General Act (reports).
He said: Mr. Speaker, the purpose of this bill is to allow the
Auditor General to table reports of his work regularly so that
parliamentarians and the people of Canada will have knowledge
of what he is looking at in terms of the efficiencies and
effectiveness of programs of government.
Currently the government gets one report a year because the
law forbids the Auditor General from tabling more than one
report. It is a huge brick and becomes a media event for about a
day and a half and then everybody forgets about it.
It would be in the interest of good administration to allow the
Auditor General to table reports whenever he or she feels they
(Motions deemed adopted, bill read the first time and
* * *
Mr. Peter Milliken (Parliamentary Secretary to Leader of
the Government in the House of Commons):
Mr. Speaker, if
the House gives its consent, and I believe that consent is
forthcoming, I move that the first report of the Standing
Committee on Procedure and House Affairs presented to the
House earlier this day be concurred in.
I might add, Mr. Speaker, that I think you might find consent
to dispense with the reading of the report.
The Speaker: Is there agreement to dispense with the reading
of the report?
Some hon. members: Agreed.
(Motion agreed to.)
* * *
Mr. Rex Crawford (Kent):
I rise under Standing Order 36 to
present a petition on behalf of my constituents. It is signed by
16,516 people calling for dramatic changes to the current Young
An 18-year-old resident, Roy Asselstine Jr., was the victim
of gang violence by young offenders. When they appeared in
court they showed no respect for the judge or any remorse for
what they had done to this innocent young chap.
This petition calls on Parliament to revise the Young
Offenders Act by lowering the age limit to allow prosecution to
fit the seriousness of the crime. I am proud to add my name to it.
The petitioners did this under duress. They should be
congratulated because there are several young gangs in the city
of Chatham and they were threatened. Almost single-handedly
they collected over 16,000 names on the petition. I am hoping
members will call our office and I will send the petition to them
if they care to circulate it in their ridings.
The Young Offenders Act must be amended. In its present
form it is a joke.
Ms. Val Meredith (Surrey-White Rock-South Langley):
Mr. Speaker, I have been requested to present this petition on
behalf of signatories from B.C. to Manitoba, requesting that the
government hold a referendum on the question of accepting or
rejecting two official languages.
* * *
Mr. Peter Milliken (Parliamentary Secretary to
Government House Leader):
Mr. Speaker, I move that all
Mr. Speaker: Does the House agree?
Some hon. members: Agreed.
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
That this House take note of ideas and suggestions expressed in the House, at
pre-Budget regional conferences and elsewhere with regard to the forthcoming
Budget, especially with respect to increased economic growth, the creation of
jobs and the reduction of the deficit.
He said: Mr. Speaker, the purpose of today's debate is to give
members of this House the opportunity to express their opinion
on the Budget.
This is an historic day. This debate is the first of its kind. In
the past members of Parliament were not part of the budget
making process. Budgets were tabled here. They were debated
upon here and they were voted upon here, but there was little
opportunity for members of Parliament to influence the content
of those budgets. On all sides of the House the focus was on
scoring points for the party, not for the country.
We believe that process was deeply flawed. Wisdom-and
I know this will come as a great surprise to the House-is not
confined to finance ministers. The issue before us is clear. How
can we expect Canadians to understand or to accept hard
choices if they are not part of the process of choice?
How can we in the House as parliamentarians expect
Canadians to trust us if we do not trust ourselves? The people of
Canada deserve to be brought into the budget making process
and the Parliament of Canada must begin to play a larger role.
Unfortunately, there was not enough time to have the House
Standing Committee on Finance take part in this year's budget
preparation. Things will be different next year when House
committees will have a central role and very real influence.
Today's debate, the first of its kind in Canadian history, is
proof of the government's intentions. It follows a process
started in last November, at the University of Montreal. Since
then, we have held a public meeting with 38 of Canada's most
distinguished economists. Critics for the Bloc and the Reform
Party were present, I may add.
We have published several new documents informing
Canadians on this country's economic state. Four independent
research institutes organized conferences in Halifax, Montreal,
Toronto and Calgary where representatives from all sectors of
society studied the issues to which we, as members of this
House, will be confronted in this year's and next year's budgets.
The public process will be broadened for the 1995 budget
There are several conclusions that we can draw on from the
consultation process this country has begun. First, one has to
have been heartened by the degree to which Canadians were
willing to put self-interest aside and discuss issues together to
look for practical, real solutions to the challenges we face.
Second, it is clear that the priorities of Canadians are jobs and
economic growth, that they want the deficit brought down but
not as an end in itself. They believe that as long as deficits are
too high unemployment will remain too high.
Third, there is a profound sense that the status quo simply will
not do and that if we continue on our current path then that
would be a road to nowhere.
Fourth, there is a desire on the part of Canadians for a budget
that embodies a game plan, a strategic outlook in which the
various budgetary measures that are to be taken can be judged as
to their effectiveness.
Fifth, there is a clear sense that the choice we face as a country
is not between jobs or the deficit but that there is an urgent need
to focus on both. There is a belief that we will never solve the
deficit until we develop sustained and strong growth. At the
same time Canadians understand that the growing debt itself is
an impediment to that growth. To attack the deficit without
encouraging growth would be foolish. To attempt to spur growth
and jobs as if the debt and deficit did not matter would simply be
Mr. Speaker, the stakes are much higher than mere details of
the budget. We aim not only to trim government but to rethink its
entire role. Today, we have a golden opportunity to change our
way of doing things, not for financial reasons but for reasons of
As a government we have already begun a variety of processes
designed to bring deep and dramatic reform to government, to
the way we operate, and to our policies and programs in a wide
range of areas. The actions that were taken by the whip in terms
of cutting down the costs of this place are a beginning and
simply a kernel in the approach we want to take to the frugality
of the way in which we generate taxpayers' money.
Yesterday in the House the minister of human resources laid
before the people of Canada the beginnings of deep-seated
reform in areas within his jurisdiction. If today was an historic
day then surely yesterday was one as well. I congratulate my
colleague because he really does bespeak for modern liberalism.
There will be more initiatives in the weeks and months ahead.
That is why we have made it clear from the very beginning that
the 1994 budget should be seen as a first step, the first stage in a
two-stage process culminating in the 1995 budget.
Unfortunately the deficit outlook for 1993-94 remains as was
set out in my November speech, that is to say in the $44 billion
to $46 billion range. A view exists in some quarters that the
deficit for the following year, that is the year for which we are
budgeting, 1994-95, could fall below $40 billion by itself
without any direct fiscal action. That view unfortunately is not
It is true that part of the increase in the deficit for this year is
due to one-time influences.
However, according to a number of factors, it is also clear that
the reduction of the deficit will evidently be limited in 1994-95
if no direct fiscal measures are taken.
First, in 1994, the growth of the economy will probably come
in large part from better corporate profits. There is little chance
however of this growth translating into an equivalent growth of
The low earnings registered by corporations during the last
few years have allowed them to accumulate considerable losses
which they will be able to apply to their income tax payable this
Secondly, the erosion of some tax bases is continuing,
especially in the area of tobacco for example.
Third, the growth in personal income taxes for this year is
likely to be weak. This is due to the unacceptably high level of
unemployment and slow income growth.
Fourth, the effect of disinflation on the government's
revenues is substantial.
Fifth, many of the savings assumed in the 1993 April budget
were never secured through legislation.
Finally many cost pressures must be faced, such as the
support for the east coast fisheries, that were never provided for
in the last Conservative budget. This is very important because
the fisheries is only one example. Not only were the revenue
projections in that April budget wrong, but the expenditure
projections which any government must have a handle on were
unrealistic as well.
For members on this side of the House-and I know members
on the other side of the House feel the same way because I heard
the leader of the Reform Party and the leader of the Bloc
Quebecois talk about it-it is crucial if as parliamentarians we
are to regain the confidence of the Canadian people that,
whether we are in government or in opposition, we not be afraid
to lay in front of the Canadian people the facts and be judged by
them. The days of phoney accounting, of illusion, must be over.
I know it is something all members on this side of the House
I will be clear. Without further action the deficit for 1994-95
will be significantly above $40 billion. To get the deficit on
track so that it will drop to a level of 3 per cent of GDP by
1996-97 immediate action is necessary. That action must not
consist of overly optimistic growth projections or accounting
sleight of hand as was done too many times in the past.
For the purposes of forecasting, we will follow the advice of
our main economic experts. We will be conservative in our
estimates and will not indulge in wishful thinking.
We have clear priorities: to create jobs, to increase economic
growth, and to help those who are truly in need. The debt and
deficit problems of our country present severe difficulties and
severe obstacles in the way of meeting these priorities. They
keep interest rates too high. They drain off our country's income
to foreigners and they force us to keep our tax rates up.
The question is: How do we get the deficit down? Let me
frame the challenge. There are those who blame the public
service. They are wrong. We could let every public servant go.
We could discharge every soldier. We could board up every
government building. We could shut the whole show down and
we would still have a deficit.
There are those who blame the poor. They are wrong. We
could abandon all the major programs we have in place to help
the elderly, to help those who are unemployed, to help those who
are in need, and the deficit would still be with us.
I would hope no one in the House today would argue that the
deficit should be brought down on the backs of those who are
most in need. If they did I would simply point out, as my
colleague the Minister of Human Resources Development
pointed out yesterday, that not only is slash and burn morally
wrong economically it will not work.
What this country needs is something that it has been deprived
of for too long. We need a long term solid growth strategy to
bring the deficit down, to put Canadians back to work, to
restructure our industrial base so that we can face the
competition that lies outside our borders. What we need is a
growth strategy that is creative, compassionate and
constructive. As a government that is what we intend to put in
The budget this year will have real cuts but it will also set in
train important processes to reform the most fundamental
programs of the federal government. That takes time and
requires consultation but make no mistake, that reform will take
I am sure all members of this House agree with our objectives
of economic growth, job creation, compassion and deficit
reduction. What we need today is an in-depth debate to help us
determine the manner in which, together, we can attain these
In the debate today the easiest priority for any one of us on
either side of the House to put forward is one's own. The most
obvious area in which to ask for more spending is one's own.
The most obvious area to ask for cuts is in somebody else's
This debate is about a national budget, not a personal budget.
It is about tradeoffs and the balance that we need as a nation. If
today there are ideas for more spending then we need to hear
today where that money is going to come from. If there are
proposals for cuts then we need to know the effect of those on
jobs and on Canadians most in need.
If there are those who argue against changes in taxation then
we need to know from them if they feel that the existing list of
tax exemptions is fair. We have asked Canadians across the land
to consider the tradeoffs. It is now up to this House to do that
very thing as well.
This country needs a budget that speaks to the needs of all
Canadians. This government intends to provide that and I know
that the debate we are about to have in this House will contribute
a great deal to that effort.
The Deputy Speaker: Under our rules there are no questions
or comments after the Minister of Finance's speech.
Hon. Lucien Bouchard (Leader of the Opposition): Mr.
Speaker, here we are in the last phase just before the tabling of
the federal budget for the 1994-95 fiscal year which, as
everyone knows, begins on April 1.
Few budgets have been as eagerly awaited as this one. The
new government has had a chance to distinguish itself from the
government that the voters judged so harshly in the last
elections. It is the new government's responsibility to tackle
with conviction and fairness the complex problems facing
Canada that can be seen in our poor economic situation and the
crisis situation in government finances.
The number of real jobs that have been created is still
negligible. There are not even enough new jobs to absorb the
newcomers onto the job market, and 40 per cent of the jobs lost
through the recession have not been made up. The Canadian
economy is still performing well below its potential.
The indications of the crisis in government funds are now so
well known there is no point in dwelling on them further. Suffice
it to say that the federal debt has reached a critical point. The
federal government has been borrowing money for a long time
to pay its grocery bills, and then to pay the interest on those
From 1985 to 1993, when the ratio of the debt to GDP in
Canada increased by 82 per cent, that ratio increased by only 21
per cent on average in OECD countries. The net federal debt is
increasing so quickly that it has now surpassed 70 per cent of
GDP, up from 46.4 per cent in 1985.
What is more, every year one third of federal revenue goes to
paying the interest on the debt. The situation would be less
critical if the government was going into debt in order to invest
in capital projects. According to the 1993-94 Main Estimates,
the government's capital expenditures represent only 4.16 per
cent of total gross program expenditures.
In addition, 53 per cent of that amount goes to the Department
of National Defence alone. A burden of this size weighs heavily
on the strength of the economic recovery, primarily by exerting
undue influence on medium- and long-term interest rates. We
must quickly reduce this burden by a considerable amount, and
at the same time we must be careful not to shatter this fragile
According to the Prime Minister, the size of the federal debt is
not so spectacular when compared with the debts in European
countries. Perhaps he should take a second look, and not
compare apples with oranges. Canada's total public debt is the
highest debt of all G-7 countries, after Italy's. And the federal
debt is the largest part of Canada's total debt.
Therefore, the government cannot choose to solve only one of
these two problems, either the debt or the sluggish recovery, and
leave the other issue unresolved. The two issues have to be
tackled at the same time, or any success that comes about will be
Since last October 25, speculation has been rife about the
government's plans for public finances, that they will reduce
spending, or go even more deeply into taxpayers' pockets.
Nothing has yet been decided and uncertainty prevails.
Although the throne speech gave nothing away in this regard,
it does appear that reducing the deficit through taxation is at the
very top of the government's list of priorities. Job creation
seems to have been relegated to second place, along with the
elimination of useless expenditures, the ones that inspired the
Liberal leader to such impassioned and repetitive speeches
during the election campaign.
Yes, there is still the infrastructure works program, the one
that is clearly inadequate. Let's look more closely at this
program. The federal government's contribution will amount to
$2 billion over two years.
The increase in unemployment insurance premiums that came
into effect at the beginning of 1994 raised an additional amount
of $800 million per year. Anyone can rob Peter to pay Paul. It is
not necessary to have a government that says it has experience to
All analysts are unanimous in making objections to increasing
taxes on the payroll. This is just what the government has
decided to do with unemployment insurance. One can ask
whether the government really wants to see this recovery that
everyone is waiting for. Everything points to the fact that, apart
from its program to repair municipal infrastructures, this
government has decided to do nothing but gaze in open-eyed
wonder at its little red book. The government is making a
religion out of its electoral creed, to which it believes it owes its
election. Propaganda has never been so effective, since even the
government, the author of the red book, believes in it.
Recycled as the throne speech, the red book is still providing
fodder for the Prime Minister's speeches, and the Minister of
Finance is still taking delight in it. Again yesterday, I saw a
government minister religiously brandishing the booklet in this
very House. The worst is yet to come, since in a few weeks we
are very likely to see it reappear sumptuously adorned as a
budget speech. In other words, the government's job creation
program is the same as the one we saw from the Liberal Party
during the election campaign: nothing but words and the
incantation: jobs, jobs, jobs. And as for the rest, they are
counting on a hypothetical recovery that is likely to happen of
its own accord. This is an irresponsible gamble on a better
future, as well as being an ominous memory lapse about the
causes of the deficit.
It is not necessary to remind hon. members that boosting the
economy means less unemployment, less welfare and higher tax
revenues. Thus it contributes in two ways to lowering the burden
related to the public deficit.
For example, if we had the same number of jobs we had before
the last recession, the expected deficit for 1993-94 would be
well below the figure announced by the Minister of Finance,
which is artificially inflated for obvious reasons. That target is
With normal expansion in the number of jobs over the past
three years, we could have avoided the sudden deterioration in
the budgetary situation of the federal government and the
When the recession began, the federal deficit was $29 billion;
today the Minister of Finance puts it at $45 billion. The main
cause of the increase is an unexpected drop in revenue.
During the first seven months of the current fiscal year,
revenues were down 5.7 per cent from the same period the
previous year. This drop is disturbing, because it occurred
despite a slight improvement in the economy.
The deficit now represents 6.2 per cent of GDP, a proportion
twice that of the American debt, which is 3 per cent of GDP
according to the OECD. A 1993 study by the IMF says that even
if the economy were performing at full capacity, Canada's
governments would have a deficit on the order of 3.5 per cent of
GDP, with forecasts of 2 per cent for 1998. So there is also a very
serious structural problem here.
Three years after the recession technically ended, the deficit
has reached, according to our calculations, about $41
billion-that is, if one eschews accounting fictions (which are
so dear to the Minister) and includes the impact of lower interest
rates on debt-servicing charges. The Minister of Finance has not
done either of these things, despite his commitment to greater
transparency in setting out budgetary parameters. He obviously
finds it more appealing to announce a reduction of the deficit
from $45 billion to-say-$37 billion rather than a much less
dramatic reduction from $41 billion to $37 billion. It is a
I want to ask the Minister today if he stands by the projected
deficit for the current fiscal year that he announced at the end of
Debt servicing constitutes the largest budget item: $39.5
billion in 1992-93. Given the wide gap between short-term and
long-term interest rates-almost 3.5 percentage points-is
there a strategy at work? One may well wonder. Does the
Department of Finance have a strategy for taking advantage of
falling short-term interest rates by continually shortening the
average term of government securities? Since at the present time
there are no inflationary pressures in Canada or the United
States, where the most recent data demonstrates a further drop in
inflation rates, the question is worth asking.
Last year in Canada the domestic inflation rate-which does
not include imported products-was not even 1 per cent. Under
the circumstances, is it reasonable to continue, for example,
paying 7.1 per cent on 30-year borrowings? When you have a
debt of $507 billion, the difference between a borrowing cost of
5 per cost and a borrowing cost of 6 per cent represents more
than $5 billion. How many home owners are there in Canada just
now who would opt for a 10-year mortgage at 8.5 per cent? Very
Fiscal equity demands that certain tax shelters be closed, but
the Minister of Finance is now trying to give this idea a broader
meaning, so that it can include the notion of expanding the tax
base. But eliminating this or that deduction used by a significant
proportion of the population means by definition increasing the
tax burden on those taxpayers, who belong very largely to the
middle class. In other words, it amounts to increasing their
taxes. The Minister of Finance talks about transparency, but he
does not want to call a spade a spade. He would be happier if
nobody noticed his little manoeuvre and he could pull a fast one
on us, as they say.
The Minister should be warned against two temptations: that
of retroactive measures and that of unequal treatment of
taxpayers according to their conditions of employment.
The very notion of a retroactive measure strikes at the heart of
a society governed by the rule of law, and we are such a society.
Citizens are rightly outraged by the arbitrariness of power when
the government changes the rules in mid-game to suit itself.
Outrage was certainly the reaction in Quebec when the
government brought in a retroactive surtax in its last budget.
As far as RRSPs are concerned, and they are very much at
issue just now, workers who do not have the advantage of
benefitting from a pension fund must be treated on the same
footing as those who do.
It is really rather odd that the government is contemplating
additional taxes affecting large numbers of people while at the
same time complaining about the growing scale of the
underground economy, which is causing tax losses for it. And at
a time when the Canadian and Quebec governments finally seem
to have seen sense as far as tobacco taxes are concerned, we
must hope, as I said two weeks ago in this House, to see a rapid
and energetic decision. Let us face facts: our governments have
let the situation fester.
Deciding to lower tobacco taxes will not prevent governments
in the slightest from continuing and even stepping up their fight
against tobacco use. In the medium term, tobacco consumption
depends on more than price. The proof is there: American taxes
on tobacco are much lower than ours and yet Americans smoke
less than Canadians. Moreover, when they buy smuggled
cigarettes smokers cease to contribute to paying for the
health-care costs than tobacco taxes help to underwrite.
There is a simple way to achieve greater fiscal equity. It
consists of putting into effect the recommendations contained in
the latest report of the Auditor General. We have to attack the
level of expenditures and we have to do it with determination.
First of all, we have to deal with the most widespread problem
causing the greatest unfairness, the problem of fiscal
In 1987, as the economist Léo-Paul Lauzon reminds us,
90,000 companies made profits without paying a cent in taxes.
According to the Auditor General, Canadian companies
invested $90 billion abroad of which $16.1 billion went to tax
havens. In such cases the revenues are only taxed abroad at the
accommodating rates prevailing in those countries. The
amounts mentioned only reflect the investments which are
declared because many of those companies are not obliged to
produce information statements. In this way, each year hundreds
of millions of dollars escape taxes.
It is obviously quite essential that all corporations must be
subject to a minimum level of taxation.
But, in the field of tax inequity, I repeat, the prize goes to
family trusts. Analyst Claude Picher of La Presse writes about
them in a recent article describing the formula, which-and I
quote-``allows taxpayers to set up a trust and include in it
securities whose yield is tax-exempt as long as it remains in the
trust, which, under present provisions, can be practically
indefinitely''. As we know, this system was set up by the
Liberals, and prolonged by the Conservatives. They have been
passing the buck, from one government to the next. I continue
the quotation: ``The trust must be set up according to a complex
and costly procedure, which makes such trusts much less
affordable, unless you happen to have a fortune''. A trust, then,
of course, intended for rich families. I have inserted a few
personal comments into the quotation. I feel that people will be
able to distinguish between the cold comments by analyst Picher
and the ones I have added.
In an article in the January 29, 1994 issue of La Presse, the
same economist considers, and I quote: ``that it is credible that
the tax provisions for family trusts represent a shortfall of $340
million annually''. And these are conservative figures, since it
is the government's responsibility to unveil the true dimensions
of this flagrant injustice and eliminate this unseemly shelter
once and for all. The Minister, who has access to information
about this issue, knows this: he knows the exact extent of this
scandal. As a result, he is under considerable pressure: his
knowledge of this issue is certainly strengthening his desire to
right a wrong and put back into the public coffers hundreds of
millions of dollars each year that would provide relief for the
taxes he is preparing to impose on the middle class.
We must also expect substantial reductions in federal
expenditures, traditional expenditures. But-not so fast!-not
by charging ahead and arbitrarily slashing 5% across the board.
Because of its role as initiator of the budget crisis, the federal
government must first set an example; it must clean up its own
act. Since this government was elected, the federal government
has been preparing to take shots at easy targets: social programs,
people who have no lobby, no union, no representation, no party,
no voice. They are easy targets; they are the ones at whom the
government has been taking shots since yesterday. And, a year
from now, we shall see the results. It is also easy to target
transfers to the provinces; from the federal point of view, the
provinces are like chicks surrounding a mother hen. But there is
no announcement about its own waste or its own ponderous
We have not heard any speeches about that. We have not heard
one Minister admit guilt or declare an intention to cut the
bureaucratic machinery down to size. Nothing. Once again, we
are bracing for the culpable connivance that made the federal
government one of the causes of our present deficit.
The evidence is accumulating. Yesterday, it was the Minister
of Human Resources Development putting forward his fantasy
plan for improving the quality and range of health and social
services by cutting related expenditures. A vicious circle. We
shall see how he manages.
Where transfers to the provinces are concerned, aside from
the equalization payments, the federal government's decision
will be made public in three weeks, as part of the budget. But
where federal government expenditures are concerned, nothing.
No announced speech, only vague phrases for media
consumption. And any reference to federal timetables is cloaked
For example, the Minister of Finance repeated several times
that his first budget, the actual budget, the one that is coming up,
apparently would not be the real thing. What is this upcoming
budget going to be? The budget of another country? The budget
of another organization? No, apparently it is not going to be the
real budget. The 1995-96 budget, next year's budget, is going to
be the real thing; that is where a reform of social programs could
be included. That is where we could see how these programs
would be delivered by the two levels of government.
We cannot see any need for such lengthy delays in a field like
labour and occupational issues, occupational training. These
issues have been dragging on for years, and what Quebec is
asking for is both known and endorsed by all players from all
sectors in society in Quebec.
But, according to the Minister for Human Resources
Development and his colleague responsible for
federal-provincial relations, we must wait not one year, but two,
to ascertain what the federal government will deign to bestow.
At least that is what he was saying until yesterday morning; then
he presented us with a timetable covering approximately 12
months. Perhaps he realized the confusion his former statement
Does this mean that the Minister of Finance is locked into an
unrealistic timetable? Or does it mean that the right hand does
not know what the left hand is doing? Or, instead, a rather
clumsy plan to postpone any meaningful streamlining of the
federal bureaucracy, and not give English-speaking Canada the
unpleasant impression that the Quebec sovereigntists were right
to point to fat in the federal bureaucracy?
Any old excuse seems valid to put off the time when they will
have to look in the mirror.
But we all know that there is fat in the vast federal body.
Exactly how much? That is a carefully guarded secret that we
cannot rely on people inside to reveal. There must be a careful,
detailed examination of all internal expenditures by the various
departments. An in-house operation would not be credible. We
have only to watch what the Auditor General says about, for
example, one very specific expenditure to see the gaps between
the federal bureaucracy's perceptions and outside analyses.
I quote a passage from page 25 of the 1993 Main Points; the
Auditor General writes: ``For 1990-91, we estimate that the
total cost of operating the Administrative Flight Service-that
is, the VIP Fleet-was about $54 million.'' Fifty-four million
dollars. In Part III of its Estimates, the Department disclosed
total costs of approximately $27.5 million. Outside estimate:
$54 million; in-house estimate: $27.5 million. One single item,
twice as expensive.
We therefore repeat our demand that a multi-party
parliamentary committee of the House of Commons be created,
whose mandate would be to go through all the government's
operating budgets. If the government party is serious in wanting
to reduce the deficit in a way that is meaningful but fair, it must
immediately attack pointless government expenditures and the
many overlapping areas of responsibility that result from
systematic intrusion by the federal government into areas of
provincial jurisdiction. The Official Opposition is prepared to
co-operate in this job of cleaning up federal finances.
In the field of labour, the Government of Quebec estimates at
$250 million the annual waste inherent in overlapping areas of
federal and Quebec responsibilities in Quebec. Against all
common sense, the government is resigning itself to letting this
overlap last at least another two years, thus entailing an
additional loss of $500 million. Can we still afford such inertia?
The federal government's attitude in this matter looks a lot
like the attitude the Soviets had during the Cold War in their
negotiations with the Americans. What we have we keep; what
you have is negotiable.
The Prime Minister made us smile the other day when he said
that Quebec would lose out if the federal government withdrew
from this sector. Since Quebec receives as a whole from the
federal government barely the equivalent of what it contributes
to it, every time the government withdraws from a sector, there
must be, in all logic and in all fairness, a compensation or even a
transfer of tax points equivalent to the federal expenses in
If this were not the case, it would just be another way for
the federal government to unload a part of its deficit on the
provinces. And one wonders if this reaction on the part of the
Prime Minister does not in fact foreshadow unilateral
withdrawals by the federal government from certain sectors that
it now considers less important, leaving it up to the provinces
to pick up the pieces and make up for the loss.
It would be as if the provinces were to tell their hospitals:
``We are withdrawing from the health sector. You will just have
to find the money elsewhere''. It would be an outrageous move
on the part of the federal government, but quite in keeping with
the system. In this system, there is a senior government and all
the others have to adapt to its moods and priorities. In the last
budget speech, for example, Ottawa unilaterally ended its
financial contribution to the development of new social housing.
Therefore the impact the next budget will have on provincial
finances is not necessarily limited to the issue of transfer
payments. There are three major federal transfer payment
programs: Established Programs Financing, equalization and
the Canada Assistance Plan. The three programs do not
necessarily evolve in the same way.
Moreover, the federal government includes in these transfers
not only payments in cash, but also the proceeds of the tax points
transferred to the provinces through agreements on shared-cost
programs. It is a way for the federal government to look better.
But it has no direct control on what these taxes yield and it
cannot take back unilaterally the tax points. It only controls the
cash transfers, whose evolution constitutes the real test of
federal equity in this matter.
In the case of Quebec, this test is blindingly clear. In the past
decade, the federal government's program expenses increased
by 53 per cent while the transfers to Quebec went from 6,250 to
7,624 million dollars, which represents an increase of 22 per
cent, the lowest of all the provinces. But one must go beyond
these absolute, raw figures to see what all this represents in
constant dollars and per capita. When inflation and population
growth in Quebec are factored in, you get a greater than 20 per
cent decrease for the decade 1983-1993. Such is the true picture
of federal transfers to Quebec, a greater than 20 per cent
decrease in the past decade.
A portion of these transfers goes to health care, a sector where
needs are closely linked with age. Because of the
rapidly-growing population of seniors, the needs increase
automatically year after year and the provincial finances must
cover them entirely. And there are people who claim in all
earnestness that certain provinces, including Quebec, have not
sufficiently contributed to solving the federal government's
fiscal problems. In fact, Quebec has already contributed more
than its share.
Therefore Quebec has already paid a heavy price on the
expenditure slashing fronts. It is time now for the feds to leave
most of the provinces alone and to start taking the medicare they
have been prescribing to some of the provinces, particularly
At the bare minimum transfer payments to the provinces
should hold steady in constant dollars on a per capita basis.
Provinces that have been singled out in recent years should
regain a little of what they have lost.
For some time now the Minister of Finance has been hinting
that it will be necessary to cast the fiscal net in a wider fashion.
If the minister wants to close tax shelters that benefit the happy
few, so much the better. However if he is looking for some
convenient way of raising new taxes on the middle class he
should not count on our co-operation. Taxes are already high
The Minister of Human Resources Development has been
hinting at the necessity of curtailing the safety net, as if those
who need it were to blame for the economic mess we are in.
If they are looking for wasteful spending they should be
looking at home. There is still a lot of fat in the federal
government, not only at the higher levels with all those useless
trips, those public relations contracts and so forth, but also in the
inner workings of all the departments, especially those that
duplicate what other ones are already doing either in Ottawa or
in the provincial capitals.
Oh yes, the federal government agrees on paper that these
parallel bureaucracies should be streamlined. But where is the
agenda, the strategic plan, the incontrovertible proof that
something is going to happen soon that will put the federal
government on the same diet as the ordinary citizen or business
person? Now is the time to act. But it seems that anything is a
pretext for procrastinating.
As a matter of fact, overlapping between federal and
provincial departments is embedded in the system to an
astonishing degree. The Bélanger-Campeau commission in
Quebec has arrived at the conclusion that the overlapping costs
Quebecers a couple of billion dollars a year-only Quebecers.
How about the rest of Canada? This being the case it is very
difficult to believe that one could not trim a couple of billion
dollars rather rapidly off the imposing coast to coast federal
machinery of government. The same could be said of definitive
Although the economic upturn is quite tepid it should still be a
couple of billion dollars in additional federal revenues. Retail
sales are on the move and the housing sector should do better
this year than last year.
If the federal deficit is really heading south it will bode well
for interest rates. We must not forget that a single percentage
point drop in interest rates, and long term rates are still too high,
means $8 billion more annually in the pockets and in the cash
register of the country. This will have a substantially more
significant impact than the government's infrastructure
However one cannot rely exclusively on the consumer. One
must address the structural crisis in the economy. If we want to
stiffen the backbone of our industrial firms we must invest more
in research and development. We must also help the conversion
of the defence industry to civilian uses.
In short, the next federal budget should provide sensible
answers to real questions and not repeat the mistakes of past
In closing, we are well aware of the difficulty of the task
assigned to the Minister of Finance. His budget must attack on
several fronts: it must provide incentives to create jobs, reduce
public expenditures, bring about tax equity, and eliminate
overlap. Many battles loom, and we recognize that not one of
them is easy. But there must be action on all these fronts
simultaneously, and such action must be properly balanced.
That is the only way of giving people hope again and giving rise
to a spirit of solidarity; only these things can make recovery
Aside from these thoughts that we submit for the
consideration of the Minister, kindly allow me to express one
pressing concern: concern about the plan to reform the present
system of social programs. I come back to this point again today
in order to call for vigilance over the reductions this exercise
will not fail to have on the social programs we have acquired
The government says it has no intention of tearing the social
safety net. But in order to reassure its objective ally, the Reform
Party, on this issue, it has not neglected to state that one of the
purposes of this operation is to reduce the costs of social
services. How can we believe that a reduction in resources
allocated to this sector will not automatically bring about a
reduction in services? Whatever the case, if the Minister of
Finance wants to give as many reassurances as possible about
the government's real intentions, he must at least give a clear
signal in his budget. Not another flight of oratory, not another
promise, cross his heart and hope to die! No, Mr. Speaker. He
must maintain at its present level in constant dollars, and taking
changing needs into account, the federal government's
contributions to funding provincial health and social programs,
by means of transfer payments to the provinces.
I have a great mistrust of cosmetic expressions that claim to
maintain. Sure, the level of transfers to the provinces will be
maintained. I can already hear a budget speech: ``Mr. Speaker, I
announce to the nation that we shall maintain the level of
transfers to the provinces,'' when what is meant is really a
freeze. That would be hypocrisy. That is why it must be clear,
that is why the signal to come from the Minister of Finance-if
he is serious when he suggests that he may maintain transfers to
the provinces-must be very clear that the transfers to the
provinces are being maintained at their present level in constant
dollars, and taking rising needs into account. That is what we
mean by a clear signal from the Minister.
We want the government to know, right now, that no one will
fall for magic tricks that would consist in reducing its
contributions and, like Pontius Pilate, forcing the provinces to
do its dirty work.
We shall blame the federal government just as much for
hitting the disadvantaged indirectly, using the provinces as
intermediaries, as if it did the job directly.
Some hon. members: Hear, hear.
The Speaker: According to our rules, there are no questions
or comments after these remarks.
I will recognize the leader of the Reform Party, but
beforehand the member for Calgary North has a point of order.
Mrs. Ablonczy: Mr. Speaker, I would like to advise that
following the debate on this motion by the leader of the Reform
Party, the hon. member for Calgary Southwest, speakers for the
Reform Party will be dividing their speaking time into 10
minutes for speaking and five minutes for questions and
Mr. Preston Manning (Calgary Southwest): Mr. Speaker, I
first of all wish to thank the Prime Minister and the finance
minister for providing this opportunity for the pre-budget
debate in the House.
Second, I want to underscore the importance of this first
budget of the new administration to the overall economic, social
and political well-being of the country. As all hon. members
know, the federal debt is in excess of $500 billion. The projected
deficit for 1994-95 is in the vicinity of $44 billion to $46
The single most important thing that this government can do
in its first term of office is to bring federal spending under
control. Of course the primary instrument for doing that is going
to be the budget which the minister brings to this House in a
couple of weeks.
Reformers have a number of specific suggestions to make
with respect to controlling federal spending, suggestions which
have been market tested in the public arena, including in the
federal election. However there are three additional
contributions that I would like to bring to this pre-budget
The first is an overview of our consultations with the public
on the issue of public spending, consultations which have been
going on since March of last year and which have involved
thousands more people than have been involved in the minister's
The second is a summary of conclusions drawn from these
consultations, conclusions which we believe will be useful to
the minister in preparing his budget and in endeavouring to
determine what the spending priorities should be of the 35th
The third contribution I want to make is a brief commentary
on the prospects of a full-blown tax revolt in this country if the
government seeks to solve its fiscal problems by tax increases
rather than spending cuts.
In making these remarks I will endeavour to be brief, it having
been my experience that politicians who cannot practise
economy in speech are rarely able to practise economy in
Early in 1993 Reformers engaged in an extensive consultation
with our members, with knowledgeable resource persons and
with the public on the subject of federal spending.
We asked over 100,000 Canadians by way of a mail survey
whether they believed the federal government should deal with
the deficit and debt problem through spending cuts or tax
increases. We asked them to give us their views on what the
spending priorities of the next Parliament should be. In
particular, we asked in what areas the federal government
should maintain or increase its current level of spending and we
asked in what areas the federal government should reduce or
eliminate spending in order to preserve financial support for
higher priority items.
With this background data we developed a list of about $20
billion worth of spending reductions which we felt could be
implemented in a three-year period if the federal government
sought and obtained a mandate from the public to do so.
This deficit reduction program was unveiled to the media and
the public in three stages in the spring of 1993. On March 29 in
Toronto we unveiled proposals for saving between $9 billion and
$10 billion through the reform of federal transfers to individuals
and provinces with the emphasis on reform of transfers to
individuals. On April 13, 1993 in Vancouver we unveiled further
proposals for achieving savings of $4 billion to $5 billion
through reductions in transfers and subsidies to the private
sector. On April 22 here in Ottawa we unveiled proposals for
achieving savings of between $5 billion to $6 billion through the
reform of the operations programs and structures of the federal
I would be pleased to table these papers describing these
proposals for the consideration of the finance minister and hon.
members, even though some of the figures are slightly dated. All
of these papers, I might add, were made available to the previous
government, although I am not sure that they survived the great
shredding which occurred after October 25.
We organized all these proposals into a 45-minute slide show
suitable for presentation to public audiences and town hall
meetings. The first public showing of this presentation was
made on budget day, April 26, 1993 to an audience of over 1,000
people in Calgary. We subsequently made this presentation, the
whole theme on how you come to grips with federal spending,
available to almost 200 Reform spokespersons across the
country. As a result, it was shown to thousands more people
across the country at dozens and dozens of town hall meetings,
followed in most cases by a question and answer period.
In addition, we prepared a broad sheet containing the same
information on proposals to cut federal spending and distributed
over 2.5 million copies door to door prior to the federal election.
This is a description of what a populist party calls intensive
and sustained public consultation on an important issue.
Now for the conclusions relevant to the minister. What
conclusions did we arrive at through this public consultation
that would be of relevance to the minister in preparing his
current budget? Let me list four:
First, there is an enormous interest in the subject of federal
spending and taxation at the grassroots level in this country.
There is a great thirst for relevant information and a genuine
desire on the part of ordinary people to contribute to a solution
to this problem.
Second, it is false in our judgment to say that the public is
only interested in spending cuts if they are made at someone
else's expense. Time and time again we have heard Canadians
say, and many of these are Canadians in dire circumstances, that
they are still personally prepared to make some sacrifices. All
they ask is that the sacrifices be distributed fairly, in particular
that those with political or economic clout do not manage to get
Third, it is possible to generate in our judgment substantial
informed sustainable public support for spending reductions, if
one goes after it and if one can hold out genuine tax relief as the
light at the end of the tunnel.
Fourth and finally, these in our judgment are the spending
priorities the Canadian people want this Parliament and the
minister to pursue in 1994-95.
First, maintain federal transfers in support of health care at
present levels or better. Second, maintain or even increase
federal support for higher education and labour force training.
Third, preserve federal support at current levels for the heart of
the pension system, the veteran's pension, the guaranteed
income supplement and old age security for households below
the national average household income. Leave RRSP
contribution levels alone.
Fourth, maintain or increase federal support for
environmental conservation, although many people feel that the
effectiveness of federal spending in this area could be vastly
improved. Fifth, maintain or increase federal support for the
administration of justice.
If these really are the spending priorities of the Canadian
people, and we remain open to suggestions from other members
concerning this whole subject of priorities, spending on
virtually everything else the federal government does should be
decreased in order to reduce the deficit and to maintain the
ability of the federal government to finance its activities in these
high priority areas.
Just to comment on my third contribution on the prospects of a
tax revolt, what prospects does the federal government face if it
does not respond to the public desire to cut spending but instead
chooses to raise even higher the total tax load carried by
Canadians? The fiscal and economic consequences of such an
action are many and well known. Increasing the tax burden will
contribute to the growth of the underground economy, the
exodus of job creating private capital in entrepreneurs, the
further erosion of social services as more and more dollars go to
servicing the debt and the reduction of international
What this House must also consider are the political
consequences of increased taxation. In particular, the prospects
of unleashing a full blown, bottom up tax revolt, the like of
which this country has never seen. Let me speak particularly of
the potential for a tax revolt in British Columbia and Alberta,
where the majority of our Reform MPs come from and where we
have a vast network of grassroots context. Let other MPs from
other provinces give the finance minister their frank and honest
assessment of the prospects of a tax revolt among their own
constituents if his budget imposes a higher tax load upon those
On Vancouver Island, for example, there are probably more
retired Canadians and more RRSP participants per capita than
anywhere else in Canada. All the MPs on that island with the
exception of the Minister of National Revenue from Victoria are
Reform MPs who campaigned hard on the spending reduction
program that I have outlined.
Many of their constituents are people who have provided their
own retirement safety nets through RRSPs, in many cases
because they did not have access to public sector or company
plans and in many cases because of their declining faith in the
Canada Pension Plan and the government's capacity to finance
OAS in the future.
If the finance minister's budget contains even a hint of
reducing the capacity of these people and their children to care
for their own retirement needs, the minister will unleash a
torrent of protest from these RRSP contributors and recipients
focused on the Minister of National Revenue's office in Victoria
which will reverberate across the country and make the GST
protest of the 1980s look like a Sunday school picnic.
In the province of Alberta, as the minister well knows, there
remains a deep mistrust of Liberal taxation policy, particularly
among people in the energy sector. The four government MPs
from Edmonton won their seats by a combined plurality of less
than 3,500 votes, three of them by less than 300 votes, the
Minister of Natural Resources by a plurality of less than a dozen
Their capacities to represent their constituent's interests are
very much still in the balance and on trial.
Rumours have persisted for weeks, to the point at which they
are now considered more than rumours, that the finance minister
is considering imposing a carbon tax on the producers and
consumers of fossil fuels. This tax would no doubt be presented
as an environmental measure, but since it will not apply to the
nuclear waste outputs of Ontario Hydro nuclear plants or to
hectares flooded by hydro electric companies like Quebec
Hydro, it will have a particularly onerous and discriminatory
effect on Alberta's petroleum, coal and utility sectors. It will be
seen in Alberta, rightly or wrongly, as the present government's
equivalent of the hated petroleum and gas revenue tax that was
the cornerstone of the national energy program.
If the minister's budget were to contain such a measure it
would completely undermine the position of the minister of
natural resources in his home province. It will provoke an ugly
confrontation with the Government of Alberta at a time when the
Prime Minister says he wants a new era of federal-provincial
co-operation and it will damage the economy of one of only two
remaining provinces that are still making net positive
contributions to equalization.
It has been said that this administration has rarely met an
interest group it did not like, but there is emerging in this
country an interest group which none of us can afford to
disregard. It is the forgotten interest of the last 30 years, the
interest that pays the bills. It is the interest of the long suffering
Canadian taxpayer whose motto has become enough is enough.
It is an interest that is finding its voice and its capacity for action
through dozens of organizations, conferences and publications
dedicated to protecting that interest from merciless, continuous,
never ending exploitation by high spending governments.
In conclusion, to the taxpayers of this country, to whom all of
us are ultimately accountable, we say that your voice has been
heard by many of us in this House. If it takes a full blown tax
revolt employing every legal means conceivable to convince the
government that taxpayers have had enough, that tax revolt will
find an ally and a command post within this House among
Reform MPs and other MPs who came here to cut spending.
Our advice to the finance minister and the government as
they finalize their 1994-95 budget is eight words: cut spending,
do it fairly, do it now.
As our substantive contribution to restoring the financial
health of the federal government and the financial health of the
Canadian economy, we will lay on the table the $20 billion in
proposed spending cuts which we have discussed extensively
with the public. Take them, modify them and improve them but
do not ignore them.
The Deputy Speaker: Members will be aware that under the
present rules of the House it would strongly appear that the
member who just spoke is subject to 10 minutes questions and
comments if members are inclined to raise them. However,
perhaps they do not wish to speak after the leader of a party has
just spoken. I take it the member for Yukon would like to make
questions or comments.
Hon. Audrey McLaughlin (Yukon): Mr. Speaker, I would
like to thank the member for Calgary Southwest for his
comments. While there are many comments I would like to
make, I would like to focus on one aspect.
I think there is no question that all of us in this House agree
that the debt and the deficit are a problem for Canadians. The
question is how to address that in a fair and balanced way.
I am going to speak to one issue that the member for Calgary
Southwest raised and that is the question of taxes. I agree that
the middle class has been absolutely overburdened with taxes.
We have a situation now in which individual Canadians are
paying far more in taxes than they did in the past while
corporations, for example, are paying far less.
The member for Calgary Southwest talks about a tax revolt. I
find it revolting that while people cannot put food on the table
we have the rich and privileged in this country who can shelter
their money in a private trust. I find it revolting that while there
are Canadians in this country who are working every day and all
members of the family are working and cannot make ends meet
that we have 90,000 corporations that are still not paying a cent
of tax. I find it revolting that while there are people who cannot
make ends meet for their children, while there is 18 to 20 per
cent youth unemployment in this country that we still have many
people in this country using tax shelters and they are the rich and
they are the corporations and we must address that tax in equity.
No one is talking about putting a further tax on the already
overburdened middle class but we have a group in this country
not contributing its full share.
I want to ask the member for Calgary Southwest if he does not
believe that we need to shift the burden from the individual,
from the middle class, to make sure that those who are
privileged and wealthy in our society are paying their fair share.
I would like to ask the member if he agree for example that in
RRSPs there should be a provision, as there is now, that allows
that Canadians are having investment in foreign countries
through those contributions rather than in this country where we
need to develop business and jobs.
Mr. Manning: I thank the member for her question. The short
answer to her general question is yes we believe in greater
equity in the tax system and if the member would examine the
middle part of the presentation which I discussed she will see
that we are calling for a reduction of $4 billion to $5 billion in
federal transfers to the private sector through subsidies and
through tax concessions.
The only cautionary words that I would add to my answer to
the member is that we do have to be conscious, because we are
an exporting country, that if our total tax burden on our
businesses exceeds that of their competitors then we simply
drive them out of business, create higher unemployment and kill
The greatest illustration of this at the current time is in the
province of Ontario if you stand at the border and interview
these companies that are leaving southern Ontario for the United
States, even for up state New York which used to be one of the
highest cost areas of doing business in the world, and ask them
why they are leaving they give you a very short answer. They
show you their tax position in southern Ontario, they show you
their tax position in up state New York and then they ask how
they can continue to do business under those conditions.
My answer to the general question of the member is yes but
with a cautionary note about driving business out by excessive
Mr. Eugène Bellemare (Carleton-Gloucester): Mr.
Speaker, I would like to congratulate the Member for Calgary
Southwest on his speech. I would like to ask him a question
I personally feel that RRSPs allow us to prepare for our old
age, and the better we are prepared for our old age, the less we
will be a burden on Canadian society, when the time comes to
pay annuities to senior citizens.
It is a program that I really like and that is really close to my
heart, which I have not yet had the chance to use, however, but I
encourage Canadians to take advantage of it. I hope that the
government will continue along this road, and I am not saying
that I know any of the Finance Minister's secrets. We are
allowed to use the RRSP program to purchase a home. I feel
that, at our age, we should also be able to use our RRSPs to help
our children buy a home.
I would like to hear the views of the hon. member for Calgary
Southwest on this plan, which is called the RRSP Home Buyer's
Plan. Do you think there is something positive in this idea, and
do you think it should be renewed in the next budget?
The Deputy Speaker: Order! Before I recognize the member
and he answers the question, I would like to ask the hon. member
for Carleton-Gloucester to address his remarks to the Chair in
future. I recognize the hon. member for Calgary Southwest, if he
would like to reply.
Mr. Manning: Mr. Speaker, I thank the member for his
My response is this. Like the hon. member I support the RRSP
program in principle, partly because of the reasons the member
gives and also because it has enabled many Canadians who have
no other way of providing adequate retirement safety nets for
themselves to do so.
Second, I believe that using RRSP funds to support the home
buyer's program is useful and helpful and should be sustained,
not be cut back. I would urge members to put that view before
the Minister of Finance.
Mr. Dennis J. Mills (Parliamentary Secretary to Minister
of Industry): Mr. Speaker, I noticed in the answer of the leader
of the Reform Party to another member that he thought
preferences in the existing tax act that sheltered companies in
the export business should be maintained. At least that is what I
thought he said.
Does that mean he has shifted his campaign position? At that
time the central thrust of the Reform Party was a tax design that
basically eliminated most of the tax preferences in the act. If the
member wants to have preferences for export companies that
might take away from his notion of a flat tax.
Mr. Manning: Mr. Speaker, I thank the member for his
I did not mean to imply that I was seeking special tax
preference for exporting companies. I was just cautioning that if
we put the total tax burden on Canadian companies, particularly
exporters, at higher levels than that of the companies in
countries we are competing with, we end up driving them out of
Our major recommendation in the materials we wish to table
with respect to reducing special treatment for companies is
mainly in reducing the use of tax concessions as a regional
development tool. That is the argument we have used all along.
Before I sit down, may I formally table these documents? I
ask permission to do so.
The Deputy Speaker: There have been discussions about that
point. I believe the Reform Party leader realizes he has to get
unanimous consent to table the documents.
Is there unanimous consent among the members that the
leader be allowed to table his document?
Some hon. members: Agreed.
Mr. Mills (Broadview-Greenwood): Mr. Speaker, I have a
I want to understand this clearly. The hon. member would
maintain all preferences that exist for corporations within the
act right now with what exceptions? Could the member please
Mr. Manning: Mr. Speaker, I would not maintain all
The details of our program call for reductions and tax
concessions to business of about $1.5 billion over a three-year
period. These are unspecified, although we have had discussions
on what they might be. The number one candidate on our list
would be to stop using tax concessions as a regional
development tool under regional development programs. That is
the only specific which is contained in that material.
The Deputy Speaker: A point of order, the Parliamentary
Secretary to the Minister of Finance.
Mr. Walker: Mr. Speaker, I believe there is unanimous
consent in the House for continuing the debate over the lunch
hour from one o'clock until two o'clock.
The Deputy Speaker: Is that agreed?
Some hon. members: Agreed.
Mr. Walker: Mr. Speaker, on this side of the House we will
now have speeches of 10 minutes and 5 minutes questions and
Mr. John Godfrey (Don Valley West): Mr. Speaker, my first
duty in this my first speech is to thank the people of Don Valley
West in Toronto who put me here and to try to keep my faith with
them. My second duty is to thank my family who helped me to be
here as well.
Mr. Speaker, during the election campaign if you asked the
people of Don Valley West what they wanted, they would give
the same answer that all Canadians gave, which is two different
things. They want these two things simultaneously. These two
things can be found in our famous red book on page 111.
At the top of page 111 in Table 1 we talk about savings from
cuts to Conservative programs, so Canadians do want spending
cuts. At the bottom of page 111 we talk about economic growth
and job creation. That is what I really want to talk about today.
When the Minister of Finance met late last year with various
economists in Ottawa, when he talked to the various
consultative groups across Canada, he heard a lot about the top
of page 111, cuts to spending. As the leader of the Reform Party
has just shown us, we are going to be hearing a lot more during
this debate about cuts to government programs.
What the Minister of Finance has heard less about in his
consultations with both the professionals and with ordinary
Canadians is about the bottom of page 111: economic growth,
primary wealth creation and jobs, jobs, jobs.
The Minister of Finance has a difficult role. He has to be both
Dr. Jekyll and Mr. Hyde. He has to be nasty cop, but he also has
to be nice cop. It is to his nicer nature that I wish to appeal today.
That is why my remarks are going to focus on the bottom of page
The most important single thing this budget can do is to create
an atmosphere of hope, an atmosphere of experimentation,
renewal and excitement for Canadians.
An economy is not simply a series of statistics and numbers. It
is a psychological state. An economy will grow if people feel
good about themselves and their country. If they feel good they
will take risks; they will change jobs; they will start businesses;
they will grow businesses; they will buy houses; they will buy
cars; they will buy appliances.
The Conference Board of Canada last week noted the
incredible boom in business and consumer confidence since the
election. Business confidence went up 10 per cent; consumer
confidence, 13 per cent in the last quarter of 1993. It is
interesting to note that the same phenomenon took place in the
United States after the election of President Clinton.
Thus it is crucial that our first budget keep that mood of
confidence going. An optimistic mood will translate into
economic growth and job creation. Too much emphasis on cuts
to government spending will destroy consumer and business
confidence. What the minister has to do with his split
personality is to walk the narrow line between cutting spending
and investing in the future.
I would ask the Minister of Finance to remember the spirit of
another government which came in, in another era, in another
country, the spirit of the new deal of Franklin Roosevelt in 1933.
That spirit has been characterized as bold, persistent
The red book mentions such experimentation under the
headings of investing in people, equality under the law and
culture. But the most challenging and economically stimulating
and exciting experimentation must take place in the area of
research and technology, specifically involving venture capital,
increased research and development, the Canadian technology
network and the engineering program.
Canada needs to create a national system of innovation or
what the finance minister has called a long-term growth
strategy. As the red book notes: ``The crucial role of the federal
government in such an innovation system is to work with the
private sector to identify strategic opportunities for the future,
then to redirect its existing resources toward fulfilment of those
opportunities''. This approach has been called in other
jurisdictions the Quebec Incorporated approach or in our own,
the Team Canada approach.
The point is that smaller societies like ours have to pull all
their national resources off the shelf if they are going to compete
as a team, if they are going to compete internationally. What
happens when we do not? We have too many examples of where
we have failed to do what we ought to have done: the case of
Connaught Bio-sciences being bought by a French owned
company, the case of Lumonics being bought by a Japanese
What happens when we get it right? History provides
examples of that too. When Canada competed as an industrial
team in World War II we built such extraordinary facilities as a
major shipbuilding operation in Quebec, a major producer of
artificial rubber at the Polymer plant in Sarnia.
The experiments we undertake will require new
configurations of business and finance, new partnerships of the
public and private sector. We need to create new business
structures to realize these strategic opportunities. What some
have called innovative business enterprises look perhaps to us
more like Japanese Keiretsu or German banking groups or
Swedish industrial groups than normal Canadian business
organizations. Words like networks, consortia and virtual
corporations can best describe these new entities.
What are some of these strategic opportunities? They abound.
Their primary definition is that they are things which no one
enterprise can undertake by itself and can only be undertaken
collectively. In Ontario, for example, with our extraordinary
base in auto production and auto parts, should we not be a
leading jurisdiction in the production of green cars? Should we
not corner part of that advanced environment market, whether it
is in the fuel area or in the disposal area?
The previous Conservative government did something very
good when it produced CANARIE, that extraordinary
consortium to build the electronic highway, a consortium which
defies all the rules of business. It includes traditional
competitors like Unitel and Stentor and brings in provincial and
federal governments, universities and research centres.
CANARIE is a virtual corporation dedicated to a huge task
which cannot be done by a single entity.
In health care we have the same opportunities. We have an
enormous biomedical base and no receptor capacity in industry.
In Alberta there is a consortium of small companies which is
coming together to build housing in Japan. They are creating
a new kind of business entity. That is the sort of
experimentation we need.
In Quebec, 13 industrial clusters were established by the
Minister of Industry, Gérald Tremblay. But one question must
be asked: if an industrial cluster performs well, within Quebec,
would it be possible for it to perform even better on the
Canadian level? A cluster in the petrochemical industry, for
example, or the aerospace industry. In summary, we need a
social plan for the whole of Canada, using Quebec's model as a
In short, Canada needs a budget which shows that cutting
spending, investing in experimentation and innovation must be
simultaneous events, not sequential.
Canada's economic problems are as much a function of slow
economic growth as they are of excessive government spending.
Let us make sure that both the spending problem and the slow
growth problem get equal attention in this budget.
Mr. Benoît Tremblay (Rosemont): Mr. Speaker, I appreciate
greatly the interest shown by my colleague from Don Valley
West for the Quebec model. I would like to elaborate a bit on
what he said particularly on development strategies.
Because Quebec has a strategy in certain sectors, our
colleague from Don Valley West says: ``Listen, if a development
strategy is good for Quebec, would it not be good for Canada as a
In some cases, I say yes. For example, for years we have had a
proposal for a high-speed train between Quebec City and
Windsor. We are anxious for the government to move on that
because these technologies are important for the future and
would benefit both Quebec and Ontario.
In other sectors, it is unfortunately not the case. That is not
unfortunate, in a way, since the sectors we choose cannot always
be the same. A good example is nuclear energy. The federal
government has spent on nuclear energy hundreds of millions of
dollars which have essentially benefitted Ontario.
Quebec has enough hydroelectricity for years to come and it
has never really been interested in investing in nuclear energy.
But, through the federal government, Quebec taxpayers have
been forced to spend on nuclear research those hundreds of
millions of dollars which now essentially benefit Ontario, which
moreover competes with us on the New York market.
Then I say: ``Listen, if it is true in an international context-in
any case, Quebec like the rest of Canada is increasingly
becoming an economic region of North America-we can no
longer implement projects for Canada, with economic and
competitive implications, without taking into consideration the
whole of North America''.
It is obvious that a region like Montreal is in direct
competition as much with Boston and New York as with Toronto
and other cities and can therefore also probably conclude joint
ventures with them. The political structure is losing importance
on the international scene. We must each invest in projects, in
sectors that are important for our future.
We can have joint projects with Ontario because we have
mutual interests. But we have diverging interests in other
sectors, where both Quebec and Ontario will have to find other
partners in the world.
Mr. Godfrey: Mr. Speaker, I want to thank the hon. member
for his question.
It is extremely interesting, but in a way it is the paradox of
Quebec, if I may quote the hon. member's leader. In other
words, if it makes sense to have industrial clusters at the Quebec
level, why not at the Canadian level? Because we control our
own territory we can create a tax atmosphere that is not the same
as that in New York but that could be the same everywhere in
What I have always admired most about Quebec over the past
30 years is the willingness to experiment that has found new
funding formulas. The Caisse de dépôt et de placement, for
I agree that if the high-speed train makes transportation
sense, if it is not just a luxury, then yes, it is exactly the type of
joint experimental project we should be trying out. We have to
take advantage of the fact that we are after all a common market.
Lastly, if we are going to create clusters, we have to concede
that in some cases-atomic energy, for example-it makes
sense to have the headquarters in Ontario. In the case of the
aerospace industry, on the other hand, the headquarters should
be in Montreal, with a branch plant, for instance De Havilland,
in Ontario. The trick is to have networks all over the country that
can benefit from all the resources. That's what we did not have
during the unfortunate business of Connaught BioSciences Inc.,
where there were the resources, in Quebec as a matter of fact,
both technical and financial, and we missed the boat.
Hon. Audrey McLaughlin (Yukon): Mr. Speaker, I
congratulate the member for Don Valley West on his maiden
speech. I guess we all know that there are not many maidens left
here. I would say that his comments were very perceptive and
bear paying close attention to.
Certainly coming from a rural northern area one of the crucial
problems we have is access to capital. During the election I
know his party spoke about an investment fund for small and
medium sized businesses. The New Democratic Party presented
a very comprehensive proposal for a national investment fund
wherein we could utilize both public pension funds and private
funds to help entrepreneurs. There are many in the country and
many young people who now want to start their own business.
They may indeed be very small enterprises.
As well as the industrial strategy to which the member
referred, could he give his views on the necessity to ensure that
we can get capital to small businesses in all areas of the country,
rural as well as urban?
Mr. Godfrey: Mr. Speaker, I thank the hon. member for
We talk specifically in the red book about new kinds of funds
called expert funds based on the model of MDS Capital, a health
care outfit, and investing on the basis of its expertise. That is the
kind of new model we need wherever businesses find
themselves, whether they are in small or large communities.
What makes the difference is a fund that understands the
nature of business and is prepared to put equity into it as well as
lend money to it. That will also have an effect on the way banks
conduct their businesses in the future.
Mr. Nick Discepola (Vaudreuil): Mr. Speaker, I congratulate
the Minister of Finance on his initiative in making the budget
preparation an open and consultative process that allows
Canadians from coast to coast the opportunity to be heard and,
more important, the opportunity to be consulted prior to the
adoption of the budget. I hope it is reflective of the way future
budgets will be prepared by all ministers of finance.
I was considering what I would do if I were minister of
finance. I would ask myself the questions: How did we get into
this mess in the first place and, more important, how are we
going to get out of it? Canadians from every walk of life know
full well that the state of the economic mess that has been
collectively created must be addressed.
My first recommendation to the minister is to tell Canadians
the exact state of the Canadian economy. Canadians have a right
to know the state of their fiscal house.
The people of Canada and of Quebec know vigorous action is
needed. Greater Montreal, which used to be a prosperous city,
has been hard hit economically. Many plants have closed their
doors. The unemployment rate, especially among young people,
has reached unacceptable levels, and the percentage of families
living below the poverty line is climbing steadily.
It is high time we got back to basics. We have to learn to live
within our means, to respect every dollar that is earned and do
more with much less.
Our government's aims and objectives are well known. We
want to encourage economic growth and job creation, we want to
protect those who cannot protect themselves and above all we
want to reduce the deficit.
How to tackle the challenge? It is important not to go in for
stop-gap, temporary solutions. On the contrary: our approach
must be balanced, rapid and complete. And above all we must
take care not to hurt the burgeoning economic recovery.
We must launch an unwavering attack on the deficit, all the
while balancing our revenue sources, carefully reducing our
expenditures and bolstering the economy so as to increase the
growth now anticipated to reach 3 to 4 per cent.
Balancing these elements demands that Canadians undertake
a thoughtful evaluation of the expectations of government. In
turn government must be politically brave. We must be frugal
and the mismanagement of public funds must be halted. We
must go after every single dollar of savings, and duplications of
services must be eliminated.
What must be the priority of the Minister of Finance? In my
humble opinion the only priority is one of jobs, jobs, jobs.
Government alone cannot create jobs. It must however generate
and foster an environment under which the private sector can
grow in order to better create those desperately needed jobs.
Government must develop a climate fostering competitive
advantage. All the while it must maintain a healthy social
I believe our government is on the right track with the recent
signing of the NAFTA and the GATT. Canada is now well poised
squarely within the new global marketplace, offering
opportunities that will allow business and industry to take
advantage of the new international markets.
These agreements are a good start, but I ask the Minister of
Finance to live up to the government's commitment to assisting
small and medium sized business. Time and time again small
business has created 85 per cent of new jobs. The time has
finally come to act. If the Minister of Finance wants those
desperately needed jobs then the government must give those
900,000 entrepreneurs access to desperately needed capital.
The requirement for personal guarantees for small business
loans must be removed immediately.
The riding of Vaudreuil, which I have the privilege of
representing, is composed of both rural and urban areas. The
main activities of the rural part of my riding centre on corn,
dairy farms and poultry breeding.
Grain producers in Vaudreuil have taken the initiative of
setting up an ethanol fuel producing plant that will be financed
by the business community as well as the producers themselves.
Besides being a clean and environmentally friendly fuel, ethanol
will assist in increasing corn production in the region, helping
by the same token farmers in my riding who are in dire straits.
Such a factory would give direct full-time employment to 300
people, and its construction would create 600 jobs. The only
impediment is the fuel tax, which would have to be eliminated if
ethanol is to become an economical alternative to gas for
It is very easy to increase the taxpayer's fiscal burden. But I
would like to warn the Minister of Finance against the lure of
easy money and urge him not to increase income tax for
Canadian men and women, as they are already paying the
highest taxes in the industrialized world. A report published in
November 1993 by the OECD shows Canada's unenviable
position among the Group of Seven; for the last three years,
Canadian families have known the highest income tax increase
as well as the sharpest decrease in net income.
The Minister of Finance must, therefore, look elsewhere for
new revenues. Or else, and this is quite feasible, he could reduce
expenditures in different fields, by restructuring the machinery
of government and the way in which services are delivered.
In my opinion, the first thing to do is demand that each
department justify its budget. A reward system evaluating the
performance of administrators in each department should be set
up. We could then estimate the savings and costs linked to the
new guidelines, as well as the amount of red tape required.
We must put a stop immediately to the spending spree that
several departments embark on when March 31 looms near, at
the end of every fiscal year. However, let us reward thrifty
administrators and penalize big spenders!
We must approach governmental services in a new way, which
does not mean that government should relinquish its role or give
up delivering services which Canadian men and women have
come to expect from it.
Better co-operation between the three levels of
government-federal, provincial and municipal-would
eliminate all the waste caused by the duplication of services.
The idea is not to take away any power, but to identify clearly the
level of government best qualified to manage an area of
jurisdiction in the most economically efficient way, with the full
co-operation of the other levels of government.
By eliminating bureaucratic duplications and overlappings,
we would save money at all levels. First, individuals and
businesses would have to deal with less levels of government,
thereby reducing their administrative costs. Second, doing away
with some costly departments would mean immediate savings
for taxpayers and governments alike. Third, co-operation
between the federal and provincial levels of government would
increase the efficiency of services provided and produce
economies of scale which would entail enormous potential
savings without jeopardizing the quality of those services.
Other areas I would urge the Minister of Finance to look at
would be in the reassessment of all government assets: tracts of
land, buildings, commercially competitive enterprises and other
assets that are no longer central to the needs of restructured
I encourage the Minister of Finance to introduce debts bonds
in which Canadians could participate, knowing that every dollar
they invest would go directly to reducing the debt. With
domestic borrowing interest payments will flow back into the
Canadian economy thus allowing the government to reduce its
external debt and retain better control of its own economy.
Another idea I would propose would be the tax lottery on
gambling and winnings. I am sure every Canadian would be in
agreement. Speaking of lottery, why not implement a Canadian
debt lottery? It may encourage participation from Canadians
who normally do not participate in lotteries. The proceeds
thereof could be split between the Canadian and provincial debts
based on an equitable formula.
In conclusion, economic and fiscal renewal in Canada will not
be an easy task but it is far from impossible. Realistic options
exist for new approaches to debt management, the
administration of government and the framework it sets for
economic growth. All we need is the political will and
Canadians will follow.
Mr. Jake E. Hoeppner (Lisgar-Marquette): Mr. Speaker, I
congratulate the hon. member on his excellent speech. I share
his concern in the farming industry.
I was wondering whether he would like to comment on what
his thoughts would be in resolving some of the management-la-
bour problems we seem continually to have in the grain industry.
This issue has bugged and hurt farmers for years. What are the
member's feelings on that?
Mr. Discepola: Mr. Speaker, as I mentioned before about 60
per cent of my riding is rural. During the campaign I had the
opportunity to meet with many dairy producers as well as grain
producers. I must admit it rarely surfaced during my campaign.
Many dairy producers are quite satisfied with the supply
management system and it works very well.
With regard to grain producers they are desperately in need of
other sources of prospects for development products. The main
project we have in mind, not only for the area of Vaudreuil, is a
task force on ethanol development as was mentioned yesterday
in the House. I think that would benefit Canadians, especially
those in rural areas.
I have not experienced the management problem but I thank
the hon. member for the question anyway. If he has any ideas I
would not mind discussing them with him.
Mr. Dennis J. Mills (Parliamentary Secretary to Minister
of Industry): Mr. Speaker, I too compliment the member on his
remarks, especially the portion of his speech that dealt with the
necessity of us getting more access to capital for small business.
Would the member take the remaining minute or so to give us
some of his ideas that we might consider implementing so that
we could be much more aggressive in that area?
Mr. Discepola: Mr. Speaker, I thank the member for his
question. Being in small business myself, having founded a
small business in 1976, I had the misfortune of having to deal
with financial institutions.
I have talked to many small business people. Every single one
of them without a doubt-and the majority has seven or eight
employees or less-is prepared to hire one or two employees if
given access to capital. Instead of investing and putting their
hard earned life savings on the line, they would like to invest
through proper access to business loans to introduce new
projects they have in mind.
If we could encourage small businesses to take the initiative
on their own to put forth projects they have had on the
backburner for many years, we would go a long way toward
creating the jobs desperately needed in the country.
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot): Mr. Speaker,
I want to thank the Minister of Finance for this opportunity to
outline our expectations with regard to the forthcoming budget,
away from the media scrums we saw during the past month and
certainly a change from Question Period, where the minister has
made a habit of leaving questions unanswered.
In this debate, the Bloc Quebecois maintains that to carry out
a tax reform that is fair, effective and sustainable and to avoid
drastic cuts in public spending and, especially, in social
programs, the Minister of Finance will have to do very shortly
what we have been asking him to do all along, and that is set up a
special parliamentary committee to examine federal spending
and the federal tax system.
It is really too bad that so far, the minister has failed to
respond to requests in this respect from the Bloc Quebecois. In
this House, the words transparency, democracy, co-operation
and responsibility are often mentioned, but acting according to
these principles is another story altogether.
Everyone here is aware of the pitiful state of our public
finances. Everyone is convinced that appropriate steps must be
taken to turn the situation around.
The federal debt, as a number of colleagues mentioned earlier,
recently rose to a record $507 billion.
The situation has deteriorated since the recession. The deficit
has risen from $31 billion in 1991 to $45 billion in 1994. The
Canadian government's operating deficit is now 6.2 per cent of
GDP or, according to the OECD, twice that of the United States.
The government's performance in terms of the deficit and the
state of its finances in general is mainly due to an unexpected
drop in tax revenue.
This drop is very disturbing, because it occurred despite a
measure of economic growth. There is necessarily a connection
between lower tax revenues and the growth of the so-called
The disastrous state of our public finances cannot be allowed
to continue, because generally speaking, it restricts the
government's ability to deal with the real problems, and
especially unemployment. The deficit alone drains domestic
savings and increases Canadian borrowing abroad. In fact,
between 1983 and 1992, the proportion of the federal debt owed
to non-residents more than doubled. Of all G-7 countries,
Canada has the highest foreign debt. The state of its finances
undermines Canada's credibility and is harmful to investment,
because of the risk premium which is a factor in raising
Canada's interest rates.
The prime cause of the disastrous state of our finances is the
state of the economy. We are just coming out of a very long
recession, one of the longest and worst since the depression in
1929. Economic recovery is slow to get off the ground and is in
fact much slower than in 1982.
This recession which we all deplore is due, first and foremost,
to the dogmatic policies of the Bank of Canada, which caused a
substantial spread between short-term real interest rates in
Canada and those prevailing in the United States at the time. Mr.
Speaker, when will the members on the other side of this House
understand that the real rate in Canada, the only one that matters
to investors, has slipped by more than 6 per cent compared to
the US rate. Under the circumstances, how are we supposed to
attract investors and keep our Canadian investors on the
domestic market? The situation is unacceptable!
Because of this policy, and primarily because of the previous
government's policy, we entered into the recession during the
first quarter of 1990, that is before everyone else. The ensuing
downturn in the world economy exacerbated the situation in
Quebec and in Canada.
When we examine the situation, we note that since April
1992, Quebec has recovered a scant 25 per cent of the jobs lost
during the recession, whereas in the rest of Canada, the figure is
considerably higher, namely 60 per cent. The unemployment
rate remains unacceptably high. It hovers at roughly 13 per cent,
and at 11.2 per cent for Canada. These unacceptable levels hide
the real tragedy faced by hundreds of thousands of Quebecers
We have been waiting a long time for the recovery, the one
which according to economists' figures, has been under way for
nearly two years now. The recession and the slow recovery,
coupled with the underutilization of Canada's output potential,
have contributed to a decline in government revenues.
According to a study by the International Monetary Fund, of all
G-7 countries, Canada's deficit is the most sensitive to the state
of the economy. Furthermore, as the leader of the Opposition
mentioned this morning in his excellent speech, still according
to an International Monetary Fund study, even if the Canadian
economy had achieved its full potential in 1993, we would still
continue to rack up in the coming years deficits in the order of
3.5 per cent of GDP. Therefore, what we are also facing is a
structural problem in Canada.
This problem is related to the nature of the federal system, and
to its chronic, historic inability to adjust to new social and
economic realities. I can give several examples of how the
nature of the system is responsible for the anemic recovery.
First, in view of the poor distribution of powers and federal
encroachment upon provincial areas of jurisdiction, the system
leads to program duplication and overlap, resulting in an
inability to achieve the very aims for which the programs were
created. It is estimated that duplication costs Quebec roughly $2
to 3 billion per year.
Here is a second example of how the system contributes to an
anemic recovery. Because of the nature of the system and the
natural tendency to centralize everything, the two levels of
government compete with each other to see who can provide the
most, not the best, services. We have seen this happen in many
areas such as manpower training, regional development and
transportation, a field with which I was associated in the past.
Under this system, the rule never changes. The federal
government must have the highest profile, the Canadian flag
must nudge out all provincial flags, including Quebec's. The
result is inefficiency, duplication and encroachment on areas of
My hon. colleagues opposite persist in brandishing their red
book each time we raise a concern or point to economic inertia.
However, the facts speak for themselves. Our system is
outmoded and in decline.
Third, the federal system results in a lack of cohesion and
policy integration, thus impeding a healthy recovery with
respect to jobs, economic growth and consequently, tax
revenues. We cannot emphasize too strongly the problem of
integrating the various components of income security,
manpower training and labour market integration or the need to
decentralize for the sake of efficiency and subsidiarity, needs
which are very clearly understood in Europe, particularly with
Not only is this system inflexible and inadequate in terms of
generating a steady economic recovery and adequate fiscal
revenues, it has lost any sense of priority, thanks to those who
have kept it running for decades, often the same people who
today sit in this Liberal government. In a world in constant
upheaval, certain priorities are inescapable.
The legacy of federalism in the area of R and D funding and
training is one good example.
Canada spends the least on research and development, 1.4 per
cent of GDP, compared to 3.1 per cent in Japan and 2.8 per cent
in the United States. It is outrageous that we have not made a
priority, historically, of such a key sector as research and
The federal R and D legacy for Quebec is even worse, since
over the past 30 years Quebec has only received between 12 and
18 per cent of R and D spending, while Ontario got over 50 per
cent. It is not surprising, then, that Quebec is not getting its
share in the economic recovery. Historically, Quebec has been
weakened because the structural benefits related to R and D have
not taken place there, and the federal government has
contributed to that problem.
At the same time, Canada has turned in a notably poor
performance in training and business training. Nevertheless,R and D and manpower training are the keys to meeting the
challenges of globalization, to a sustainable recovery, jobs, and
adequate tax revenues. That is self-evident. It is not surprising,
given the poor performance of the system, that in only two years
Canada had slipped from fifth to eleventh place among
industrialized countries on the competitiveness scale of the
World Competitiveness Report in 1992.
It is not surprising either that according to the same report
for 1993, Canada's future prospects ranked 20th out of 22. We
see Quebecers and Canadians losing faith in political
institutions. In a world of constant change, we cannot simply
mark time indefinitely.
Faced with all that, this whole mess, and faced with a
government that gives people no hope, except constitutional
conferences, now economic conferences, conferences on human
resources, conferences that will drag on and on with no solution,
we have a better idea of why those who have been left behind and
those who have been crushed and strangled by Canada's tax
system, namely the middle-income people, are cynical about
We had better understand their feeling of revolt, their feeling
of powerlessness and their frustration at not being able to make a
real choice except once every four years and at having the wool
pulled over their eyes in the meantime. We have a better
understanding, even if we do not agree with them, of the reasons
many of them are forced to turn to the underground economy, to
the black market, thus cutting into government revenues and
worsening the state of the government's finances.
The problem of contraband cigarettes is only an expression of
a much more serious situation than those who claim to govern us
would admit. It is simply an expression of a widespread
disillusionment and even disregard felt by Quebecers and
Quebecers will soon choose what they think will be a more
promising way to the future than what the present system offers.
When Quebec becomes sovereign, of course it will take charge
of its destiny and Quebecers will be accountable to themselves
and to History; it will also be an ideal opportunity for Canadians
to redefine themselves, to create institutions that reflect who
they are, with a strong central government if they so wish and
wall-to-wall national standards if that is what they want. In
short, Canadians will have every opportunity to develop on the
basis of models that suit them and that we respect but no longer
share as Quebecers.
Meanwhile, to get into the subject before us today, and so that
I will have time to get my whole message across, I would like to
tackle head-on the issue of public finances. Since the Minister
of Finance began consultations, many have said that it is not
possible to put the public finances back in order without cuts in
social programs, because transfers to individuals and provinces
account for more than half of program spending. The way the
government's consultations, led by the Minister of Finance, are
going, we are inclined to think that he and his colleague, the
Minister of Human Resources, are tempted by that solution.
If not, how do you explain that in his department's own
booklet on Canada's economic challenges, it is said that our
social security and health systems are too generous? How do you
explain that the member for Hull-Aylmer, who loves to travel
by Challenger jet at $170,000 per speech, could talk about
cutting the health budget by 20 per cent? How do you explain
that every time I asked him in this House to deny the rumours
about it, the Minister of Finance never did?
The statistics that were quoted in this House yesterday on
underemployment and on the poverty of women and children
should have convinced us and convinced this government that
social programs must not be tampered with, that the less
fortunate members of our society must not be targeted, as the
previous government has been criticized for doing.
These figures should have convinced the government to stop
hounding those who are hard up, as we would say, and to try
instead to improve their well-being and prospects by putting
into place adequate economic policies and taking corrective
action such as restoring funding to social housing which was
shamefully cut by the previous government.
The second option, one apparently favoured by the Minister
of Finance, is to draw on middle-income taxpayers. We, from
the Bloc Quebecois, do not think this is appropriate either.
Sound management of public finances is required. The
middle-income taxpayers, who have borne most the 68 per cent
increase in federal taxes since 1984, are not able to contribute
additional tax revenues. They are overburdened.
They should not be the ones affected by the broadening of the
tax base this government is considering because, as I said, the 68
per cent increase in federal taxes was borne mostly by those
taxpayers. Again, the Minister of Finance is tempted to adopt
this course of action.
On January 28, the headline in La Presse read-and I will
have to use the name of the minister-``Martin has his eye on
seniors and social programs''. The article went on to say that the
minister intended to tax health care and insurance plans that
employers contribute to and was contemplating measures
affecting certain exemptions benefiting middle-income seniors
as well as the capital gains exemption and the limit on RRSPs.
The Bloc Quebecois believes that the middle-income taxpayers
deserve a break.
As part of the public finance review process, it was suggested
that, to put finances back on a healthy footing, transfer
payments to the provinces should be cut. The solution does not
lay there either. In the end, the same people end up footing the
bill, except that the provinces, Quebec in particular, bear the
brunt of the cuts and the fiscal restraints, while the federal
government is washing its hands of the matter.
The provinces have done more than enough in that respect
since 1984. Let us just say that, from 1984 to 1993, the rate
of federal transfer payments to Quebec-I am taking the case
of Quebec because it is the one I am most familiar with, but
this probably applies throughout Canada-has dropped from 29
to 18 per cent.
During the same period, the federal government share in the
financing of health and post-secondary education programs fell
from 45 per cent to 32 per cent.
These drops in federal contributions to Quebec resulted from
several measures taken by the federal government to pass on its
public finance management problem to the provinces.
Just for established programs financing, the Quebec Minister
of Finance estimated that, for fiscal year 1992-93 alone, federal
cuts cost the Government of Quebec nearly $2 billion in lost
revenues. Who paid for that? The taxpayers, the same taxpayers
on whom the former Minister of Finance levied a special tax.
That is not where the money should come from. The tax base
needs to be broadened, but by eliminating tax loopholes
benefitting high-income taxpayers and big corporations. I see
that I have only two minutes left. So, I will just quote a few more
In preparing his Budget, the Minister of Finance should think
of the richer Canadian taxpayers. According to Yves Séguin, an
eminent Quebec tax specialist and former Quebec Minister of
Revenue, in 1991, 368,000 of them reported $68 billion in
income on which they were taxed at an actual rate of 18 per cent,
while the basic tax rate was 29 per cent.
By adding just three percentage points to their actual tax rate,
the government would have recovered $2 billion in new tax
revenue that year, but chose not to.
I would suggest that the Deputy Minister of Finance get
money from the thousands of corporations that did not pay a
single penny in taxes. It is obvious that all the numbers are not
out in the open. The Department of Finance has been compiling
data since 1987, but according to Léopold Lauzon, another
well-known Quebec tax accountant, 90,000 companies made
$27 billion in profits that same year without paying any taxes.
A minimum tax of say 10 per cent on these profits would have
allowed us to collect almost $3 billion more in new tax revenues.
Why are we not doing it? The Bloc Quebecois is urging the
Minister of Finance to impose on corporations a minimum tax of
up to 10 per cent for instance. That is where we must look for the
billions of dollars missing from the federal coffers.
It is the same for family trusts. We have talked about it but
there are not enough truly comprehensive studies in this regard.
A figure of $350 million in annual tax losses was put forward by
Claude Picher of La Presse and confirmed by other analysts
elsewhere. But we know that there is probably more money in
these family trusts. In 1982, the most recent year on record,
total assets in trust amounted to $87.7 billion although this
amount includes other things besides family trusts. We do not
know the true extent but we do know that we can add hundreds of
millions of dollars to the federal Treasury by putting our foot
So we are reiterating another request of the Bloc Quebecois:
to set up a parliamentary committee. I heard the Finance
Minister say this morning that we had to wait until 1995 and
follow the process leading to the preparation of the 1995-96
budget. We cannot wait until 1995-96. The Minister must
immediately set up this special parliamentary committee to
fully review the federal government's overall budget and fiscal
spending in order to implement a lasting and equitable reform
and especially to close loopholes and eliminate tax inequities I
pointed out to you earlier, Mr. Speaker.
My colleague, the hon. member for Joliette, will speak further
about the Auditor General's new revelations as there are
hundreds of millions of dollars to be collected there. In
conclusion, I would like to convey through you to the finance
minister the following message: I hoped before the holiday
season that the finance minister would not renew the Canadian
monetary policy pursued by the former Governor of the Bank of
Instead, he appointed the right-hand man of the former
Governor of the Bank of Canada with essentially the same
mandate, namely monetary and price stability regardless of
economic growth. I am asking him through you to review this
monetary policy to strike a balance, as many economists, and
not only the 90 per cent of economists here in Ottawa but people
such as Pierre Fortin, are asking him to strike a new balance
between his objective of long-term price stability on the one
hand with short-term employment growth and economic
development on the other.
Mr. Nick Discepola (Vaudreuil): Mr. Speaker, I would like
first of all to congratulate our colleague, the member for
Saint-Hyacinthe-Bagot, on his speech. I agree with many of
his concerns, some of which I also mentioned in my own
I feel the member for Saint-Hyacinthe-Bagot missed a great
opportunity. Since he is the critic for finance, I listened
carefully to what he had to say but his statement remained very
general; I would have hoped for something more precise. I share
his views, particularly in the areas of research and development
and small businesses.
As I said before, he had the perfect opportunity to make his
point and I would have hoped for more concrete and precise
As regards my riding and my beautiful province, I get
frustrated when I hear day after day the B.Q. and the P.Q. say
that the problem with the economy of Canada and of Quebec
is that the federal system no longer works, that the problem
with the rate of unemployment in Quebec is that the federal
system no longer works.
Today for the first time in the history of our Parliament, we
had a perfect opportunity to say something concrete.
I repeat my question to the member for
Saint-Hyacinthe-Bagot: If ever Quebec were to become
independent, what percentage of the tax burden, and especially
the debt, and what percentage of unemployment insurance and
other social systems would it be just for Quebec to take on,
according to him? Is it not better for all Quebecers and all
Canadians to work together towards building a better country
and a better province?
Mr. Loubier: Mr. Speaker, I want to thank my colleague for
his remarks. If I was not clear enough, let me add a couple of
words to make myself perfectly clear this time.
My message to the Minister of Finance is as follows. First, he
must not target those members of our society who are having the
worst possible time right now, I mean the unemployed actively
looking for a job; and the majority, the vast majority of them are
actively looking for a job.
Second, he must not target the people on welfare, through cuts
to the Canada Assistance Plan, and other transfer and
equalization payments aimed at improving the fiscal situation of
Also, I ask him not to cut those transfer payments to the
provinces, as a whole, since, in the end, there is only one
Furthermore, I am ask him to spare those who have been
paying taxes, carrying an ever increasing burden since 1984, and
who are fed up; I mean the middle-income earners. That is
essentially the first message I wanted to convey.
The second one is that he should tackle the real problems, the
tax loopholes. I mentioned a whole series of them, I could have
added more to the list; in fact, there are many studies, albeit
incomplete, to back me up. The studies are there but the extent
of the problem regarding tax loopholes, especially family trusts,
is not fully known.
It has been said, and this is not out of line, that a minimum of
$350 million is involved here. It might require the House to
unanimously give the Auditor General a mandate, well within
his authority, to conduct an in-depth study of tax havens, family
trusts and the like. That would be the only way. That study
should be an integral part of the proceedings of the ad hoc
parliamentary committee the Minister of Finance has been
asked to set up. He would then combine that study with the
Auditor General's report and the committee's democratic
proceedings. That is the first part of my message.
The second one, Mr. Speaker, is that the ball-I am referring
to sovereignty versus federalism-the ball is going to be in my
colleague's court and in his federalist colleagues'court, during
the next provincial election, but most of all, during the ensuing
referendum debate. In the last five years, there has been no
proof, on the contrary, that the system can be changed to respond
to Quebec's aspirations.
So, I will ask my colleague to conserve his energy because in
the upcoming debate he will need all of it to demonstrate that the
system can meet Quebec's expectations and that it can foster
economic development and take up the many challenges we face
in a global economy.
Ms. Mary Clancy (Parliamentary Secretary to Minister of
Citizenship and Immigration): Mr. Speaker, I am delighted to
be here and to congratulate you on your appointment. I am
delighted to be taking part in this debate today with my first
speech, while not my maiden speech, in this Parliament. May I
also say that the view is different from this side of the House. I
want to take this opportunity to thank the people of Halifax for
letting me have this view. It is one which I hope to keep well into
The election that we all came through last fall was a landmark
in more ways than one for the people of Canada. Our country had
been in difficulty and remains challenged by numerous
problems for its people and for its government. There was a
resounding message sent by the people of Canada to this place,
to its members, to the government and to all of us. That is that
the overwhelming concern of Canadians is the concern for jobs.
I remember hearing a commentator once talking about the
way citizens watch the news. They watch the news and ask if it
affects them, their family, their neighbourhood, their city, their
province, and their country.
If the answer is no to all of those, then the next thing is how
much entertainment value is there in the item.
The late great speaker of the American House of
Representatives, `Tip' O'Neil, said it very well when he said
that all politics are local. The most local of those issues for
Canadians is the question of a job, job security and providing for
I am delighted to be on this side of the House, led by the
Prime Minister, the Minister of Finance and other members of
the cabinet who have put the highest priority on job creation
and economic growth.
It is time that the compassionate side, the understanding side
of government was foremost in the eyes of Canadians. It is time
that the people of this country know that those people they have
put in positions of power are determined to see that life
improves, that this country, the most favoured one on earth,
lives up to its potential and ensures for each of its citizens the
kind of life that our birthright should be giving to us.
I look at the specific programs that were promised in our
much vaunted red book and again I am reassured because we are
keeping our promises. As members of Parliament, as the
governing party, as all members of this House, whether in Her
Majesty's Loyal Opposition or on the government side or sitting
as independents, we know that the people of this country have
said to us that there is much to be proven.
Those of us who were fortunate enough to receive a second or
in some cases a third or a fourth election from our own electors
cannot rest on our laurels because we too have much to prove to
the people of this country. It is absolutely essential that the
question of trust be restored between those of us who sit in this
chamber and the people who put us here. It is absolutely
essential that the profession to which each one of us belongs, the
profession of politics, be allowed to earn back some of the much
lost lustre that we saw go down the drain over the past number of
I believe that this can be accomplished, not easily, not
quickly, not overnight, but it can be accomplished.
I am delighted, for example, that the infrastructure project
that was much talked about during the campaign is underway
and beginning in all parts of this country. I am further delighted
that programs such as the residential rehabilitation assistance
program and the youth service corps will be initiated to create
jobs and to restore perhaps the most important element, the
element of hope for Canadians of all ages.
We know what the job is before us. We know that we must
invest in Canada's businesses. We must work with small and
medium sized businesses which are certainly in my much
beleaguered region of the Atlantic the backbone of the economy.
For five years on the other side I railed at a government that
did not listen and seemed to have a search and destroy policy
with regard to the Atlantic. Atlantic Canada does not deserve to
be the stepchild of Confederation nor will it remain so under the
policies of this government.
Small business is the way to go in Atlantic Canada. The
infrastructure projects that are being worked on there right now
will be the jump start. In the long term it will absolutely be the
change in policy toward small business, the unfettering of small
business that will bring us into our proper place.
I have said for five years and I hope for a further five years I
will say we do not like to come cap in hand. We are a very proud
region. We are a region that has sent to other parts of this country
educators, lawyers, politicians, community activists, bankers,
you name it. We will continue to do so.
Governments must understand that those of us who come
from the Atlantic region are really disjointed and cut off if we
have to stay somewhere else for too long. We live in a very
special part of the country. It is a part of country that we want
our children to be able to inherit from us and to be able to make
their place in the greater Canadian society.
We are very fond of our brothers and sisters in central,
western and northern Canada. We like to visit. We like them to
visit us. However we do not want to see the four small provinces
clinging to the Atlantic Ocean become have not provinces but
provinces that stand as equals in Confederation.
We believe that this will happen because of the policies
outlined in the red book. We believe that this will happen
because of the commitment of the Prime Minister. We believe
that this will happen most definitely because of the
determination of the people of those four provinces.
The federal government understands full well its
responsibility to the people of this region and indeed to the
people across the country. It is important that we keep the
promises we made and we will do so. It is even more important
that the country as a whole sees the results of these promises in
the programs that the federal government will put forward.
It is important, for example, that the Canadian government
provide capital to attract high tech business such as the Red
Cross blood fractionation facility scheduled to be built in
Halifax. This facility alone will create up to 400 permanent high
tech jobs and $11 billion in economic spinoffs in the
metropolitan area and the province of Nova Scotia.
This would be an amazing project for almost any centre in the
country. In Atlantic Canada, it is the kind of thing that we have
been seeking and attempting to attract for a long time. I must
compliment the provincial government in Nova Scotia, most
particularly the minister of development, for the work done to
bring that plant to the metropolitan area.
Our government also must take advantage of the fact that
Canada is a trading nation. Jobs and prosperity depend on our
ability to sell products abroad.
On that note I speak again of the city of Halifax and the great
port of Halifax which, until last week, was the largest ice free
port in the world. We had a little bit of ice last week. No doubt
it was the cold air coming from central Canada. It was a great
shock for Haligonians to wake up and see icebreakers working
in their harbour. Tied up in the harbour and sailing in and out
is one thing but having to break the ice in our harbour is a great
shock to our systems. We hope that it will not happen again.
Unfortunately, I do not believe there is anyone in this Chamber
that can actually control that.
An hon. member: It is questionable.
Ms. Clancy: Yes, it is questionable.
The port of Halifax is perhaps the greatest single asset in the
industrial sense in the province of Nova Scotia. I can go back to
the quotations of the days of wooden ships and if you will pardon
my paraphrase or my editing, Mr. Speaker, wooden ships and
iron persons. In the province of Nova Scotia, our port is again
ready to be a major player in the industrial development of
Canada, in particular with regard to our enhanced trading
We have frequently been accused of seeing only in Atlantic
Canada the north-south aspects but we also see the east-west.
The port and the transportation links out of the port of Halifax
can be of tremendous benefit to all Canadians. We in the port of
Halifax invite hon. members who sit in this Chamber to come to
see the facilities we have and to see what a tremendous asset this
is and can be to the people of Canada.
Along with our developments in business, trade and job
creation we also have to ensure, as I said earlier, that Canada
remains the compassionate country the rest of the world
believes us to be.
I compliment the Minister of Human Resources Development
on his announcement yesterday and on the initiative that he will
take to ensure that compassion and common sense remain the
keystones and the key notes of a Liberal government.
Mr. Speaker, I thank you for the opportunity to take part in
this debate and I look forward to further debates in this House.
Mr. Ian McClelland (Edmonton Southwest): Mr. Speaker, I
want to assure the hon. member that the view from this side of
the House has improved considerably as well. Although I am
new here, I think that is probably the case.
I spent some of the best years of my life, from 17 to 20 years
of age, in the maritimes. I wonder if the member could think
back to what caused the diminution of the prospects of the
maritimes in the first place. After all, the first settlements in
Canada took place in Nova Scotia in Annapolis Royal and the
Bay of Fundy. What happened in the maritimes to cause the
diminution of the prospects in the first place?
Ms. Clancy: Mr. Speaker, I thank the member for Edmonton
Southwest for his question. Actually when I heard the direction
of the question I was thinking that as a child growing up in a very
political household I heard the answer to that question a lot.
Let me begin by saying that maritimers are very committed
Canadians. Indeed we have been tried. That is why it can be said
we are passionately committed to this country, to its future and
to its prospering.
There are many things. First, the sort of downhill slide did
begin at Confederation because of the emphasis on east-west as
opposed to north-south. We always had close ties to New
England, to the Caribbean. To a great extent until probably the
first war that continued.
There were questions-heaven forbid that I should bring this
up-about buying Alberta oil. Nobody would buy Cape Breton
coal nor could our apples be shipped to Ontario. There were a
number of questions with regard to trade within the country,
questions that still remain to be answered. I hope, as all of us in
Atlantic Canada hope, they will be answered over the next term
by this government.
The other thing was migration. No question. We have been
staffing the universities, courts and the public services of the
other nine provinces for a long time. While people come back
they tend not to come back until their careers are over. That has
been a problem as well.
Mainly the major problem has been a lack of an industrial
policy that truly fits the Atlantic region. It is my belief that the
emphasis on small business as mentioned in the red book and as
the hon. Minister of Finance has been talking about in his
pre-budgetary consultations are the kinds of policies and
programs that will flow from the ideas that will specifically
assist Atlantic Canada.
We do not have the population or I suppose to a degree the
inclination for megaprojects. Megaprojects were tried.
Everyone who lives in Nova Scotia can tell horror stories about
Clairtone, heavy water and that sort of thing.
However we do have both the inclination and the ability to
succeed in small business. If small business is given its head, as
I think it will be by this government, then we will see a new
prosperity in Atlantic Canada in which a number of my
colleagues are looking forward to taking part. We invite the hon.
member and you, Mr. Speaker, to visit us at any time because of
course one of the most successful small businesses in Atlantic
Canada is tourism.
Mr. Ian Murray (Lanark-Carleton): Mr. Speaker, may I
first congratulate you on your appointment. This is also my first
opportunity in the House of Commons to thank the people of
Lanark-Carleton for putting their trust in me as their member
I want to thank the Minister of Finance for convening this
special pre-budget debate. This is a worthwhile extension of the
cross-country consultations the minister has held during the
past 10 days.
The most important consultation with the people of Canada
took place late last year when each of us during an intensive
47-day election campaign heard first hand from Canadians how
they felt about their country and their governments.
The economy of my riding which is just west of Ottawa
includes small businesses, farms, manufacturers and the centre
of Canada's high technology industry. The people of
Lanark-Carleton have felt the full impact of the recession and
the realignment of international trade. I have been impressed by
the tenacity and the resilience demonstrated by many small
I am sure all hon. members listened during the election
campaign to countless individual examples of economic
hardship, personal bankruptcies, jobs lost or families squeezed
by ever-increasing taxes demanded by every level of
On October 25 Canadians voted for change. They demanded a
change from a system that fostered dependency to one that
rewarded initiative; a change from a climate of worry to a
climate of hope; and, a change from a system of privilege to a
system of fairness.
When the first budget of this government is presented it will
be judged by the men and women of Lanark-Carleton on how
we live up to our commitment to change. There is no shortage of
ideas available to the minister as he prepares the budget. There
are only difficult choices. Therefore we need a set of principles
to guide us as we make those choices. In particular, we need to
reward individual initiatives and those who create jobs for other
Canadians. We must be fair. We must agree that taxes are too
high. People have said ``enough''.
In the short time I have today I want to mention a few specific
items. Whether we like it or not each federal budget influences
the behaviour of Canadians. There will always be trade-offs but
the issues of fairness as perceived by taxpayers must be
addressed. Though we try to make the tax system neutral society
is too complex for the tax system to accommodate all of our
Personal taxation has been based on the traditional family
unit. We must come to grips with the realities of change in the
family unit, whether it be single parents, working couples or
stay-at-home dads. Like many Canadians, I am wrestling with
how we can make the system fairer by allowing for these
Several residents of Lanark-Carleton have suggested we
look at the income of the family unit as a whole. There is a sense
that families which decide to have one parent remain at home
while raising children are penalized by the tax system. One
suggestion which I personally support would allow income
splitting between spouses while they have dependent children.
I have also heard from many people who are very concerned
that the budget may target RRSP contributions. It is easy to
portray this tax expenditure as a benefit for the rich. However
for many self-employed people and others who do not have the
security of a company or government pension plan RRSPs
represent their best opportunity to save for their retirement.
The government should also continue to encourage people to
take personal responsibility for their future.
During the election campaign all parties spoke of the
importance of small business to our economy. In fact we are
looking to small business to be the primary engine for economic
growth and job creation in Canada.
If it is the role of government to create an environment to
stimulate private enterprise what can we do to show
entrepreneurs that we mean business? We must allow them to
operate free from the growing burden of taxation, required
contributions and paperwork they now face. Our priority should
be to make it easier for them to hire new employees.
Government must change its attitude and realize that the vast
majority of business people are honest, law-abiding citizens
who do not need bureaucrats and government auditors looking
over their shoulders.
Let us address the question of financing for small business
through the innovative use of the tax system. Just as we should
encourage those who create jobs we should use the tax system
aggressively to reward individuals who invest in Canadian
For example, the real problem we face as we move further into
the information age is how to finance small software companies
with few if any capital assets. Their main asset is brain power.
Though a high percentage of new high-tech companies fail,
those which succeed more than compensate for that risk. This
has been proven many times in my riding. The well-known
success stories inevitably spin off new companies. This may be
an opportunity to put the capital gains tax exemption to good use
by rewarding risk takers. Low risk investments do not need
support from other taxpayers.
Business associations have been saying for years that
government handouts to large businesses should end. Let us take
those groups at their word and channel money from existing
grant programs toward funding tax incentives for job creation.
Grants would remain available to small businesses as their more
stringent cash-flow requirements make it difficult for them to
take advantage of tax incentives.
One government-funded program that has received far too
little credit comes under the community futures program of the
Department of Human Resources Development. Local business
development centres provide loans as well as technical advice
to new or existing companies.
Over the past six years the Business Development Centre in
Lanark-Carleton has been responsible for the creation of
several hundred jobs at little cost to the taxpayer. As we look for
expenditures to cut I hope ministers will recognize the
importance of maintaining this community based program.
The first budget of this new government is only one step along
the road toward renewed prosperity and job creation. The
coming months will see the development of complementary
programs that were outlined in the Liberal election platform
As a responsible and caring government we must never lose
sight of Canadians who are the casualties of global economic
forces. As Canadians we are in this together. We do need to
ensure that scarce financial resources are directed where they
will be most effective.
I wish the Minister of Finance well as he and his colleagues
continue to work on dismantling interprovincial trade barriers
and the sooner the better.
I also believe we should keep in mind that real job creation
comes from the creation of wealth, not its redistribution. The
minister is faced with making exceedingly difficult choices in
the certain knowledge that he will not please everyone.
The people of Lanark-Carleton will be looking for a budget
that rewards initiative, inspires hope and restores a sense of
fairness in the way that government operates.
Mr. Ian McClelland (Edmonton Southwest): Mr. Speaker,
my intervention is more to my hon. colleague by way of an
observation than a question. As I listened to my colleague's
presentation I was struck by the common sense embedded in
virtually everything that I heard. I want him to know that there
are some very strong parallels on both sides of this House.
If the hon. member could in a couple of minutes expand on the
notion of income splitting for families.
This is a question that has come up time and time again, the
inequities in our tax system between working parents where two
parents are working and where the sacrifice is made with a stay
at home family.
Mr. Murray: Mr. Speaker, this has been of particular interest
to me personally over the years. I have not pursued it primarily
for the reason that in my previous job I enjoyed a high income
and it was always my sense that if someone talked about the
problems that high income earners face with the tax system they
should be dismissed as perhaps those who do not deserve to be
However, when one looks at the burden of taxes on upper and
middle income earners and if we consider that a family could be
five or six people getting by on the income of one person one
starts to realize that there is quite a bit of unfairness embedded
in the tax system.
I really had my suspicions confirmed during the election
campaign when I would go door to door. During the daytime I
would meet women who were at home raising their children and
very much feeling the pinch from high taxes.
It is only fair that the government make this change partly to
recognize that people who do stay home to look after their
children are providing a real benefit to society. Most of us would
agree that it is in the interest of the children and the interest of
society if they are able to be raised by their parents.
I have not looked into the intricacies of such a change. I am
sure it has been suggested in the past. I am sure the Department
of Finance must have looked at this as an option. It is one that I
intend to explore in the coming days. I thank the hon. member
for his comments.
Mr. Herb Grubel (Capilano-Howe Sound): Mr. Speaker,
as an economist I know most of the jokes about my profession. If
you laid all of us end to end there would be no agreement. We
never seem to hold the same opinion on anything.
Given the reputation it is amazing, however, how much
agreement there was among the 42 economists whom the hon.
Minister of Finance had assembled for some pre-budget advice
in the middle of December. Of the 42 about 36 agreed on a
number of points that I think are important to recall on the
occasion of this House debate.
First, the budget deficit has three highly undesirable
consequences that make lowering it one of the most important
tasks facing this Parliament. Other speakers in this debate have
presented or will present projections of recent trends and I will
not repeat them here. Suffice it to note that since I started
speaking about a minute ago the federal debt has increased by
One of the points made by the economy experts was that
continuing deficits threaten the viability of our social programs.
Under some reasonable assumptions by the fiscal year 2000 the
interest on the then existing debt will take up 50 per cent of total
government revenues as compared with the 31 per cent it will in
1993 and only 21 per cent it did in 1983.
As the hon. members of this House know, program spending
has already been cut so much that future cuts will result in
serious inefficiencies and public resentment. Therefore if the
deficits continue, required increases in interest payments will
have to come at the expense of social programs. It is precisely
because of this threat to social programs that Reform continues
to put so much emphasis on the need to eliminate the deficit.
The experts also noted that deficits raise the interest rate and
therefore lower investment, economic growth and home
construction. These effects are due to the fact that every year
there is only a limited amount of savings generated by the
economy. Lenders who use their money to buy government
bonds cannot lend it to firms that want to build factories or to
Canadians who want a mortgage to buy homes.
Future generations of Canadians will be hit by a double
whammy: lower capital stocks and productivity, as well as tax
burdens to pay the interest on the debt.
One of the most serious concerns expressed by the experts
was that continuing deficits raise the probability of a financial
crisis. We have all heard about the problems which face New
Zealand, Sweden, Britain and Italy when international investors
lost confidence in the ability of their governments to restrain
No one can predict what might set off such a crisis in Canada.
The Minister of Finance's economic experts were almost
unanimous in their judgment that the probability of such an
event is increased the longer the deficit persists.
The second major point on which there was overwhelming
agreement among the economic experts was that it will be
impossible to eliminate the deficit without substantial spending
cuts. An economic recovery cannot generate enough revenue to
reduce a deficit to 3 per cent of GDP, no less eliminate it. The
rate of economic growth required to achieve this goal simply is
without historic precedent and virtually unachievable.
At the same time, it is clear that the deficit cannot be
eliminated by higher taxation, either through higher rates or a
broadening of the base. Any such attempt would further
stimulate the growth of the underground economy or tax evasion
and therefore is unlikely to raise sufficient revenue.
The third point of major agreement among the experts was
that the deficit could not be eliminated by inflation. Until the
1970s, perhaps inflation could be used to depreciate the real
value of government debt. However, in today's world of
integrated and highly sophisticated capital markets neither
national and especially not international lenders will buy
Canadian bonds whose purchasing power is depreciated by
inflation unless they are compensated by a corresponding
increase in the interest rate.
It is easy to see what the public demand for such higher
interest rates will do to the size of the deficit. Every one
percentage point increase in the interest rate quickly translates
into an increase of $5 billion in debt payments and therefore the
For this reason I hope that Gordon Thiessen, the new
Governor of the Bank of Canada, will continue to pursue price
stability in the tradition established by his predecessor, John
I should further note here that inflation also cannot be used to
decrease unemployment and raise economic growth. The idea
that this is possible represents a theory that was found invalid as
a result of the experiences of the 1970s and later in Canada and
As the last point in my contribution today I would like to note
that the economic experts assembled by the Minister of Finance
offered a wide range of suggestions for spending cuts. However,
none had so many supporters in principle as did the suggestion
that spending cuts should be achieved through the so-called
restructuring of social programs. To the best of my memory,
only Michael Walker of the Fraser Institute elaborated on the
term restructuring. Mr. Walker's suggestion was based, much
like that of the Reform Party during the election campaign, on
the realisation that vast amounts of government transfers go to
families with high incomes.
Without further elaboration let me just note here that in 1992
families in the upper decile with incomes over $100,000 per
year received $2.5 billion and $1.5 billion in UIC and old age
security benefits, respectively. Similar large amounts were
received by families with high incomes by any other standard.
From these facts follows a clear and precise definition of
restructuring of social programs. It means the elimination of
transfers to those who do not need them. Would the hon.
members of this House please note this important point that
needs repeating. In the Reform lexicon, restructuring of social
programs does not mean reduction to payments to the poor. It
means eliminating payments to those families that by a wide
consensus do not need them.
During my election campaign the vast majority of high
income earners I met expressed their willingness to forego their
receipt of these benefits if other Canadians made similar
sacrifices to balance the budget.
In summary, I remind the members of this House that finance
minister's economic experts urge the government to take prompt
action in eliminating the deficit with spending cuts, not tax
increases or inflation, and that the spending cuts be achieved
predominantly through a restructuring of social programs.
Mr. Bill Blaikie (Winnipeg Transcona): Mr. Speaker, I have
just a couple of comments to make on some of the things the hon.
member had to say.
It is appropriate that the member pointed out in part of his
speech the role that interest rates play in increasing the deficit.
He was counselling against the strategy of higher interest rates
because it would have the effect on the deficit that he pointed
out. However, I think it would be useful not just to apply that
insight in terms of how not to deal with the deficit now, but
also how the deficit was created in the first place.
Much of the deficit that we have before us today was created
not by the social spending that the Reform Party wants to
criticize, but by the high interest rate years in the early eighties.
I think that is one of the holes, if you like, in the Reform
We cannot go back and change those interest rates. We cannot
go back and eliminate the debt that was created by those interest
rates. I realize that, but there is a kind of implicit blaming of
social spending for the deficit when studies have shown,
particularly a Statistics Canada study, that it was the high
interest rates in combination with tax expenditures that were
largely responsible for the deficit and not social spending.
The member's argument would be much more credible if that
were at least acknowledged. It may be that there might be some
restructuring of social programs in order, but I do not agree with
the member that the way to do it is to eliminate universality. If
high income Canadians who are receiving these benefits are so
willing to contribute to the deficit then why can we not do that, if
they are that willing, through a more progressive income tax
system whereby they would pay for these universal programs
they receive through the income tax system?
What would be the member's objection to that? Why do we
have to accept that the only way that high income Canadians can
do this is by foregoing these certain benefits and paying for them
item for item instead of accepting that for once we could have a
fair tax system in this country and high income earners could
pay the share that they have paid less and less of in the last nine
years thanks to the tax reforms of the Conservative government?
Mr. Grubel: Mr. Speaker, I appreciate the rhetoric that I
received from the distinguished member who just spoke.
The Governor of the Bank of Canada did not very happily
raise the interest rate. He was forced into raising the interest rate
because of developments in the world and because of pending
There is simply no way in which a government or a private
corporation can sell its obligations in an environment of
inflation and charge a low interest rate. It is now a well
established fact among those who are economically literate that
if we have inflation we will have high interest rates, otherwise
nobody will lend money.
I think we should see the episode of high interest rates in the
early 1980s as part of that process.
I would like to respond to the member's notion that high
marginal tax rates would be an equitable thing to do and that
there is no distinction between taking back or not paying out in
the first place social program spending transfers. High marginal
tax rates throughout the world have been shown to generate
disincentives which feed back on the welfare of the entire
society. That is why universally throughout the world high
marginal tax rates were removed. In fact, in many countries
when the marginal tax rates were lowered total revenue was
increased because effort and attempts to hide income
When I asked a student who came to me the other day what he
would do after he graduated, he said: ``I will move to the tax
haven, Seattle''. This is what our distinguished member will
have to remember, unless he is prepared to close the borders
from Canada, if he imposes very high marginal tax rates on
Canadian citizens. They, especially those who are productive,
original and entrepreneurial, will go to where they do not have to
pay these high taxes. One might say good riddance, but I can tell
the hon. member it will not be in the interests of Canadians that
these young entrepreneurs, the originators of small business
stimulation, the innovators will go to where the tax rates are
Mr. Ian McClelland (Edmonton Southwest): Mr. Speaker,
the other day the Prime Minister suggested in Question Period
that each member present had a bill of about $3 million for his or
her part of the overhead. I hope the Prime Minister pays close
attention because I am just about to pay mine off as my
contribution to this debate.
This really is the speech I was elected to give. This is why I
got into politics in the first place. I hope that over the next
couple of years I will be able to make a continuing contribution
through the caucus and through the House to our national debate
on the economy. I want to thank the government very much for
making this possible so early in this 35th Parliament. It is going
to be an evolutionary process as we go from this budget to the
I am one of those real live entrepreneurs that one hears so
many people talking about. I went to Edmonton in 1975 with
absolutely nothing. I was living in a basement apartment at my
sister's. I was paying maintenance to my ex-wife who lived in
I started with absolutely nothing and built a business that 20
years later at its peak does about $7.5 million a year with 130
employees. Today, this very day, I am proud to tell everyone that
our employees are one-third share owners in the company. As of
today, the ink is dry and we have gone one-third to our
employees, one-third to me and one-third to my partner. I am
very proud of that.
Over these 19 or so years that we have been in business I am
embarrassed to say that we have been the recipients of one grant
from the government. We got $16,000 through western
diversification. I am in the photo finishing business. I think
somehow the $16,000 grant from the federal government came
from the Western Grain Transportation Act. Figure that one out.
How did my photo finishing business end up getting about
$16,000 from the Western Grain Transportation Act through
The real question here is that we qualified for the grant
because a person came knocking on our door and asked: ``Are
you doing any expansion? If you are, I can get money from the
federal government for you. You do not have to do a thing. All
you have to do is open your books. I will go through them and I
get 25 per cent of anything you can get''. I thought long and hard
about this because we had gotten this far without a nickel from
the government and would it not be nice to get everywhere
without a nickel. But then I thought that we were paying the
taxes and if we did not take advantage of these bonehead
programs our competitors would, leaving us at a disadvantage.
Therefore we did.
We received that particular grant because we were getting
involved in another aspect of the business. Our investment was
$300,000. Does anyone in this House reasonably think that any
business person would make a business decision of whether or
not they should make an investment of $300,000 because they
can get $16,000 from the government? Absolutely not. And any
business person who would, should probably not be in business
in the first place.
Over Christmas I was having coffee with one of our
employees in the lunchroom. I said: ``Joan, if you have a word to
say, here is a chance to say it. What would you like me to say?''
She replied: ``Tell them to stop having the government take
money from me to give it to somebody else. I am barely getting
by on $10 an hour. Tell them I am sick and tired of the
government and other people wasting my hard-earned money''.
When was the magical mystical moment that we as members
of this government or elected members of any order of
government suddenly went through a magic laying on of hands
and became venture capitalists? It did not happen. We as
government take a dollar in taxes from business or individuals.
We take it into government, we chew it up and spit it out as 20
cents. We give that 20 cents to someone else to go into
competition with the very people who gave us the dollar in the
first place. It just does not make any sense.
One can see in any newspaper the government grants and
government loans, government money for nothing. There are
over 600 grants through the various government agencies that
people can get. Peat Marwick Thorne has a book on how to get
money out of the government. Large businesses have people on
staff that do nothing but get money from government.
If we had a Klondike today it would not be out west or in the
north. It would be right here in Ottawa where there are people
mining for gold whose business it is to get money out of the
government. Well that money people get is money which is
earned by individual taxpayers, $10 and $20 at a time and we
have to think about it in that context.
It must have been over 20 years ago that an hon. member of
Parliament coined the phrase of corporate welfare bums. Well it
has not changed.
Mr. Blaikie: David Lewis.
Mr. McClelland: That is right. It was David Lewis. It has not
changed. It is not the role of the federal government or any
government to take from individuals and decide who are going
to be the economic winners and losers in society. That is the role
of private entrepreneurs.
We would go a long way in reducing this tax burden on
Canadians if we were to stop this insane practice of government
grants and handouts to business. If a business does not have what
it takes to run on its own, it should not be in business in the first
place. If a business has to have money from the government to
be established you can bet it is going to have to have money from
the government to continue.
The government's role then in business, at least in my
opinion, is to have an infrastructure program that allows for
consistent high quality education in the country so that we have
a resource pool of people to get into business. Roads, sewers and
other infrastructure, consistency from orders of government and
environmental standards, that sort of thing. But most of all there
should be a tax environment that rewards investment and
entrepreneurial risk by allowing those who actually do
something to keep some it.
A final and important point is that we should elevate the status
of innovators and entrepreneurs in our society to a level
commensurate with the commitment in what entrepreneurs,
investors and risk takers actually give to our society.
Mr. Dennis J. Mills (Parliamentary Secretary to Minister
of Industry): Mr. Speaker, I would like to begin by
congratulating the member on his address. Having come from an
entrepreneurial background myself I share many of his feelings
However there is something I have learned over the last four
or five years about government grants, or government handouts
to use the hon. member's expression. I have learned that the
largest number of grants given to corporations, whether they be
small, medium or large, through the Government of Canada do
not come from the various line departments whether it is
industry or western diversification as the member cited. In fact
the real grants that are given to corporations are buried in the
Tax Act of Canada, that 15,000 pages of rules and regulations,
all those special preferences. Of course those preferences which
have been put into that act over a number of years by Liberal and
Conservative governments, many of them no longer meet their
original policy objectives.
Would the hon. member be willing to take the same passionate
view about eliminating those tax grants as he does on the direct
Mr. McClelland: Yes, Mr. Speaker, I definitely would. As a
matter of fact the faster we can get to a flat tax system the
happier I will be. This whole notion of write offs for this, write
offs for that, you have to be a Philadelphia lawyer, you have to
have 14 tax accountants to figure out where Tuesday was, is
We will have a revolt but the revolt will be all the tax lawyers
and tax accountants who will be looking for work if we only
simplified it and made it fair.
Mr. Bill Blaikie (Winnipeg Transcona): Mr. Speaker, I
know that what the member just said is music to the ears of the
member for Broadview-Greenwood, except he did not actually
come out and say that he was in favour of a single tax-
Mr. Mills (Broadview-Greenwood): I was waiting for you
to do it.
Mr. Blaikie: -and the member will still wait awhile before
he hears me say it, although I would have to say that the point
made about the complexity of the tax system and the way in
which what is supposed to be a progressive tax system turns out
to be a non-progressive tax system because the higher up the
income bracket you are, the more you are able to hire people to
figure out how not to pay taxes is a point that is well taken. That
is why I continue to be open to the member's proposal, if not
convinced at this point.
I just want to say to the member, I was going to bring up David
Lewis if he had not. He could not remember the name, so I had to
help him along. David Lewis, former leader of the NDP in this
Parliament was the one who coined the phrase of corporate
welfare bums and I am glad to hear a Reform Party member
talking about that.
I know there was some talk of that in the Reform Party
platform, but their tendency has been to concentrate and to have
Canadians concentrate on what people at the lower end of the
income scale are allegedly getting for nothing in the form of
welfare, social programs or whatever. I think the distinction that
exists between certain groups in the House is that I find the
welfare that exists at the top of the system much more offensive.
If there is a single mother on welfare getting more than she
should, maybe that should be corrected, but that does not drive
me wild. What drives me wild are the tax expenditures that are
claimed and created by government and exploited by business
which sees many large profitable corporations in this country
paying absolutely no taxes at all.
I have certainly done my best while I have been here-and I
think the member will vouch for this-to call attention to that. I
am glad to hear someone from the Reform Party calling
attention to that as well. If he is serious about that he is going to
have to take on some very strong powers and principalities, to
use a Biblical term, because they have got their claws right into
the public trough through the tax system.
When I was first elected here along with you, Mr. Speaker, in
1979, the deficit was $14 billion and tax expenditures for that
year were $32 billion, twice the deficit. We could have paid the
deficit off and had $18 billion left over if we had been smart
about tax expenditures. However we have not been and it is time
that we did get smart about tax expenditures.
Mr. McClelland: Mr. Speaker, I will be very quick and very
brief. The essential basis of anything we do as far as taxes are
concerned or concessions to anybody, business or people, is that
we have to have a foundation of fairness in everything we do.
It must not only be seen to be fair, it has to be fair. That is what
this great debate is on when we talk about whether or not people
should have deductibility of a business expense, lunches and
that sort of thing.
What we have to do is to inculcate a sense of fairness in
everything we do and set a direction and leadership from this
House so that when people in Canada say: ``Well, we have to
tighten up our belts and live within our means'', they can look to
the Parliament of Canada and say: ``Look, they are setting the
example and that is where the leadership has to come from''.
Mr. Alex Shepherd (Durham): Mr. Speaker, Canada has too
often taken a shortcut to economic prosperity. We have been
living on natural resources while neglecting the true revenue
enhancing areas of secondary manufacturing and technological
innovation. The branch plant economy is in disarray. Most
research and development occurs south of our border and has
crippled our ability to learn from a changing economy and
I would like to ask my colleagues to ponder this as they drive
home tonight in their American-built cars and turn on their
Japanese television sets.
We are drowning in a sea of debt. This debt is not only at the
federal level but involves all levels of government. It is in
excess of $650 billion. If we include the unfunded portion of the
Canada pension plan, it is over a trillion dollars. This amounts to
over $35,000 for every man, woman and child in this country.
A change is sweeping the industrialized world, a change that
discards the old smokestack economy for a new knowledge
driven society. This is our chance to get our public sector debt
under control and at the same time get our economy growing.
The easier and least painful way to solve problems is to have the
economy grow at a faster rate than government spending;
indeed, we should reduce government spending and at the same
time get our economy growing.
This is our chance to regain control of our economy and our
country for all Canadians, a chance to make the 21st century
truly Canada's century.
I will be using two terms in my presentation; one is
investment and the other is consumption. I take a rather wide
ranging view of the term investment. It is not only building and
equipment but also research and development and training and
education. In a sense, it is an investment in brains.
Consumption, of course, is the simple consumption of goods and
We must create and foster more investment and considerably
less consumption in order to get our economic house in order, as
well as driving our economy on to success as we approach the
The two facets of the budget are revenue and expenditure. I
will touch only briefly on the revenue side and only with respect
to the concept of investment.
The infrastructure spending program is to create investment
and thus jobs. Similarly the capital gains tax exemptions are
exemptions in support of private sector investment. So to deny
these exemptions would be counter productive to stated
government objectives. Furthermore, capital gains taxes tend to
be inflationary. Without these exceptions it will be a real
temptation to government to inflate the economy, and I am sure
none of us want to see the days of 21 per cent interest rates again.
Some will argue that these exemptions are for the rich. I
would like to point out that the rich most likely have already
taken full advantage of these deductions. It is only the middle
class that has been unable to utilize these tax advantages.
Specifically I would like to speak in support of the retention
of the $500,000 exemption for farmers. Most farmers live a
difficult financial life. The constant requirement for capital
investment in machinery, equipment and buildings, as well as
the low return on these investments, puts a constant hole in their
pockets leaving them unable to invest in registered retirement
savings plans, or to save. As a result, most farmers regard the
farm as a retirement nest egg. So I believe it is very important to
retain this deduction.
I note that had the deduction not been available for 1991 this
would have only accounted for $235 million. I note that the
quantum of revenue from this source has also been declining by
3.3 per cent between 1989 and 1990, and 19 per cent between
1990 and 1991. So you can see, Mr. Speaker, this is not a very
significant area of government revenue in any case.
Having argued in defence of capital gains tax exemptions
generally, I would like to narrow the focus of this exemption. It
should be available only in support of small and medium sized
Canadian owned businesses. It should only revolve around
trading in small and medium sized shares. I suggest that we
eliminate the $100,000 general exemption but expand the
$500,000 exemption now allowed privately held small
businesses so that this deduction would include minority
interests in small and medium sized firms.
I have other ideas for creating secondary markets in these
shares so that small and medium sized businesses can get access
to the capital they need in order for them to create new
businesses and to modernize older ones. Only in this way can
they take full advantage of Canada's march to the 21st century.
I would also like to mention in passing that the foreign
component of registered retirement savings plans should be
eliminated as this deduction is inconsistent with our needs for
domestic capital formation.
I would now like to talk about the expenditure side of the
budget. This is what appears to the public as the seemingly
endless sinkhole of taxpayers' dollars. I have here a statement of
federal government expenditures presented by the Department
of Finance; old age pensions here, agricultural subsidies there,
job creations elsewhere, in short no rhyme or reason, no
statement of government purpose.
I come back to my original definition of investment and
consumption. I propose that the government prepare its
accounts with a view to these two terms. I have briefly attempted
to do this. This has been made very difficult for me since no
department of government seems to think in this terminology. In
any case I have roughly calculated that less than 20 per cent of
spending revolves around investment and that the rest of
expenditure is in support of consumption.
It seems to me that the government's approach to deficit
reduction must have two objectives with respect to consumption
spending. First we need to define the core area of consumption
spending. Here I think of the genuine need for old age pensions
and support for those unable to care for themselves due to
physical or mental impairment and so forth. The balance must
then be discretionary consumption spending. The overall
approach must be a degree of absolute elimination of
ary consumption spending, and second, for those who remain a
conversion to investment spending.
What does this mean? It means we can no longer afford simply
to pay people because they do not have a job. We cannot afford
to pay mothers a total of half a year's unemployment insurance
benefits regardless of the merits or wants for this type of
program. We cannot afford to transfer moneys to the provinces
that they transfer to the municipalities. In turn they can support
youth from the ages 15 to 21 so that they can leave the
responsibilities of family life and be unproductive members of
Of course we will continue to support the concept of
universality for social services in our medical system but we
must question whether treating the common cold is an essential
The elimination of services or a degree of them is obvious.
The conversion from consumption to investment is somewhat
more complex. It seems clear that if people are not going to be
engaged in work, they should ultimately be trained or retrained
in order to regain entry at a higher level than when they left. If
for some reason this is not possible these people should be
supported based on the degree of their commitment to undertake
work directed at the improvements to their communities.
I suggest this will encourage the dignity and self-respect that
all humans are entitled to embrace. This commitment of
government to upgrade the skills of our labour force will allow
all of us to participate in the march to prosperity in the 21st
In conclusion the road for Canada is in front of us. It involves
a change in attitude by government as it approaches investment
and consumption in government finances. Indeed it embraces a
change in attitude of all the people in Canada. It recognizes that
we can no longer drive our consumption spending based on want
but rather it must be based on genuine need. It must recognize in
its legislative agenda the need to support investment not only in
the small and medium sized Canadian owned business sector but
also in the grey matter of all the people in Canada.
The chance to build a greater nation is in front of us. Now is
the time to take bold steps to claim Canada's destiny.
Mr. Grant Hill (Macleod): Mr. Speaker, I would like to
congratulate the member on the comments. I presume that he is a
new member in the House. I believe he has not suffered with
some of the atherosclerotic disease that seems to be prevalent
with some aged members in this House.
I would like to know from the member if it would be possible
for him to infuse this fresh enthusiasm into some of those aged
Mr. Shepherd: Mr. Speaker, I accept the hon. member's
comments. I guess it comes from not being actively involved in
politics to some extent, although that is not quite true. I had
some involvement in my early youth here in Ottawa. However,
being out in the real world trying to make a buck and having to
meet payrolls, seeing both sides of our economy, people having
problems as well as people being successful, gives me a good
perspective on what I think we need as a nation. I will try to
instil that around here if I can.
Mr. Julian Reed (Halton-Peel): Mr. Speaker, I would also
like to congratulate the hon. member for Durham for injecting a
very fresh idea into this debate. He and I share something in
common in that the agricultural parts of our ridings are farms
that are agriculturally valued very differently than farms in
other parts of the country.
When a farm is passed on and when there is succession right
now, the paper value of the farm far exceeds its value as a
working farm. Therefore, it is absolutely essential that the
$500,000 exemption continue.
I am just old enough to remember when death duties existed in
Ontario and I saw farms being lost to government, farms that
had been in families for generations.
The member talks about cancelling the $100,000 capital gains
exemption. Does he simply feel that it is too small? Is that his
reason for wanting to cancel it and dwell on the $500,000
Mr. Shepherd: Mr. Speaker, I do not think it is unusually
small. Indeed the finance department's estimates are that this is
a $650 million loss of revenue had those exemptions not been
available in the last taxation year 1991, I believe.
It is significant, but what we need to do, getting back to the
government's agenda, is to re-focus on where we want those
exemptions to exist. Currently I suspect the lion's share of those
exemptions are in stock trading and investment real estate
Basically, our problem today is clearly that the small business
sector is under siege and one of its biggest problems is capital. I
would not say the banks of this country are failing the small
business sector, but their debt type of financing is not what the
small business sector is looking for. It is looking for equity and
equity participation and we must spend a considerable amount
of time to formulate these markets.
What I am suggesting is that we have a significant shift in our
taxation system which recognizes that we need to have the
underpinnings of the small business investment there and that
we expend one. However, as the Minister of Finance has
mentioned, if we are going to do one thing we have to pay for it
and the way we are going to pay for it is to reduce the $100,000
exemption on other forms of investment.
Mr. Dennis J. Mills (Parliamentary Secretary to Minister
of Industry): Mr. Speaker, I welcome the remarks of my
There was one part of the member's speech on which I would
like a short clarification. He mentioned that he did not support
young people between the ages of 17 and 21, I believe it was,
getting social assistance. Was the hon. member suggesting that
he did not want people who are abusing the system to get that
kind of support? Was he suggesting maybe that those who were
in genuine need should continue to get that support?
Mr. Shepherd: Mr. Speaker, basically what I was trying to
say by the whole tenor of my speech was that we have to get back
to focusing away from pure subsidization of consumption.
What I am proposing is that we need some other kinds of
incentives to our young people rather than just being in receipt
of consumption income. We should have to earn it somehow.
Basically one earns that by being engaged in education or by
pursuing a better career, which are useful aspects to one's
society, or by being involved in the labour market.
In my campaign during the last election I ran into many young
people who are abusing the system. It is not acceptable. We talk
about our commitment to youth. We are sending some terrible
signals to our young people. We are telling them it is acceptable
to do this. What we have to do is give them encouragement to get
back into the job market and to give them their dignity and
Ms. Judy Bethel (Edmonton East): Mr. Speaker, today is
special for me. It is my first opportunity to address Canada's
A good start would be to congratulate you and all members of
Parliament on their election to the House. I look forward to
working with everyone and for my constituents. I commit to
you, Mr. Speaker, that I will do everything I can to make this
Parliament the most positive and productive one ever.
I am proud to represent the riding of Edmonton East.
Edmonton East is the heart of our city. It includes Edmonton's
business district and its government centres, the Alberta
legislature, Edmonton city hall and Canada Place.
The Avenue of Nations and the Old Fort Road business and
revitalization zones are lined with strong and vibrant
enterprises. Edmonton East includes families living in beautiful
river valley communities and families struggling to survive on
little or no wages in inner city communities.
Edmonton East is truly a reflection of Canada. People from all
over this world have come to find a better life for themselves and
their children. They are willing to work hard and to consider new
and innovative solutions to the challenges of unemployment, the
changing economy and our growing social needs.
They understand that this budget will have a profound impact
on them because of the magnitude of changes needed to get our
financial house in order. They want to be involved. They want to
be informed. More important, they want to be part of the
Last Saturday I was an observer, a very active listener at the
pre-budget conference in Calgary. I heard clearly what western
Canadians had to say to our Minister of Finance. Their advice
was sincere, profound, diverse and far reaching. I must say the
essence of that advice cannot be wrapped up in the simplistic
headlines of yesterday's newspapers.
There was consensus. The deficit must be reduced. There was
an understanding that the reductions could come from economic
growth, a more equitable tax base, increased tax rates and
reduced program expenditures. Participants at the workshops
had some great advice for the minister to consider in developing
I would like to share these suggestions with the House. John
Howard, Vice President of MacMillan-Bloedel, says to increase
the clawbacks from high income earners and focus attention on
where the money goes. Do not base privatization on ideology. It
needs to be cost effective, fair in process and fair in result. He
says deregulate. There are too many governments and too many
interventions especially in environmental matters.
Ardyth Cooper from B.C. believes that cuts across the board
favour the status quo. She says we need instead to restructure
our programs from the ground up and with vision.
Doris Ronnenburg from Alberta expressed concerns about
Pathways, the much needed aboriginal training programs and
Hugh Wagner from Saskatchewan suggested government
should support small business through equity investment in
venture capital companies rather than regional development
Vicki Dutton from Alberta wants to see an end to all
government subsidies to business.
Roberta Ellis-Grunfeld's group encourages us to keep
listening and to invest in human capital. A sense of strategic
direction is needed and we are to keep in mind that equal is not
Diane Hunter's group believes that programs should be
measurable, have clear objectives and be cost efficient. Each
should be co-ordinated and harmonized with other levels of
Jim Gray's group said that there needed to be increased
confidence and trust in government and more consultation with
The Auditor General's report should be part of the budget
process and be dealt with by a parliamentary committee to
ensure follow up.
These are the voices of Alberta and western Canada and they
do not all sing from the same song sheet.
There are some who represent Alberta as cold, hard and
uncaring. There are some who believe those in need are at fault,
that they have done something to deserve pain. There are those
who believe that charity begins at home and stays there. There
are those who believe that Alberta is full of rednecks, cloned to
act the same, think the same and be the same. That is the other
Alberta. That is not my Alberta.
My Alberta would balance eliminating the deficit and
reducing the debt with feeding hungry children and providing
deserving men and women with real jobs which allow them to
support their families with pride and with dignity.
During the election campaign my office was located deep in
the inner city on what is less than affectionately known as the
strip. My campaign team and I saw a way of life that I will never
forget and which I will represent until my public life ends.
I will never lose sight of Virgil. He is an aboriginal child who
was a great help to our campaign. Late last October he showed
up wearing ten T-shirts because he had no jacket. I will never
lose sight of the young men and women who were forced by a
cycle of abuse and addiction into the degrading life of
I will always represent the steady stream of capable, qualified
and willing Albertans who cannot find work. These are the
people who were not at Calgary last weekend. These are the
people who need to be part of our budget deliberations. I urge the
members opposite and all members of this House to listen to all
the voices of Alberta.
I am convinced that we can reduce both the fiscal deficit and
the human deficit.
Mr. René Laurin (Joliette): Mr. Speaker, while listening this
morning to the hon. member for Saint-Hyacinthe, who
described the current financial situation of the Canadian
government, noting how alarming is the national deficit's
growth and how high is our foreign debt, I came to the
conclusion that the future of the next generation of Quebecers
and Canadians was not very promising and that we are going to
leave a very poor legacy to our children, in fact the worst ever.
The situation is extremely serious and must be corrected.
Moreover, in those days of anemic economic recovery,
taxpayers are under the impression that the federal government
does not do its share to improve management methods and
eliminate waste. The Auditor General insists on that aspect in
his recent report, when he states that, today more than ever, it is
clear to civil servants and parliamentarians that Canadians
expect them to manage firmly and cautiously rather than find
new ways of spending borrowed money.
As the Bloc Quebecois said during the election campaign, we
want a reduction of $10 billion in government spending,
including tax expenditures, of which $3 billion would come
from a 25 per cent cut in the Department of National Defence's
expenditures. Recent information suggests that the Liberals are
considering reducing government spending by only $2 billion,
excluding the non-recurrent expenditures incurred last year,
which amounted to $4 billion. This objective is so low and
unambitious that the Globe and Mail had this to say in a editorial
published last January 18:
The Liberals are just as complacent about the debt as ever. Either that or they
sincerely believe that the federal government is 99 per cent fat free.
The Bloc Quebecois and the Official Opposition are of the
opinion that there is some fat within the federal government.
One only has to read the newspapers to see that indeed some cuts
can be made. Just take for example the controversy surrounding
the new Canadian embassy in China, or the travelling expenses
of new Liberal ministers.
To eliminate waste, unnecessary spending and
mismanagement in the government administration, I reiterate
the request made by the Bloc Quebecois for the creation of a
parliamentary committee which would examine and review
budgetary expenditures item by item. It would be appropriate to
set up such a committee. The most recent Auditor General's
report clearly demonstrates that Quebecers and Canadians are
right to think that the government is wasting some public funds.
To illustrate that point, I will use the most shocking examples of
waste, unnecessary spending and mismanagement of public
money mentioned by the Auditor General.
Let us begin with National Revenue. Because of a flaw in the
deduction applying to resources, the government lost $1.2
billion in revenue. If it had, as recommended by the Public
Accounts Committee, a system allowing for quick amendments
to a flawed tax expenditure program, the government would
have saved a good chunk of that money.
Let us now look at Investment Canada, which spent $132,000
to set up a new office, with kitchen and bathroom for its new
chairperson, when in fact the previous incumbent's office in the
same building already had all these facilities.
Let me give you another example. Let us take a look at
travelling expenses. Travelling expenses linked to the use of the
government's Challenger aircraft have reached $54 million,
more than half of which is for trips made by ministers.
According to the Auditor General, this total amounts to an
equivalent of $19,650 per hour.
Is this the best way to pay for our ministers' and other
officials' travels? Some say that government airplanes have to
be used for security purposes. It may be so, but would the price
of a commercial flight providing special security measures for
our ministers be over $20,000 an hour? I doubt it very much.
Now, let us turn to Fisheries and Oceans. The Minister of
Fisheries and Oceans spent $587 million on the Northern Cod
Adjustment and Recovery Program. Out of this amount, almost
$15 million was wasted because of mismanagement, according
to the auditor general.
The department gave compensation to people who were not
fishing northern cod, but other species not affected by the
moratorium. Also, payments were made to fishermen who were
illegally fishing cod. If I can get 20 more seconds, Mr. Speaker,
it would be easier for me to resume the debate later today.
In the meantime, 5,300 people have yet to receive benefits
they are entitled to, because the department has some
reservations about their eligibility. These stalling tactics used
by Fisheries and Oceans Canada are illegal, and we know that all
of the coastal communities urgently need that money.
The Speaker: It being two o'clock, pursuant to Standing
Order 30(5), the House will now proceed to statements by
members, pursuant to Standing Order 31.
STATEMENTS BY MEMBERS
Mr. Peter Adams (Peterborough):
Mr. Speaker, the
Peterborough Family Y has just celebrated its 125th
anniversary. It operates in the oldest continuously used Y
building in Canada. This gives members a strong kinship with
the founders of 1868.
The YMCA is an example to all Canadians of how to adapt
without trading in principles and philosophy. One hundred and
twenty-five years ago you had to be young, male and Christian
to belong to the Y; today you have to be none of these things.
Today more than 20 per cent of the memberships in our Y are
If a founder of the Y came back he would be surprised at the
changes, but he would soon realize that the basic principles of
self-help, community service and tolerance are stronger than
Congratulations to Kathleen Bain, Doug Walker and Bob
Gallagher for Canada 125 medals in recognition of their work
for the Peterborough Family Y.
Like the Peterborough Y, Canada should not be afraid of
change. Let us face the future willing to adapt and confident in
our foundations and principles.
* * *
M. Pierre Brien (Témiscamingue):
Mr. Speaker, we learned
recently that several property owners along Témiscamingue
Lake were allowed to bring the first collective action against the
federal government for damages caused by a dam which was
built in 1908. Because of that dam and the high water levels,
these lakeside residents have been facing numerous problems
such as landslides, inaccessible beaches, tree uprooting and land
Besides asking for financial compensation, lakeside residents
want the Minister of Public Works to ask for a reduction of about
half a meter in the water levels of Témiscamingue Lake.
According to a recent report from the firm AGEOS Science, and
contrary to what other studies say, that half-a-meter reduction
would not lead to floods in the Montreal area.
As the member for the Témiscamingue riding, I am very
familiar with the problems of the lakeside residents of
Témiscamingue Lake and I want to give all my support to the
complainants in their action against the federal government on
* * *
Mr. Werner Schmidt (Okanagan Centre):
Mr. Speaker, I
appreciate this opportunity to alert members of Parliament and
all Canadians to an incredible annual occurrence.
According to the 1993-94 estimates expenditure plan for this
House, this place has approximately 130 million pages printed
annually. The total cost to Canadian taxpayers for printing
services is in excess of $4 million per year and the costs are
There are alternatives. We can no longer depend on antiquated
methods when we are surrounded by technology that will reduce
I urge the government to utilize an information highway to
eliminate the printing costs associated with Hansard and other
government documents, and also to ensure the efficient and
timely transmission of information electronically within the
House and to all Canadians.
* * *
Mr. Paul Steckle (Huron-Bruce):
Mr. Speaker, I rise in the
House today to speak on a matter of importance to the
constituents of Huron-Bruce and to all rural Canadians. That is
the future of rural post offices.
I am very pleased that the government has acted quickly after
the election and initiated a 30-day moratorium and subsequent
extension on post office closures, along with a review of Canada
Post operations. This action has given rural Canadians a great
deal of hope that the disastrous actions of the past government
will not continue.
Since 1986 almost 1,000 rural community post offices have
been closed or converted to retail outlets, 16 of which have
occurred in my constituency. In small towns across Canada post
offices lie empty, a constant reminder of job loss and
abandonment. In many cases the post office was the only federal
presence towns had.
I urge the government to restore federal postal service back to
the affected communities and to take action to enhance service
and ensure that future closures do not occur.
* * *
Mr. Ron MacDonald (Dartmouth):
Mr. Speaker, I rise today
on an issue of utmost importance not only to my own
constituents but to all Atlantic Canadians.
The port of Halifax is the economic hub of the region injecting
over $400 million per year into the local and regional economy.
This is a great deal of activity, yet traffic at the port is more than
30 per cent lower than what it was in 1990.
It has been argued that a rethinking of some federal policies,
specifically rail fuel taxation and capital asset depreciation,
would greatly enhance the competitiveness of the port,
increasing traffic and also creating badly needed jobs in the
I know the new finance minister will not ignore Atlantic
Canadians like his Tory predecessors and I urge him to seriously
consider these policies in his budget deliberations.
We in the Atlantic are confident in our ability to compete and
prosper, if only we are given the tools and the footing to do so
equally with our competitors.
* * *
Mr. Gurbax Singh Malhi (Bramalea-Gore-Malton):
Speaker, as a long-time member of the Toronto Real Estate
Board I hope the government will extend the RRSP home buyers
plan. Scheduled to expire on February 28, the plan links
ownership with retirement planning.
The home buyers plan eliminates the question of whether to
save for a down payment or retirement. It also recognizes the
key role housing plays in economic growth. The program costs
the taxpayer nothing to operate.
I believe an extension would show government support for the
real estate industry. It would also help first-time buyers
establish the dream of home ownership. Let us keep that ball
* * *
Mrs. Christiane Gagnon (Québec):
Mr. Speaker, the
unilateral cuts made by the Conservative government in the area
of social and co-operative housing in their last two budgets have
had very serious consequences. In Quebec City, and especially
in the downtown area, the need for social housing is enormous.
At the present time, more than 1,200 families are on waiting lists
for an apartment in a low-cost building, and more than 600 other
families have applied for co-operative housing.
Concerned by the urgency of the situation, the city council
passed a resolution on January 10, 1994, asking the federal
government to review the budget of the Canada Mortgage and
Housing Corporation. The city is requesting enough money for
social housing, and it would like to see the Co-operative
Housing Program reinstated and the establishment of a program
of rental housing renewal which would limit the contribution of
the renter to 25 per cent of his or her income.
This cop out by the federal government is a good example-
The Speaker: I am sorry, the time allowed the hon. member
has now expired.
* * *
Mr. Keith Martin (Esquimalt-Juan de Fuca):
Speaker, there is widespread agreement in Canada and in this
caucus that the primary way in which governments can reduce
their deficits is through reducing expenditures.
To this end there is one potent tool that I do not think the
government is using wisely and that is the Auditor General's
report. This report outlines numerous areas where the
government can spend public money more wisely and in fact
points out areas of gross fiscal mismanagement.
Therefore I suggest that instead of allowing the Auditor
General to report only once a year, let us allow these reports to
come out several times a year in a timely fashion, so that
remedial efforts can be put into effect as soon as possible to
correct the problem. This would significantly help getting our
fiscal house in order. The facts are there. Let us use them.
* * *
Mr. Patrick Gagnon (Parliamentary Secretary to Solicitor
Mr. Speaker, the replacement of the Lucy Maud
ferry serving the Magdalen Islands is the source of
great concerns these days. During the election campaign, I
promised to consult the population of the Islands before any
decision was made on that issue.
We must admit it is the Islanders who will have to live with
the new ferry. Therefore, I think their preferences and needs
should come first. But everyone agrees a new ferry must be
built. However, the Islanders have some legitimate
requirements; they want a bigger and stronger ferry able to cope
with the ice in the Gulf of St. Lawrence.
We will soon find a way to replace the present ferry. I would
only like to remind the opposition and the government that the
interests of the Magdalen Islanders should come first and not
those of anyone else outside my riding of
* * *
Mr. Janko Peric (Cambridge):
Mr. Speaker, I received
several calls regarding statements made by the Minister of
Finance following last week's pre-budget consultations in
Toronto that Canadians would be willing to pay more in taxes.
Many of my constituents, including Arnold Carbiton, Norman
Grass, Martin Hawthorne and Peter Krotkey are curious as to
which groups suggested to the minister that Canadians would be
willing to pay higher taxes. These constituents would like the
minister to know that they cannot afford to pay higher taxes, nor
do they want to pay more taxes.
My constituents would like the minister to assure them that
his February budget will not contain any tax increases which
could affect average Canadians.
* * *
Mr. John Nunziata (York South-Weston):
our Canadian Olympic hockey team leaves for Europe today
without Toronto Maple Leaf star Glenn Anderson.
Mr. Anderson has had a lifelong dream to win Olympic Gold
for Canada and is anxious to play. Cliff Fletcher and the Toronto
Maple Leaf organization are anxious to have him play. The
Olympic team is desperate to have him play, but the NHL board
of governors, the majority of whom are American, refuse to let
On Thursday I will be meeting with NHL Commissioner Gary
Bettman. I will be accompanied by 11-year old Tiffany
Williams, a die-hard Anderson fan from Belleville. Tiffany will
present Mr. Bettman with a petition with over 5,000 names
urging the NHL to reconsider its decision.
Tiffany and millions of Canadian hockey fans want to see our
team win gold in Lillehammer. Glenn Anderson could help us
win that gold medal, our first in over 40 years.
I urge other MPs to join me in my meeting with Mr. Bettman.
* * *
Mr. Paul Crête (Kamouraska-Rivière-du-Loup):
Quebec government has recognized that advisory regional
development councils must play a decisive role, giving Quebec
regions control over decisions which determine the
development of their area.
The federal government should pledge to respect the
priorities set up, through strategic planning, by each regional
municipality in the ridings and regions of Quebec, so as to
maximize the impact of measures taken by Quebec regional
leaders. The economic revival of Quebec is at stake.
* * *
Mr. Ian McClelland (Edmonton Southwest):
over the past two weeks we have heard a lot in this House about
lowering the price of cigarettes to discourage smuggling.
We have not heard one word on behalf of the millions of
Canadians who believe that lowering the price of cigarettes is
merely caving in to lawbreakers, criminals and the tobacco
May I suggest that we reinstate the export tax on cigarettes
thereby taking the profit out of cigarette smuggling, that we
come down hard on smugglers and continue to discourage
smoking by any means possible.
Has the government considered the negative impact on our
nation's health that will result from lower cigarette prices and
the increased consumption that will result from lower prices.
* * *
Ms. Jean Augustine (Etobicoke-Lakeshore):
today, the first day of February, marks the beginning of Black
History Month. This month highlights and acknowledges black
Canadians and African Canadians who have struggled to
advance the causes of their people. Black Canadians have been
part of Canada's history since 1603.
There will be many activities taking place throughout Canada
to celebrate Black History Month. These activities will show the
colourful and rich heritage of black people.
I invite hon. members to join with me not only to recognize
Black History Month, but to have an understanding of the trials
and jubilations that our people have experienced.
Not only is this month a recognition of the contributions of
black Canadians but it is also for all Canadians to understand
different heritages which will foster a better relationship within
this wonderful diverse culture of Canada.
* * *
Mr. Stan Dromisky (Thunder Bay-Atikokan):
Speaker, we have shown that Canadians can compete
successfully providing that our goods and services are of the
same or better quality than that of our competitors. Highly
trained and competent employees are key to quality output and
success in the global marketplace. Inadequate quality control
can lead to the loss of markets and unemployment.
A case in point is unravelling in the grain industry of Thunder
Bay where a staff of 70 grain inspectors that protect the farmer
as well as the customer faces the possibility of losing 25 of its
members within a few days.
This is implementation of policy by the former government
which claimed that $4.7 million would be saved which amounts
to 1 cent per tonne approximately of the grain process. The
former government's projections and policies are wrong. Those
directly concerned want this government to reject those policies
in order to maintain essential jobs and quality control within the
ORAL QUESTION PERIOD
Hon. Lucien Bouchard (Leader of the Opposition):
Speaker, my question is directed to the Prime Minister.
Yesterday, when he spoke to students at a high school in Toronto,
the Prime Minister, echoing his Minister of Finance, indicated
that his government's first budget would contain no major
spending cuts to bring down the deficit. On the weekend in
Calgary, the Minister of Finance made it clear that it would be at
least a year before we would see any major spending cuts.
My question is this: Considering what was said yesterday in
Toronto by the Prime Minister, are we to conclude that the
government has reversed its policy by postponing real spending
cuts and that, underestimating the gravity of the structural
causes of the deficit, it has decided to rely on the hypothetical
boost afforded by an otherwise lacklustre economic recovery?
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker,
the government's policy is well known. We said that cuts were
needed but that budget cuts alone were not the answer, that we
would also have to rely on economic growth.
After winding up his consultations in the House of Commons
this afternoon, the Minister of Finance will prepare his budget,
and we are looking forward to hearing the budget speech before
the end of this month. For the time being, this is all speculation.
I simply said that cuts would prevent us from achieving all our
objectives, because we must ensure that jobs are created in
Canada, otherwise the problem will just get worse.
Hon. Lucien Bouchard (Leader of the Opposition): Mr.
Speaker, there is a major difference between speculation and the
conclusions drawn from public announcements by the Prime
Minister and his Minister of Finance.
Does this mean that instead of spending cuts, the
government's new strategy will now consist in increasing
government revenues by broadening the tax base, in other
words, by a very substantial increase in the tax burden for many
Canadians? Does the government realize that in so doing it will
compromise economic recovery by reducing the purchasing
power of consumers?
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker,
with everything that has been said so far, the Minister of Finance
has consulted broadly in Canada. Today for the first time ever
there is a debate in the House where members have been invited
to make suggestions to the Minister of Finance. Then he will
write his budget in the next three weeks. Now we have to wait.
The time of speculation is over. It is a time of action. I know the
Minister of Finance will prepare a very good budget.
Hon. Lucien Bouchard (Leader of the Opposition): Mr.
Speaker, I would like to know why the Prime Minister has
decided against a general review of all government spending and
more specifically of the government's operating expenditures
and the fat in the federal machine and why he is now so reluctant
to make cuts where there is money to be saved, in other words,
by cutting government waste and costly and useless duplication
by various levels of government?
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker,
we have taken action in a number of areas as part of the ongoing
debate on duplication. I discussed the matter with the premiers
in December, and work is being done at this time at both levels
of government. As for the budget, the Leader of the Opposition
will soon realize that this government is not afraid to act
* * *
Mr. Gilles Duceppe (Laurier-Sainte-Marie):
Speaker, my question is directed to the Prime Minister.
Yesterday, he announced that the days when the federal
government neglected Toronto were over. Does the Prime
Minister remember that a little further to the east, there is a city
that has just received the dubious honour of being named the
poverty capital of Canada? Does he recall the position of his
Minister of Finance who proposed the striking of a special
Cabinet committee to oversee Montreal's economic recovery?
Can the Prime Minister give some assurances to the
disadvantaged neighbourhoods in Montreal and unveil today the
strategy he intends to put forward to spur Montreal's recovery?
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker,
last summer the city of Toronto only had one minister in cabinet.
It now has a much better representation with very good
ministers. I can say the same about Montreal.
The City of Montreal is very well represented in Cabinet by
senior ministers. I think that the residents of Montreal know that
their interests are very well represented in government by the
ministers of finance, foreign affairs and heritage, as well as by
the member for Mount Royal who is a secretary of State and
assists us in Cabinet. Therefore, Canada's two major cities are
very well represented and that is what I said in Toronto.
Mr. Gilles Duceppe (Laurier-Sainte-Marie): Mr.
Speaker, as the Prime Minister has stated that the City of
Montreal is well represented in Cabinet, I would like to ask him
if he is prepared to announce today that he is setting up the
special Cabinet committee to oversee Montreal's economic
recovery, an initiative which he promised during the election
campaign and which is contained in the red book, a promise that
the voters heard him make many times during the election
campaign. Is he prepared to make this announcement, Mr.
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker,
Quebec has six representatives in Cabinet and four of them come
from Montreal. I think we already have our committee.
* * *
Mr. Preston Manning (Calgary Southwest):
my question is for the Minister of Finance, in keeping with the
pre-consultation with members of the House on the budget.
The Prime Minister has been quoted in the past as saying there
will be no new taxes. Is it therefore the position of the
government in principle that any new revenues must come from
increasing current taxes and reducing tax exemptions but not
from implementing new taxes?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional Development
-Quebec): Mr. Speaker, the position taken by the Prime
Minister and myself has been very clear. We feel it is necessary
to build greater equity into the tax system. It is only as a result of
greater equity that Canadians will be prepared to support the
system and the very difficult choices we have in front of us.
I would like to go on, and I would like to do so in answer to the
member's first question, to give him an opportunity perhaps in
his second or third question to respond. In the debate this
morning the member referred to the fact that those who would
seek a tax revolt would find an ally, in fact a command post, in
his office and in the Reform Party.
I simply would like to say that this is an historic day for the
country. It is the first time we have ever had a pre-budget
debate. The member opposite was elected to represent his
constituents in the House where the great debates ought to take
place. It is here that the differences of opinion in the country
ought to be set out. It is here that Canadians look for leadership.
I am sure the member was misquoted or did not mean it. I would
like to give him an opportunity to stand to clarify his remarks,
that he did not mean any tax revolt in the House.
Mr. Preston Manning (Calgary Southwest): Mr. Speaker, I
appreciate the chance to respond to questions when the
government puts them to us. I gather that is procedurally
acceptable to you.
The Speaker: It could be that in the course of a question
period we would end up with just questions on both sides. I am
hoping there will be some questions and some answers, but I will
leave that up to the hon. member.
Mr. Manning: Just briefly in response to the hon. member,
everything I said this morning reflects very accurately the views
that were expressed to me by my constituents during the last
election and by many other Canadians across the country.
I also should clarify that when I talk about a tax revolt I am
talking about what other Canadians are going to do. I made very
clear that what I mean is something that is perfectly within the
law and by legal means.
The Speaker: I am sure that in this response there is going to
be a question. I would hope that it would be forthcoming.
Mr. Manning: I have a supplementary question for the
Minister of Finance. We are asking serious questions. If the
minister would give us a straight answer we would like to hear it.
Along the same lines as my previous question, the
government's speech from the throne promised the goods and
services tax would be replaced. Is it the government's position
that any replacement of the GST, while it may be fairer and more
efficient, will not impose any additional tax burden on
Canadians? In other words, is its proposal for the replacement of
the GST revenue neutral?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional Development
-Quebec): Mr. Speaker, one would certainly hope so.
What we have said, and we made it very clear, was that we are
not going to foreclose the options the parliamentary committee
was going to discuss. It will be discussing this with the
provinces and there will be negotiation with the provinces.
Obviously the wish as expressed by the leader of the Reform
Party is one that we share. We do not want to increase the tax
burden on Canadians as a result of this goods and services tax
which has caused so much damage to the country.
Some hon. members: Hear, hear.
Mr. Martin (LaSalle-Émard): Mr. Speaker, I consistently
miss the applause line.
The answer to the leader of the Reform Party is that we would
hope so, but we do not want to foreclose the negotiations with
the provinces and indeed the wishes of Canadians as they will be
expressed to the parliamentary committee on which his party
will be represented.
Mr. Preston Manning (Calgary Southwest): Mr. Speaker, I
have a further supplementary question for the Minister of
Finance. I think this will be helpful to all members on both sides
of the House.
It is difficult for members of the House and for the public to
participate in productive pre-budget consultations on the
budget without seeking pertinent information on the budget
itself. This will be helpful to members opposite as well.
Could the minister clarify for the House what subject matters
and lines of questioning he considers appropriate for a
pre-budget consultation and what subject matters and lines of
questioning he considers inappropriate and off limits?
The Speaker: The question is very far reaching. I know the
hon. member would not want a list of all the questions. I am sure
there would be a very succinct answer coming from our Minister
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional Development
-Quebec): Mr. Speaker, the fact is that we have now had four
very public consultative conferences at which Canadians did not
have to stand to ask the Minister of Finance what he wanted
them to talk about and at which Canadians set out very clearly
the issues as they saw them.
I would simply therefore suggest to the hon. member that if he
is indeed looking for direction he might well look to the lines of
discussion that took place by Canadians in our conferences.
I would say that I am a little taken aback by the question of the
leader of the Reform Party, that he would like me to stand and
give rigid direction. Perhaps that is because it applies in his
party. In our party we are democratic.
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot):
was a member of the Official Opposition responsible for issues
relating to the economic development of Montreal, the Minister
of Finance put forward a three-point plan to spur the Montreal
economy. This plan called for, first of all, implementing a
manufacturing industry renewal policy; second, creating a giant
business incubator and third, increasing investments in research
My question is for the Minister of Finance, formerly
responsible for the development of Montreal. Does he intend to
implement his own recommendations soon and to act before the
Montreal economy crumbles completely?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec): I think it was made very clear in the
throne speech that our goals and plan of action with regard to the
economy in general, and that of Montreal in particular, have
been well thought-out, and we intend to keep our word.
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot): Mr. Speaker,
as a suplementary question, I would ask the Minister of Finance
whether he can give this House the assurance that he will put as
much enthusiasm, conviction and determination into the
economic recovery of Montreal as the Prime Minister displayed
yesterday toward Toronto?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec): The answer is yes, and I will do it
together with the Prime Minister of our country.
* * *
Mr. Bob Mills (Red Deer):
Mr. Speaker, my question is for
the Minister of Finance.
The minister has just completed a series of cross-country
meetings to consult with Canadians about the upcoming budget.
Could the minister tell the House what proportion of
participants favoured increasing federal revenues and what
proportion favoured decreasing federal spending?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional Development
-Quebec): Mr. Speaker, there is no doubt that there is a
consensus across the country on the need to decrease
government spending, one that we on this side of the House
share very much.
What occurred and was very interesting was that in each and
every one of the conferences-in the workshops and in the
debate about the nature of the deficit, the necessity of preserving
our social programs and rebuilding our economy-virtually
everybody understood the necessity of augmenting the revenue
side of the governor's p and l statement. I cannot think of a better
word; I have not been in this job long enough. More so, no one
disagreed with the absolute necessity of building more equity
into the tax system.
Mr. Bob Mills (Red Deer): Mr. Speaker, it seems the idea
that a group of people out there want an increase in taxes has
been attributed to the hon. minister. Could the minister identify
these people and who they supposedly represent?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional Development
-Quebec): Mr. Speaker, I have a great deal of difficulty
understanding the thrust of the member's question.
The fact is that virtually everybody-and I said it in my first
answer-wants to see more equity in the tax system. In fact that
is an essential part of building a strong economy. There was no
one out there who said they did not want to have more equity in
the tax system. Everybody understood that building more equity
in the tax system meant filling in tax loopholes and taking away
exemptions from one segment of society that they enjoy that
other people do not. That is the kind of system we are going to
* * *
Mrs. Pauline Picard (Drummond):
My question is for the
Minister of Health.
The newspaper La Presse reported this morning that the
Minister of Finance said that dental and health insurance
premiums could be taxed for the first time in order to reduce the
number of tax loopholes and to generate additional funds.
My question is as follows: In this International Year of the
Family, does the minister agree with this proposal to tax dental
and health insurance plans?
Hon. Diane Marleau (Minister of Health): Mr. Speaker, of
course, the Minister of Finance has things to do in the area of
taxation, especially because of the debt and the deficit which we
face. I care about the health of Canadians and I will do my
utmost to defend Canadians' health and welfare.
Mrs. Pauline Picard (Drummond): Mr. Speaker, my
supplementary question is this: Is the minister aware that 9
million taxpayers will have to pay this tax, which could cost
each family up to $700 a year?
Hon. Diane Marleau (Minister of Health): Mr. Speaker, I
am surprised. Obviously the member opposite has had more
information about the budget than the rest of the people in
Canada. I am under the impression we have to wait until the
Minister of Finance actually delivers the budget to know what is
* * *
Mr. Jake E. Hoeppner (Lisgar-Marquette):
my question is for the Minister of Agriculture.
The ongoing labour dispute involving west coast
longshoremen is costing Canadian grain farmers millions of
dollars a day. Contrary to what the minister of human resources
claimed yesterday in the House there is no settlement in sight. It
is obvious that the plan of dockyard owners is to hold Canadian
grain farmers hostage.
Could the minister tell thousands of innocent grain farmers
caught in this mess what he intends to do to resolve this major
Hon. Lloyd Axworthy (Minister of Human Resources
Development and Minister of Western Economic
Diversification): Mr. Speaker, I say to the hon. member for
Lisgar-Marquette that my statement yesterday did not indicate
that a settlement was in sight. I said a settlement was possible
because the parties were not that far apart.
What is going to be required is a real good sense of public
interest in their responsibilities and a recognition that under the
collective bargaining process all parties to the dispute have a
responsibility not only to themselves but to the entire country.
Mr. Jake E. Hoeppner (Lisgar-Marquette): Mr. Speaker, I
wonder if the hon. minister could use his talent in speech in
negotiating rather than answering for the agriculture minister.
I have a supplementary question. With all due respect to the
minister, the only thing unions and owners agree on is that there
will not be a quick voluntary settlement. This lockout is an
obvious attempt by the dockyard owners to force federal
Could the minister tell the House what is to be gained by
waiting for this to happen?
Hon. Lloyd Axworthy (Minister of Human Resources
Development and Minister of Western Economic
Diversification): Mr. Speaker, I say to the hon. member for
Lisgar-Marquette that in a time when the difficulties we face in
this area are very sensitive it does not help for members of
Parliament to be trying to inflame opinion or trying to pit one
group against another.
It is very important in statements made in the House that we
recognize the two parties to the dispute must be encouraged to
come back to the table to exercise their responsibilities under
In the meantime the government is carefully monitoring the
situation. We are prepared to offer mediation services as soon as
the two parties make a request. We will certainly keep in mind
the public interest of Canadians. Of that the member can be
* * *
Mr. Michel Gauthier (Roberval):
Mr. Speaker, yesterday,
about a week after the first protests against the government's
inaction on cigarette smuggling, the RCMP stepped in to put an
end to this illegal activity in Montreal's east end.
To appease fed-up Quebecers, could the Solicitor General
make a commitment before this House that from now on he will
see to it that the RCMP puts as much energy into tracking down
the real smugglers' networks as it has into harassing honest,
Hon. Herb Gray (Leader of the Government in the House
of Commons and Solicitor General of Canada): Mr. Speaker,
it is the RCMP's responsibility to enforce smuggling legislation
throughout this country. I am confident that the RCMP is taking
its responsibilities seriously and will continue to do so.
Mr. Michel Gauthier (Roberval): Mr. Speaker, the Minister
told us he did not have enough leads and evidence. Could he ask
his colleagues, in particular the hon. member for
Glengarry-Prescott-Russell, who said on television that he
knew the type of weapon, the type of boat, where it went on and
who was involved, and his colleague from
Saint-Henri-Westmount, who stated yesterday, ``This illegal
activity is carried out by criminal organizations who take
advantage of the same channels they use for drugs, arms and
alcohol''. His colleagues seem to be better informed than the
Minister. Would he not want to ask them about their sources?
Hon. Herb Gray (Leader of the Government in the House
of Commons and Solicitor General of Canada): Mr. Speaker, I
know full well that between November 1993 and January 1994,
close to 80,000 cartons of cigarettes, 36,000 litres of alcohol and
150 vehicles were seized by the RCMP in Quebec alone. This
shows that the RCMP is taking its responsibilities seriously and
will continue to do so.
Mrs. Jean Payne (St. John's West):
Mr. Speaker, it is with
great concern that I continue to read reports about the ongoing
decline of the groundfish stocks in Newfoundland.
We have to take every action possible to protect and rebuild
the stocks. We also have to take into account the century old
tradition of cod jigging in Newfoundland and subsistence
fishing in other areas, including the lower north shore of Quebec
Given this, can the Minister of Fisheries and Oceans tell the
House why he is resorting to closing down the recreational and
food fisheries in Newfoundland and will he be taking such
drastic action elsewhere?
Hon. Brian Tobin (Minister of Fisheries and Oceans): Mr.
Speaker, I would like to congratulate the hon. member for St.
John's West on an excellent first question in this place. May I
say that my predecessor as minister of fisheries would agree that
that is the best question a member for St. John's West has asked
in this place in many years.
Some hon. members: Oh, oh.
Mr. Tobin: Somewhere John is chuckling.
I want to assure my colleague it is with the greatest of
reluctance the Government of Canada has come to the
conclusion that it is necessary to stop the food or recreational
fishery along the northeast coast and south coast of
Newfoundland. The decision was taken only after the latest
scientific evidence indicated a drop in spawning biomass since
1989 of almost 99 per cent in some areas and an indication of
some black market in cod.
We have taken the decision. I think it is understood and
supported by the vast majority of the people of Newfoundland
and Labrador. We are going to look at the area zone 4RS which
affects the west coast of Newfoundland and the north shore of
Quebec. The scientific survey vessel came back to port this past
weekend. The analysis will be available in another four or five
days. I will take a look at the analysis.
If similar action is warranted, I will take it. If similar action is
not warranted, we will continue with the recreation and food
fishery in those areas.
* * *
Mr. Ed Harper (Simcoe Centre):
Mr. Speaker, my question
is for the Prime Minister.
Without the power of recall, voters will not have an
opportunity to replace an MP who has lost their confidence. This
situation is clearly unacceptable and intolerable to Canadian
voters who have a right to proper representation.
My question for the Prime Minister is this. If the voters in a
riding submit a petition that demands the removal of an MP and
the calling of a by-election, and if the number of voters signing
that petition is greater than 50 per cent of the number of people
who voted in the last federal election, will the government
respect the wishes of the petitioners and enact a recall process?
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker, I
spoke about this problem on Friday. It was tried in Alberta in
1936. There was a request by the people who elected the premier
at the time, Mr. Aberhart, that he be recalled. He passed
legislation abrogating the legislation retroactively.
This is puzzling me a little bit, so I hope he will consult with
his leader because his father was involved at that time. We
should study the situation of 1936 and after that we can consider
what should be done.
Mr. Ed Harper (Simcoe Centre): Mr. Speaker, a
supplementary question. Yesterday the Prime Minister said that
democracy demands that members be allowed to fill out their
Is the Prime Minister suggesting that democracy is served
when MPs who betray the trust of voters are rewarded with a
four-year no-cut contract and that democracy is endangered
when the voters have the opportunity to remove such an MP and
force a by-election.
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker,
we have been elected under the law of the land and the law of the
land states that we were elected for the full term.
Of course often after an election some citizens are not too
happy with the way they voted. I am sure that in the riding of the
hon. gentleman there are more than 100 persons today who
regret they voted for the Reform Party and if they had a chance
they would need, in his case, only 110 people to sign a petition
that would void the majority he had in the election.
* * *
Mr. Michel Guimond
Mr. Speaker, my
question is for the Minister of Transport. Last Friday, the
minister answered a question asked by the hon. member for
Louis-Hébert concerning the criteria which led to the closure of
the radar control facility at the Quebec City airport. The
Minister of Transport said that the review process was being
applied to the country's entire air traffic control system. He said,
and I quote: ``I can assure my hon. colleague that the
same criteria will be applied, whether it be in Quebec City,
Calgary, Moncton or Vancouver.''
Was proximity the determining factor in the decision to
transfer the radar control facility from Quebec City to Montreal,
since it is located 120 air miles from the control centre in
Hon. Douglas Young (Minister of Transport): Mr. Speaker,
what I said last week in the House was that the criteria which
will be established to make decisions regarding the Quebec City
airport are similar to those which will apply elsewhere. I can
assure the hon. member that the basic criteria relate to safety and
the provision of services in one's preferred official language.
This is what we intend to look for when we review this case and
any other one.
Mr. Michel Guimond
(Beauport-Montmorency-Orléans): Mr. Speaker, why then
does the Minister of Transport not apply the same reasoning to
the Ottawa airport, which is located less than 90 air miles from
the Montreal airport? Is it because people do not want to come
and work in a French environment in Montreal? Is that the real
Hon. Douglas Young (Minister of Transport): Mr. Speaker,
in his first question, the hon. member asked if this was the
primary criteria. I can tell him that it was not. What I said to the
hon. member is that we want to ensure that people can get those
services in both official languages, and we also want to ensure
everyone's safety. I sincerely regret that the hon. member does
not seem to believe that the service provided in Montreal can be
as good as the one in Quebec City.
* * *
Mr. John Cummins (Delta):
Mr. Speaker, my question is for
the Minister of Fisheries and Oceans.
Last Thursday the minister informed the House that the
federal government would participate in the B.C. Utilities
Commission hearings on the Kemano River diversion project.
Many suspect the project will have a negative impact on the
environment and on fish stocks yet the minister said he cannot
halt or delay the contentious project because he inherited a 1987
agreement signed by his predecessor.
Given that the government was able to cancel the EH-101
helicopter contract and the Pearson airport contract, will the
minister fulfil his responsibilities and cancel the 1987
agreement if fish stocks on the Fraser River are threatened?
Hon. Brian Tobin (Minister of Fisheries and Oceans): Mr.
Speaker, I want to thank the hon. member for his question. I
know he has a genuine interest in matters regarding fish habitat.
The member asks why is this not like the EH-101 and
Pearson. The EH-101 was a $5.8 billion project that was not yet
under way. The Pearson proposal was a $750 million airport
expansion that was not yet under way. The Kemano project is a
$1.5 billion project in current dollars and those dollars have
already been spent.
Given the Reform Party's well-known and often expressed
interest in the deficit, I think the member would want me to
acknowledge that the terms of the 1987 settlement agreement
are such that the Government of Canada, the Government of
British Columbia together with Alcan entered into an agreement
where any move to slow or stop the project could potentially see
the two governments liable for that delay or stoppage.
I am saying to the hon. member what I am sure he would
expect. The government's intention is to allow all evidence by
all officials to be put forward before a B.C. review panel, to
allow the panel to speak for itself and to not pre-judge the
Mr. John Cummins (Delta): Mr. Speaker, the project is not
without cost if it goes through. If this project is as
environmentally benign as Alcan would have us believe, surely
it would not mind guaranteeing the west coast fishing industry
compensation if its predictions do not come true and fish stocks
on the Fraser River decline as a direct result of the Nechako
Is the minister prepared to demand that Alcan provide
compensation to commercial and sport fishermen in British
Columbia if wild salmon stocks on the Fraser River decline in
number as a direct result of this project?
Hon. Brian Tobin (Minister of Fisheries and Oceans): Mr.
Speaker, the member in his first question said: ``Will the
minister agree to stop if-''. In his second question the member
said: ``Will the minister and government agree to compensation
The previous government negotiated an agreement behind
closed doors and then locked the doors. This government has
opened the doors, opened the process and made officials and
tens of thousands of pages of documents available to an open
review process. We are not going to pre-judge the process. We
are not going to say hypothetically what we would do if we are
going to allow the facts to speak for themselves in an open
process as committed by the Prime Minister during the course of
the last election campaign.
Mr. Don Boudria (Glengarry-Prescott-Russell):
Speaker, my question is for the Minister of National Revenue.
Last week the Ontario Minister of Finance said that tobacco
smuggling was a regional problem in Quebec only. I want to ask
the Minister of National Revenue what he intends to do to
educate his provincial counterpart, to make him aware that
one-third of all cigarettes in Ontario are illegal and that it is a
national problem, not just a regional one?
Hon. David Anderson (Minister of National Revenue): Mr.
Speaker, the member's statement regarding the facts of tobacco
smuggling and the consumption of smuggled cigarettes in
Ontario are essentially correct as far as I can tell.
How would I educate the Ontario minister? I do not know. It is
hard with NDP members in that government. We attempted to
put the material in front of them which demonstrates that this is
a national problem. Quebec may have more of a problem than
the province of Ontario, but if anyone in Ontario is of the view
that this is a minor problem and strictly one in Quebec, let me
say that they are quite wrong. There is a very substantial
smuggling problem in Ontario and a very substantial
consumption of contraband cigarettes in Ontario particularly by
We must pay attention to these facts as we attempt to develop
a strategy for dealing with what is essentially a national problem
and not a Quebec problem.
* * *
Mr. Michel Bellehumeur (Berthier-Montcalm):
Speaker, my question is directed to the Minister of National
Yesterday, it was reported that since 1989, the
Communications Security Establishment had awarded three
contracts worth $1.1 million for developing devices capable of
intercepting conversations originating from telephones and fax
Could the minister tell us whether the government is still
funding the development and production of this so-called top
secret equipment and whether the federal government intends to
use these devices to monitor the private lives of Canadians and
Hon. David Michael Collenette (Minister of National
Defence and Minister of Veterans Affairs): Mr. Speaker, the
communications security establishment has been discussed in
the House before. The particular contract in question, which
came to light last week, is a normal contract. It is for about $1
million. There is nothing nefarious about it.
The Department of National Defence is responsible for a
foreign intelligence function. It helps Canadians protect
themselves against drug smugglers, terrorists and others who
want to infringe on the rights of Canadians.
I can assure the hon. member that this relatively small
contract would in no way be used to do anything against
Canadians. The communications security establishment does
operate within the full ambit of the law and is fully accountable
to the House of Commons.
Mr. Michel Bellehumeur (Berthier-Montcalm): Mr.
Speaker, when he was in the opposition, the Liberal member for
Scarborough-Rouge River, then chairman of the Committee on
National Security, stated that the CSE was obviously
overstepping its authority and might invade the privacy of
Canadians with these devices.
My question is this: Does the minister agree with his
colleague that the Communications Security Establishment is
overstepping its authority and does he intend to investigate this
Hon. David Michael Collenette (Minister of National
Defence and Minister of Veterans Affairs): Mr. Speaker, I
should emphasize that the work of the communications security
establishment does not impinge on the rights of Canadians. It is
a foreign intelligence gathering mechanism.
The Speaker: I would point out that although I permitted the
question, usually we do not refer to statements made in
committees. I know hon. members will want to review that as
they pose their questions in future.
* * *
Mr. John Duncan (North Island-Powell River):
Speaker, my question is for the Prime Minister. As a lawyer and
a former Minister of Indian Affairs and Northern Development
can you provide the House today with a legal definition of
inherent right to self-government as it relates to federal
The Speaker: It is just a small point but I know the hon.
member will want to pose his question through the Chair.
Perhaps we could find another venue for any questions that have
to do with legality rather than ask for a legal opinion here in the
House. If the hon. member could rephrase his question he might
get the information he is seeking.
Mr. Duncan: Mr. Speaker, I have a question I would like to
ask the Prime Minister. Can the Prime Minister provide us with
his definition of inherent right to self-government as it applies
to federal authority?
Right Hon. Jean Chrétien (Prime Minister): Mr. Speaker,
we have a Minister of Justice to give legal opinions.
The meaning of inherent right to self-government has been
debated in Canada for some time. The Minister of Indian Affairs
and Northern Development is discussing how it can be
implemented with the aboriginal peoples at this time. If they
come to an agreement we will have a clear definition.
* * *
Mr. Jean-Robert Gauthier (Ottawa-Vanier):
Speaker, my question is for the Minister of Public Works.
Recent media reports stated the government is planning to pull
several thousand public servants out of downtown Ottawa and
move them to outlying regions.
The timing could not be worse given the devastating toll of the
recession. The downtown service sector is currently suffering
from serious fiscal restraint. A job exodus, including the
spin-off effect on service jobs, would create a virtual ghost town
of our national capital. An abandoned downtown would also be
damaging to the tourism industry. Canadians would find it kind
of dull to visit Ottawa.
I want to ask the Minister of Public Works if he can confirm
whether his department or any other department is presently
proceeding with a study to relocate public servants from
downtown Ottawa to the suburban areas.
Hon. David Dingwall (Minister of Public Works and
Government Services and Minister for the Atlantic Canada
Opportunities Agency): Mr. Speaker, I thank the hon. member
for his question. It is a subject matter of great concern to him as
well as my colleague, the hon. member for Ottawa Centre, who
has raised it with me on several occasions.
I should indicate to the hon. member that my department is
charged with the responsibility of developing the
accommodation needs of the various departments of the
Government of Canada. As a result of the restructuring a new
balance must be redrawn.
However I wish to assure the hon. member that no decisions
have been reached. It is preliminary evaluation of the existing
available space. No decisions will be made until such time as
there are wide consultations with hon. members, the Minister of
Industry and the Minister of Intergovernmental Affairs.
Some hon. members: Hear, hear.
Hon. Audrey McLaughlin (Yukon):
Mr. Speaker, I know
that the Liberal Party will want to clap just as hard after I have
asked my question.
My question is for the Minister of Health. The minister
responded earlier to a question by saying that she had the health
of Canadians at heart, and I believe her.
Given that tobacco use costs Canadians and the health care
system directly and indirectly over $15 billion a year and costs
the lives of some 37,000 Canadians, will the Minister of Health
state in the House today, directly to Canadians, whether she is
against lowering the taxes on tobacco products or whether she is
If she is for lowering taxes, will she indicate how her
government will compensate provincial governments whose
health care costs will clearly rise?
Hon. Diane Marleau (Minister of Health): Mr. Speaker, in
response to the hon. member, I am very concerned about the use
of tobacco in the country. I am also very concerned about the
high level of tobacco use among young people. That of course is
an issue that is raised with the problems of counterfeit and
contraband cigarettes going across the nation.
It is a problem we have to face and we have to deal with,
always remembering that the health of Canadians is the most
important issue in this docket. We have to convince Canadians
to stop smoking. We have to convince young people to stop
smoking. We have to make sure that tobacco products are not
available to the young people of Canada.
* * *
I draw to the attention of hon. members the
presence in the gallery of the Hon. Jeannie Marie-Jewell,
Speaker of the Legislative Assembly of the Northwest
Some hon. members: Hear, hear.
Some hon. members: What about Marc?
The Speaker: There is no reason to introduce our friend, a
former member of the House, who is in the gallery.
The House resumed consideration of the motion.
The Speaker: Order, I believe the hon. member for Joliette
still had 15 minutes left.
Mr. René Laurin (Joliette): Mr. Speaker, when I interrupted
my speech just before Question Period, I was listing some
examples of wasteful spending and poor management of public
funds. I mentioned National Revenue, Investment Canada,
ministers' travel expenses, the Department of Fisheries and
Oceans, and I was getting to the matter of student loans.
In 1990, 1992, and 1993, the Auditor General stated that
annual ceilings for student loans had been exceeded. In 1993,
the annual ceiling had been exceeded by $170 million.
According to the Auditor General, action was urgently needed to
correct the situation and ensure compliance with the provisions
of the Canada Student Loans Act.
We are not against lending money to students. We are aware of
the financial needs of students, but the decision to exceed
approved ceilings is up to Parliament, not departmental
Another example concerns the Canadian Aboriginal
Economic Development Strategy. This strategy would invest $1
billion over a period of five years. Three departments were
responsible for implementation of the strategy: Indian Affairs
and Northern Development, Industry, Science and Technology
and Employment and Immigration. The purpose of this strategy
was to address disparities between aboriginal peoples and other
Canadians, and its objective was to help aboriginal peoples
achieve economic self-reliance.
Between 1989 and 1993, $900 million was spent under the
strategy. The Auditor General deplored the lack of
harmonization between the departments, which were supposed
to co-ordinate their activities and put in place an evaluation
framework. Because of this lack of leadership, the framework
was not put in place until 1993, four years after the strategy
came into effect.
There are also very few ways to evaluate the effectiveness of
this strategy. In fact, $900 million is being spent without any
assurance that these expenditures are justified.
In 1992, for instance, the Department of Indian Affairs and
Northern Development spent $20 million on 73 economic
development organizations in communities considered to be
fully developed. On the other hand, it spent $33 million on 296
organizations in less developed communities. No wonder the
Auditor General has asked for measures to monitor and evaluate
It is most unpleasant when one is speaking to the Chair and
members on the other side of the House are talking. I think we
deserve some respect when we speak on behalf of our fellow
The Acting Speaker (Mr. Kilger): The hon. member for
Joliette has raised a point, and I must say I agree. I would ask
hon. members to continue their discussions outside, behind the
curtains, so that we can hear what is being said and the hon.
member for Joliette can continue his speech undisturbed.
Mr. Laurin: I will go on, then, Mr. Speaker. To sum up, I do
not know what real benefits have resulted from the activities
outlined in the strategy. Were the resources maximized? We do
not know whether the funds were spent on native priorities or
whether there is a more cost-effective way to obtain the same
results. A review of the Canadian Aboriginal Economic
Development Strategy is therefore essential and programs must
be assessed at that level.
Another example is the Old Age Security and Canada Pension
Plan. Pension benefit overpayments are in the range of $120 to
$220 million each year, thus increasing administrative and
implementation costs by 50 per cent to $260 million. These
overpayments represent 0.5 per cent of total payments.
The detection, recording and recovery of overpayments is not
being managed in a cost-effective manner. Overpayments could
be related to deficiencies in two key program activities: Canada
Pension Plan disability reassessment and Guaranteed Income
Supplement renewal. The systems and procedures in place for
the recording, control and collection of overpayments fell far
short of meeting minimum standards for such accounts.
Past efforts to prevent and detect overpayments have been
minimal and ineffective. The department responsible does not
even maintain information on the extent of overpayments. That
is why the Auditor General had to come up with an estimate
Here I would like to quote from the Auditor General's report:
``In short, the Department does not have proper control of the
overpayment situation. Benefits are paid to those not entitled to
receive them. Existing systems do not allow managers to
quantify the amounts involved or to manage their collection
efficiently. Moreover, the Department is not organized for
enforcement activities such as the recovery of overpayment''.
There is another example: the Canadian International
Development Agency, better known as CIDA. This organization
continues to invest in development projects unlikely to be
sustained beyond donor countries' financial assistance.
This government agency did not maximize its use of resources
and its projects have not led sufficiently to self-reliant
development of the countries receiving financial assistance.
It is important to resolve conflicts among multiple goals such
as alleviating poverty while pursuing commercial and political
CIDA must channel its efforts. On the one hand, pursuing
multiple objectives to meet the demands of various Canadian
interest groups raises costs and diverts us from the intended
objective. Commercial and political goals have caused CIDA
to scatter its human and financial resources.
On the other hand, new objectives have been added to those of
the 60s and 70s such as economic and social policy reform of
third world countries; human resources development; the
promotion of human rights; sustainable development and
environmental protection; finally, delivery channels, program
proliferation and CIDA personnel rotation between countries
every two to three years.
This situation has increased the administrative burden and
made the assessment of project results much more difficult.
Corrective action is needed and the Canadian International
Development Agency must act: one, to streamline its operations
to be more efficient and effective; two, to review its project
management strategy; three, to spell out its accountability to
Parliament and the Canadian public; four, to be more open and
transparent with regard to its strategic objectives. Finally,
information on the results obtained should be made public.
Just think, all these examples are taken only from this year's
report, nothing else. The Investment Canada case is a good
example of waste by a public servant. In management courses,
we learn that officials and other managers often want to increase
their sphere of influence by hiring too many employees or
asking for operating budgets which are too high. All this leads to
irrational spending. Civil servants do not always have the
interest or the desire to challenge the government apparatus
That is why we want the committee that will analyze
government spending to be made up, not of public servants, but
of parliamentarians answerable to the people.
We believe that it is the people's representatives who should
ensure that the various programs achieve their objectives and
that the public service and the government manage the
allocation of public funds fairly, efficiently and economically.
I again quote the Auditor General, who wrote in his report:
``Most of the time, Parliament is not provided with adequate
information on the results that departments and Crown
corporations have achieved with billions of dollars of taxpayers'
money''. Since parliamentarians do not have sufficient
information on the government's financial situation, we think
that the cases of waste and mismanagement reported by the
Auditor General are just the tip of the iceberg.
A parliamentary committee to analyze public spending could
provide Parliament and thus the public with more information
on the government's financial situation. On this point, we agree
with the Auditor General's proposal to ask departments to
provide clear and comprehensive reports in which they would
give Parliament an exact accounting of their stewardship by
providing results-oriented data on major spending items.
Duplication of programs and overlapping jurisdiction are
another waste of public funds. Not many studies deal with this
issue, but among those that do, we have one done by the
Treasury Board of Canada in 1991. It concluded that for at least
half the provinces, provincial and federal programs apparently
overlap in about 60 per cent of cases. The unclear division of
power, federal interference in provincial jurisdiction and the
federal spending power are the main reasons for this duplication
The Bélanger-Campeau Commission estimated that a
sovereign Quebec would save $233 million on transportation
and communication costs and $289 million on the collection of
duties and taxes, by eliminating this duplication. The problem is
therefore potentially very important. However, no recent studies
to estimate the cost of duplication in all provincial and federal
programs exist. Some sources estimate the total cost at nearly $3
billion; others put it higher than that.
That is why we ask this House to give the Auditor General a
mandate, free of partisanship, to make a serious, complete study
of duplication and overlap in all spending programs of the
provincial and federal governments.
In conclusion, the Bloc Quebecois thinks that the Canadian
government must show that it is doing its part to reduce the
deficit by eliminating waste, unnecessary programs and
mismanagement of public funds. For this, we ask the Liberal
government to stop hesitating and to set up a parliamentary
committee to study government spending, item by item.
This is part of a series of measures proposed by the Bloc
Quebecois to put the government's finances back on a sound
footing, without making the most disadvantaged or the
provinces bear the burden of the necessary reduction in the
We also ask the Liberal government to act quickly and
energetically to eliminate the cases of waste and
mismanagement identified by the Auditor General, which I
mentioned in my speech.
Mr. Philippe Paré (Louis-Hébert): Mr. Speaker, I have a
brief comment. The hon. member for Joliette gave a good many
very convincing examples of inept government administration. I
have another one for you.
With respect to occupational training, the federal and Quebec
governments spend roughly $1 billion annually in Quebec
alone. Despite this fact, the occupational training needs of
Quebecers are still not being properly addressed.
We have seen that in this particular area, overlapping
jurisdictions swallow 60 per cent of the total amount allocated,
that is 60 per cent of $1 billion, or $600 million. This money is
used to deal with administrative problems, which leaves a mere
40 per cent for real occupational training. This is completely
In spite of the promises in the white paper, we are now being
told to wait two years for a review of these problems. This is
Mr. Laurin: Mr. Speaker, I totally agree with my colleague's
remarks. More examples could have been given. Mention was
made of the inept management of the public service. We could
also have mentioned public service renewal, a process that is
two years behind schedule. In his report, the Auditor General
noted that the public service is absolutely indispensable to the
operation of government. He also said, however, that the public
service does not have the necessary tools to ensure effective
management or the necessary controls to fulfil its obligations to
We could have given you many more examples, but since time
is limited, we have to be content with underscoring the principal
areas highlighted by the Auditor General. Follow-up action
must be taken as soon as possible and the necessary changes
must be carried out in order to ensure the sound operation of the
House of Commons.
Mr. Paul Szabo (Mississauga South): Mr. Speaker, on the
occasion of my first speech to the House of Commons in the 35th
Parliament of Canada let me first express my sincere gratitude
to the residents of my riding of Mississauga South. I am
honoured to represent their interests in Ottawa and to serve their
I also wish to thank my wife Linda, and my children Aaron,
Reagan and Whitney. All members of Parliament know the great
personal sacrifice that our families have made so that we can
pursue our goals. In this, the International Year of the Family,
we say to you: ``We miss you, we love you and we thank you''.
We also thank the Prime Minister for his vote of confidence
and the historic decision to allow all members to speak freely
and openly on important issues such as this pre-budget debate.
Canadians are well aware of the complex and troubling
problems we face today such as chronic deficits, high
unemployment, poor economic performance and the lack of
credibility of government.
In 20 years of corporate life and as a chartered accountant I
learned quickly that for every complex problem there is a simple
solution, and it is wrong. To focus solely on deficit reduction is
too simplistic. We need a balanced approach to fiscal and
monetary policy to promote economic growth and job creation.
This, coupled with expenditure rationalization, will lead to
Financial performance can be improved in two ways:
increasing revenues or decreasing expenses. On the revenue
side, tax increases are not an option in this budget. Canadians
are already over-taxed. Alternatively, we need to broaden the
tax base by expanding the economy.
On the expense side, cutting and slashing to lower the deficit
would be destructive. Moreover it does not take into account the
value of an integrated expenditure plan which can create
synergies and opportunities in support of economic growth.
Government must redefine its philosophy on expenditures,
viewing them not as spending but rather as investing in people,
programs and assets. We are investment managers of the
taxpayers' funds, and when we invest, not only must we set
returns and performance requirements but we must also become
accountable to the people of Canada. When these returns and
performance requirements are not being achieved government
has a duty to take corrective action.
Annually the Auditor General has reported on countless
examples of waste and mismanagement. We must respond to
these reports and demonstrate that we have learned from our
Our social programs were initially designed to provide a
social safety net for those in most need. Although the system
served Canada well in the past, we must overhaul and renew
these programs to fit the realities of the 1990s and into the 21st
We must simplify our tax system and restore equity and
fairness both in the personal and the corporate sectors. We must
streamline government operations at all levels to improve
productivity and efficiency. We must provide incentives for new
investments, particularly in small and medium sized businesses
to create lasting jobs for Canadians.
For every one dollar investment in Canada the multiplier
effect is five times in terms of the contribution to our economy.
This creates new jobs and a broader tax base which is essential to
the meaningful reduction of the deficit.
At this point I would like to make a few specific suggestions
for budget consideration. We must aggressively deal with the
underground economy to ensure that more are paying their share
so that all are paying less. With an estimated 20 per cent of our
economy underground the government has a duty to conduct
more network audits and to introduce more comprehensive
forensic auditing techniques to address this most serious
In regard to RRSPs, contribution limits should be set at levels
that will allow all Canadians who are not members of pension
plans to adequately provide for their retirement income. These
levels should be comparable to those afforded to members of
registered pension plans.
With regard to the $100,000 lifetime capital gains exemption,
it has not met its objectives of stimulating investment in
Canada. The exemption should be discontinued and the savings
be reinvested in job creation initiatives.
Old age security for our seniors should not be affected by this
budget. The present tax law already claws back a portion of the
benefit where the taxpayer has other income. The Prime
Minister told seniors during the election campaign that old age
security was a dividend, recognizing their lifetime of
contribution as taxpayers and we should honour that position.
The rising level of foreign-owned debt is draining capital out
of Canada. As such, consideration should be given to incentives
for Canadians to invest in our country, such as tax exempt bonds.
On unemployment insurance, benefits should be paid only to
those Canadians who are unemployed and looking for work.
The current practice of paying benefits where there is only a
disruption of earnings should be reviewed and a threshold of
earnings should be considered as a basis for increasing the rate
of clawback on these social benefits.
On immigration, the federal government must enforce its
immigration sponsorship agreements where the sponsor is able
to meet their obligation. In 1993 the region of Peel alone had
some 11,000 welfare claims from immigrants who were already
covered by a sponsorship agreement. Thirty-eight per cent of
those agreements broke down in the first year, rising to 62 per
cent before the end of the second year of the 10-year
sponsorship. In addition, 59 per cent of those sponsors were
children sponsoring their families. In a large number of cases
they did not have the financial ability to do so.
The rise in defaults has been dramatic and the burden is
falling squarely on the shoulders of the Canadian taxpayer.
Fiscal responsibility requires that we must address this
On health care, the federal government contributes 24 per
cent of the cost through transfer payments to the provinces and,
as such, should ensure that the funds are being appropriately
spent. However, Ontario has over two million unauthorized
health cards in circulation, costing that province as much as
$900 million per year in fraudulent claims.
Although this is under provincial jurisdiction, there is only
one taxpayer and this type of savings opportunity cannot be
With regard to economic growth, new partnerships must be
built with the business sector which will be responsible for the
creation of 85 per cent of all new jobs. That means that the
government must provide meaningful incentives, such as job
creation tax credits, training subsidies, UIC premium
exemptions and wage subsidies as its partnership contribution.
We must also provide a supportive environment by
streamlining government services and creating one stop
shopping for those services, especially as it relates to small and
medium sized businesses and to export opportunities.
In conclusion, the pursuit of economic growth coupled with
sound financial management and wise investing will allow us to
deal effectively with the challenges before us. To quote from the
government red book, a strong economy is the essence of a
strong society and therefore jobs and economic growth must be
our top objectives.
Political credibility requires fiscal responsibility. The people
of Canada have given this government the mandate to make the
tough decisions necessary to restore our economic strength and
to create opportunity, hope and jobs for all.
Canadians also understand that all who are able will be called
upon to contribute their fair share. We need a tough but fair
budget. We need it now for the long term benefit of all
Hon. Audrey McLaughlin (Yukon): Mr. Speaker, I would
like to congratulate the member for Mississauga South on his
first speech in this House. He made some extremely good points.
However, I would like to ask him a few questions on tax
policy. He mentioned at the beginning of his remarks that he felt
that there should be no new taxes. I certainly concur that the
middle class and individuals are just totally overburdened on
taxes. He concluded his speech by talking about fairness.
I would like to ask the member for Mississauga South if his
comments at the beginning of his remarks would include the fact
that there should be no consideration in this budget of taxing
those profitable corporations that now pay no tax. Last year the
Auditor General told us that there are millions of dollars in
uncollected taxes because of the provision for profits to be put
offshore and therefore not taxed in Canada. We know that the
family trusts, where the rich can shelter their money, are not
I would like to ask the member, when he talks about no taxes,
is he talking about allowing these tax loopholes for the rich and
for profitable corporations to continue or does he really want
to see a fair tax system so that the individual taxpayer gets less
burden when everyone is paying their fair share?
Mr. Szabo: Mr. Speaker, I want to thank the hon. member for
Yukon for her kind words of congratulations.
I do not think I can do justice to her question in the brief
moments that we have here but let me comment with regard to at
least the concept of no new taxes vis-à-vis corporations,
offshore companies and family trusts.
The concepts of fairness and equity would say that
government has to revisit all of the provisions. There are no
more sacred cows. To the extent that businesses are indeed
draining capital or sheltering business income through offshore
instruments, this government, if it is to be true to its value
system of fairness and equity in our tax system, must
investigate, analyse and work toward reasonable solutions to
ensure that the income derived from Canadian soil is invested to
the greatest amount in Canadian opportunities.
Mr. Ghislain Lebel (Chambly): Mr. Speaker, my question is
for the hon. member for Mississauga South, whom I want to
congratulate on his maiden speech. I noted that he talked about
the elimination of the $100,000 lifetime capital gains
Does the hon. member not think that by doing away with this
exemption, to which every taxpayer is entitled during his or her
lifetime, the government is in effect taxing the inflation that it
has itself generated because of negligence, because of a bad
interest rate policy in some cases and because of excessive
Mr. Szabo: Mr. Speaker, the $100,000 lifetime capital gain
exemption was introduced two Parliaments ago by the previous
government. It was sold to Canadians on the basis that it was
going to stimulate investment and job creation in Canada. I
think that Canadians embraced those principles as being
However, the government in its implementation made two
fundamental errors in that exemption. First of all, it did not
establish a V-day value for investments and so allowed
investments which were already made and had holding capital
gains on them which were eligible for that exemption. It
forewent the opportunity to direct this exemption to new
Second, the government did not specify or restrict the nature
of investments that could be made under this program. As such,
investments even such as Florida vacation properties became
eligible for that exemption. Under the circumstances I think the
hon. member would agree that this particular exemption,
although honourable in its roots, was very poorly implemented.
The optics are very bad to the Canadian taxpayers and the
dollars that the government is foregoing by permitting that
exemption would be much better spent by investing in job
Mr. Bernie Collins (Souris-Moose Mountain): Mr.
Speaker, it is my honour and privilege on behalf of the electors
of Souris-Moose Mountain to rise on this very memorable
occasion to make my first presentation to the members of this
House on a topic so crucial and that is the budget.
We are honoured to have the hon. minister, Mr. Paul Martin,
as the minister in charge of this department. I am sure that the
members from across the House have recognized his
capabilities and are prepared to work with him along with each
For me, having come from a riding that has been notable for
people who have served in this capacity, it is a humbling
experience. I do know that I have the support of my wife,
Delphine, and my family. If I were to name all the members of
my family we would be here for some time.
Let me just say that from the oldest member Michael to the
youngest member Carrie-Lynn, I do know that they are prepared
to make a commitment, along with me, of total responsibility
and trust to those who have placed me here.
I look forward to the opportunity to work with all members of
this House as we go forward to address the challenges of this, the
Because my riding is so vast, almost 300 miles across, I have
had the opportunity to travel 30,000 miles and meet constituents
during the campaign. Our riding encompasses the entire
southeast corner of Saskatchewan. From the Manitoba border
one can travel 300 miles to Minton in the area of the Big Muddy.
From the United States border our constituency reaches 180
miles north to the Qu'Appelle Valley.
I found that everywhere I went young people were seeking
hope. They desire a chance, a way to make themselves known in
this great country of ours. They do look to us to light the fire in
their eyes and to renew the hope in their hearts so that they along
with us can be the beneficiaries of this fantastic country.
My riding includes seven First Nation reserves, the Sakimay,
White Bear, Ocean Man Band, Ochapowace, Cowesses,
Kahkewistahaw, and Pheasant Rump. I know their hopes and
aspirations are for recognition as a First Nation and for
self-government. They too search for hope for their families.
I am happy now to put forward some ideas that may be
incorporated into, as it is being prepared by the people of
Canada, this budget for 1994.
I have travelled through southeast Saskatchewan and have had
a very clear, concise concern put forward to me by different
groups of people.
In the agricultural community never did I find a farmer who
said he wanted a handout. What they did ask for was a fair price
for the product they produced.
Certainly that is all too true when I look at the unemployed.
They wish to have training to improve their skills so that they
can become part of that hope and dream.
I remember a meeting in Estevan some three or four years ago
when the then Minister of Finance, Michael Wilson, brought
forth the goods and services proposal. The business people of
that area spoke loudly and clearly and said they could stand a 3
per cent or 4 per cent flat tax or basic tax but that would be the
What has happened since that time? I am sure the House
remembers the reports in the newspapers that the goods and
services tax was creating such a great amount of wealth that the
government was not sure what it would do with it.
We still find that the truth of the matter is that the goods and
services tax did not produce the expected wealth. What it did
produce was an army of people out collecting the tax, creating
for small and large businesses alike a horrendous amount of
I look to this government to get rid of these levels of
paperwork that take hours and hours for business people. They
are in the business of making money, not just spending time
filling out government reports.
In the history of Canada there is no tax that I know of that is as
hated as the goods and services tax and I want to assure all those
people in Souris-Moose Mountain that in one clear voice they
have spoken. They do not want any more taxes and they do not
want an unfair tax system.
What I do mean is a fairness in taxes. I believe, as the report of
the Auditor General has indicated, that the Government of
Canada must close loopholes so that investors cannot borrow
money, invest it in foreign countries and then have a tax shelter
of these investments.
I also believe that the Auditor General when he does make his
report should frequently bring those recommendations to this
House so that we can fix those areas which are inappropriate or
wrong. Corrective steps to overcome the problems must be
What about accountability and proper management? I read
that between $120 million and $220 million is lost annually
because of pension plan and old age security benefits paid to
ineligible people. I know a case in which an individual was able
to approve for himself educational funding. Where is the
These are the things that have gone on in the past which my
constituents have made clear to me they will not tolerate any
I want to switch gears into the area of student loans. The
student loan program is costing the government a tremendous
amount of money. The tax on student loans should be equitable
and should be fair. There should be a six month buffer for
students to pay.
Let us be thoughtful when we are spending our money and
how it is accounted for. My constituents are not pleased about
spending $1.6 million on a painting when there are 1.6 million
I have a few quick observations from consultations with my
constituents. Several have suggested to me that a tax on lottery
winnings especially over a certain level would be acceptable.
An opportunity should be given for communities to invest in
themselves. This could be handled through an infrastructure
program, but there are tax implications. A suggestion has been
made that citizens could make a one-time contribution to a
community fund and receive a tax benefit.
Given that a significant amount of our debt is held by foreign
countries a concerted effort should be made to buy back that
portion of the debt that is held outside this country.
I am confident, as is everyone in this House I am sure, that we
have a talented, thoughtful and visionary man at the helm of this
overwhelming economic situation. Remember that Paul Martin,
Sr. was a man of vision, a man of action and a statesman. He was
a man Canadians trusted and respected. He was a true Canadian.
Our present finance minister will surely be deserving of the
same accolades as he prepares and presents, with our help and
the help of all Canadians, the budget for 1994.
A famous writer of Negro heritage, Langston Hughes,
depicted the life of his family and indicated that one could go
through life laughing or crying. His solution was: Go through
life laughing. Enjoy it. Part of the challenge is to provide an
opportunity for the people of this country to go through life
enjoying it. We will enjoy our part if we know that we have
contributed to improving the standard of living and the hopes
and expectations of all Canadians.
Mr. Roger Pomerleau (Anjou-Rivière-des-Prairies): Mr.
Speaker, I listened closely to what the hon. member for
Souris-Moose Mountain had to say, as I did to everything that
has been said in this place so far today. I think that, if we were to
sum it all up very concisely, there would be at least two main
ideas emerging. First, a good many people in this country have
lost confidence in their politicians and second, we have a
government mired in a situation that can be attributed to
Every member who has participated in this debate has
pointed out several instances of mismanagement, like this
business with health insurance cards, although this involved the
Ontario provincial government to some extent, and other telling
examples of mismanagement on the part of our governments.
What strikes me about this debate is that we seem to be
rehashing the same old things we have been hearing for ten
years. I am sure there are people in my riding who are thinking
just that: ``All that stuff, we have been hearing about for ten
This morning, the Minister of Finance mentioned relying on
meetings he had had with 30 or 40 top economists in Canada.
But we have been relying on Canada's 30 or 40 best economists
for 10 or 12 years already and, instead of improving, things are
I want to put this question to the hon. member for
Souris-Moose Mountain regarding Quebec. As you know, it is
most likely that we will be holding a referendum in Quebec
within a few months. Here is how the people of Quebec view the
overall situation at this time. In 1980, when the Liberals took
office, the cumulative debt in Canada was about $80 billion.
Incidentally, our present Prime Minister was Minister of
Finance in that Parliament. At the end of their mandate, they
passed on a debt of $200 billion or so. Under the next
government, a Conservative government, it rose to $500 billion.
We know that upon separating from Canada, we will take on 25
per cent of the Canadian debt. Had we voted ``yes'' in the 1980
referendum, we would have had to pay $20 billion out of this
debt, but if we vote ``yes'' now, it will cost us $125 billion. This
means that over a 13-year period, Quebec's share of the debt has
increased by over $100,000 million. As the holder of 25 per cent
of the voting shares in this company called Canada which has
increased our debt by $100,000 million in 13 years, in what way
is this partnership profitable to Quebec?
Mr. Collins: Mr. Speaker, I appreciate the question the hon.
member has put forward.
Let me say that he is being more than optimistic in his thought
that all of us in this House, with the exception of the Bloc, are
going to stand by while he departs from this country, because it
will not happen. We are in this for the long haul. In this, the 35th
Parliament, each and every one of us has a commitment to the
debt and to the improvement of the welfare of this great country
I can assure hon. members that the people of Souris-Moose
Mountain will make their commitment to continuing to come up
with a budget that considers Quebec, that considers Yukon, that
considers all of Canada.
I am pleased that the hon. member for Yukon is here because
she is going to be part of this process so that jointly we come up
with a decision. We are not going to do it as individuals but
together collectively we will come up with a solution.
It is easy to turn to the past and say that it was the fault of
someone else. I suggest that we have to come up to today's
standard and ask: What are we going to do now? We have a new
group of people. They are optimistic. I am optimistic and I can
see nothing but good for this country under the leadership of our
great Prime Minister and our Minister of Finance.
Along with us, the hon. member from Quebec will be
surprised how happy he will be when the budget for 1994 comes
Mr. John Solomon (Regina-Lumsden): Mr. Speaker, I
wish to offer my congratulations to the hon. member for his
election to Parliament and also congratulate him on his remarks
The hon. member has asked the members of this assembly for
advice with respect to the budget. I have many things I wish to
offer in terms of revenue saving items. I do not have the time
right now but will get them on the record later.
I have one question I would like to raise at this moment. On
the budget considerations by the Minister of Finance, the
minister of defence is considering closing certain military
installations across the country.
CFB Moose Jaw which is now called 15 Wing has been in
existence for many years. It has been there for very practical
reasons, for example, the cloud-free skies, adjacent flat
topography and a low population density to the south. These
have contributed to the positive training and safety conditions of
Would the hon. member join with me in making
representations to the minister of defence to ensure that this
facility remains intact for the benefit not only of our country but
also for the province of Saskatchewan and for the military and
residents in and near Moose Jaw?
Mr. Collins: Mr. Speaker, I thank the hon. member for his
On many occasions he and I have shared the opportunity of
coming together on certain topics. The kind of thing that has to
happen in this House is that we have to come up with a collective
approach to dealing with problems.
I assure the hon. member not only will I be part of that but
I want to work very hard to convince all members from
Saskatchewan that we collectively ensure the base at Moose
Jaw continues to stay open.
Mr. Ray Speaker (Lethbridge): Mr. Speaker, I would like to
say that this is a great day to be in the House of Commons.
When I decided to take on the challenge of being a member of
Parliament representing not only the Lethbridge constituency
but the people of the province of Alberta, I faced in my home in
Edmonton a number of young people, young men and young
women who were concerned about their futures. These young
people who had visited my home from the University of Alberta
were quality students, young people who had the potential to
make a great contribution to Canada. But their main concern was
job opportunity: How do I get a job after I have studied so hard
and taken on a major loan portfolio as well? That was their main
At that time I said I thought I would like to take on the
challenge of federal politics and be in the House of Commons,
leaving the Legislative Assembly of Alberta where I had served
my people for some twenty-eight and a half years. So today I
feel it is a great day that I am able to stand and take part in this
pre-budget debate and make a contribution that I feel should
assist those young people.
We in Canada, specifically the people of my constituency as
in other areas, have other concerns as well, with the deficit and
the debt and with the type of leadership we will have this 35th
Parliament. Will we achieve what we have established and set
out to do? I would like to talk about that for a few minutes today.
During the past two weeks as I sat here in this assembly I
listened very carefully to what the Prime Minister had to say and
what the Minister of Finance had to say regarding their
objectives and the hints they were going to give. I know as well
as all other members do that they may not have been able to lay
out a full plan with all of the details. That is because it would
have been the traditional way where the government lays out the
plan and then goes into a defensive mode and we in the
opposition go into an offensive mode and we become
adversaries over the plan as set out.
As I understand it the plan is still loose and is building and is
open to suggestion. That is why we have this opportunity today
to fulfil our commitment to Parliament, to the people and to the
Minister of Finance, to fulfil that plan.
As I looked at some of the remarks of the Minister of Finance
during the past week I believe he gave us some hints. He said on
page 387 of the January 26 Hansard: ``We are going to hit our
target through a combination of growth, cutting unnecessary
spending and building more equity into the tax system''. He
went on to say on another day in Question Period: ``We are going
to broaden the tax base and fill in the tax loopholes and this will
simply remove inequities in the tax system and make it a great
Those are noble objectives. What I hope we are able to
impress upon the Minister of Finance is that in his budget he will
have to implement the details that are satisfactory to the
I want to go a little further in Hansard as of January 26 and
issue a bit of a concern in this listening process. One of our
Reform Party members raised the matter of the Reform zero and
three plan, or our proposal to reduce the deficit. The Minister of
Finance in his comments of Hansard of that day said that our
proposal was a kind of savagery.
I only say to the Minister of Finance that he should rethink
that. And I ask this question: In this listening process has he
taken the time to listen to all of the details, the tabling that our
leader made today? Is he prepared to read through the plan to see
if there are suggestions and ideas which can be used before he
writes off in a partisan way suggestions that have been truly
tested by hundreds of thousands of Canadians and supported by
them because that is why there are many Reform members
sitting in this assembly today.
After reading some of the comments of the finance minister
and after what I heard today in Question Period, I get the feeling
we could be on the verge of more taxes or new taxes or increased
taxes. Certainly there will be a shift somewhere within the cross
section of Canadians. Someone will pay more and maybe
someone will pay less or pay the same. In that equity formula
there will be an imposition of a greater amount of taxation. In
this context I say to the Minister of Finance that there are very
few people who support the concept of more taxes, especially
An article in the Financial Post of January 30, 1994 referred
to American growth relative to the Canadian growth, and I think
the minister should take it into consideration. It stated:
Fast-paced economic growth in the U.S. is likely to drag Canada along
eventually, economists say, but lack of consumer demand and government
cutbacks will make it a struggle.
Despite booming exports to its neighbour, Canada will be hard-pressed to
keep up with the U.S. economy this year.
These are the reasons given in the articles:
Fragile consumer confidence and rising taxes have left it several steps behind
in the recovery process.
I suggest the minister should make note of the article. Another
thing about taxation and the approach to it is that more taxation
is not the way to cut the deficit.
I refer to a government document entitled ``Canada's
Economic Challenges'' and dated January 1994. Page 48 of the
document talks about Canada's tax burden. It states: ``Canada's
tax burden has been steadily increasing. Since the early 1980s
total government taxes as a share of GDP has risen
significantly''. If we look at the graph over the last 10-year
period it is about 6 per cent.
Page 39 talks about the public debt. It states: ``The public debt
burden continues to rise. Relative to GDP, Canada's combined
federal and provincial debt has increased two and a half times
The point I want to make to the finance minister is that even
though taxes have increased significantly relative to GDP, our
debt continues to rise. Just increasing taxes is certainly not the
solution to the problem we face.
I listened very carefully last evening to the remarks of the
Prime Minister in Toronto, along with my good colleague from
the Bloc Quebecois. The Prime Minister indicated to Canadians
and to the people in Toronto that he would like to cut the deficit
to 3 per cent of gross domestic product by the third year of the
government's mandate. He said that there would be cuts but that
the best way was through growth.
The Prime Minister did not talk about the kinds of cuts or the
kinds of objectives. Again today the Prime Minister hedged on
how we were to deal with the question of social programs. There
is a challenge for the government. A soft Liberal approach will
The Investment Dealers' Association made a submission to
the Minister of Finance in January 1994. I have just received a
copy in the last couple of days. Referring to the approach of the
government, the association indicated that the government must
do more than what the Prime Minister has said, that it must deal
with the expenditure pattern of governments. The association
The deficit for the current year is now projected at $45 billion, about 5 per
cent of GDP. The government's stated policy is to reduce the deficit to 3 per cent
GDP within three years-requiring a $20 billion or 45 per cent reduction in the
We have to recognize that we are left with $25 billion as a
deficit. The association went on to say:
This deficit target is a worthy fiscal objective. However, the government
cannot rely on strengthening economic growth to close the deficit gap within
the forecast period. The scale of expenditure reduction to achieve the 1996-97
deficit target suggests massive reform of federal and provincial spending will be
I certainly want to echo and support that. I believe it is the way
the government must handle it.
What do I suggest Canadians are also saying? They are saying
that the government must priorize its spending. I believe it
should work toward deficit reduction and balancing the budget
within a term of the 35th Parliament. I expect that in the budget
there will be targets, priorities and a concrete time line for
That is the challenge of the Minister of Finance. I am at the
end of my time. I would like to thank you, Mr. Speaker, the
government, the Prime Minister and the Minister of Finance for
the opportunity to make these remarks on the pre-budget debate.
Mr. Sarkis Assadourian (Don Valley North): Mr. Speaker, I
congratulate the member on his election and on his first speech
on the pre-budget debate.
Before I put my question, I mention to him that we promised
in the red book that we would bring down the deficit to 3 per cent
of GDP. In his plan, as was mentioned during the campaign and
as he mentioned again today, he is to eliminate the deficit in
three years. This means that on average it must be reduced by
$15 billion every year for the next three years to meet the target
of a zero deficit.
Would the member explain to us how he would do that? From
where would he cut $15 billion every year on average for the
next three years?
Mr. Speaker (Lethbridge): I certainly appreciate the
question. It is a very leading question. It gives me an
opportunity to espouse our position very clearly.
Some ingredients have changed since we set forward our zero
in three plan in early 1993 in terms of revenue possibilities. The
actual deficit is much greater than the one we projected. I
believe we were looking at around $35 billion. We are now into a
projection of $44 billion to $46 billion. There certainly are other
areas of government that we must look at in terms of bringing
about those kinds of expenditure reductions.
Basically the Reform Party looked at three areas. In the broad
area of government efficiency we recommended that some areas
have 15 per cent cuts. That is in the document we presented
The second area we looked at was grants that are now made
available to businesses and special interest groups. In that area
we felt we could reduce the expenditures of government by
about $4.3 billion.
The third area we looked at were transfers to individuals. We
have said clearly that health care was not one of them. We were
to maintain the expenditure pattern as set out in the 1992-93
budget. It is to be kept at that level until we could maybe add to
it, but there would not be a reduction in health care spending or
in advanced education. We also had a hold on retraining and
criminal justice programs.
Other areas we were looking at were unemployment
insurance and old age assistance. For example, we wanted to
look at an income threshold of $54,000. In examining that we
could reduce the direct expenditure in that area by about $3.5
billion, by putting in that family threshold of $54,000. Those
are some of the kinds of things we were looking at.
We have tested those with many Canadians and have had very
positive responses. We intend to continue to do that. There may
be others we will have to put on the table. Now that we have a
major contingent elected to the House, it would be our plan to
develop, refine and certainly be more specific in terms of further
expenditure reduction patterns.
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot): Mr. Speaker,
I would like to congratulate my hon. colleague for Lethbridge on
his excellent speech and I am happy to hear a member from the
Reform Party say they would maintain the resources allocated to
health care and social security systems. I feel that this shows
progress in the analysis made by Reform Party members, and I
think the Bloc Quebecois and the Reform Party will eventually
reach common ground on this. Besides I had yesterday the
opportunity to discuss at length with the member for Lethbridge
before commenting on the speech by the Prime Minister.
I would like to ask my colleague if it would not be appropriate
for the Reform Party to support the request the Bloc Quebecois
made many times to the Minister of Finance that a special
parliamentary committee be struck, with responsibility for
looking at the tax and budget expenditures as a whole, so that
drastic cuts are not made across the board, and so that, after an
item-by-item review, cuts and increases could be determined.
We feel, for instance, that expenditures on social housing should
rise. Through you, Mr. Speaker, I ask my colleague if it would be
possible for his party to support mine on that point?
Mr. Speaker (Lethbridge): As a Reform caucus we certainly
considered the presentation of the Bloc Quebecois in its
amendment to the main motion.
In terms of the concept of having a parliamentary committee
to review the budget and the priorities and to look at areas where
we could reduce and cut in a responsible way, I think it had a lot
of merit. What made it very difficult for Reform members to
support the concept were some of the other items listed in the
major paragraph called the amendment. Because of that we felt
it was not the right thing to do. The original idea, the concept of
more study by a broader group, did have some merit.
Mr. Stephen Harper (Calgary West): 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
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
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
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
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
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.
Mr. Jesse Flis (Parliamentary Secretary to Minister of
Foreign Affairs): Mr. Speaker, I want to compliment the
Reform Party speakers in their philosophy of bringing the views
of their constituents on to the floor of the House.
We saw them try to do this in question period. I wish they
would do more of this in their debates. I have been using that
practice for the 10 years that I have been representing
To begin input into this debate to help the Minister of Finance
and the government reduce our public debt and deficit, I sent a
questionnaire out to each household in Parkdale-High Park
with a preamble about how Ottawa spends its money, where it
gets its revenues and so on. I asked: ``Do you agree that deficit
reduction is one of the top priorities for the federal
government?'' The results are preliminary but already 88 per
cent said yes. They agree that deficit reduction is one of the top
priorities for the federal government in addition to job creation.
The second question I asked was: ``Which of the following
approaches would you support to help solve the deficit
problem?'' I asked them to check: increased personal income
taxes; decreased government spending; or, a combination.
Eighty-one per cent said that they support decreasing
government spending to help solve the deficit problem. If they
agreed to a decrease in government spending, I asked: ``Are you
willing to accept fewer government services in order to reduce
the deficit?'' I am pleased to say that 84 per cent of my
constituents said yes, that they are willing to accept fewer
government services in order to reduce the deficit.
I would like to ask the hon. member this. In his constituency
which kinds of services would his constituents be willing to
either eliminate or reduce? If we can do this in every riding, then
we can help bring down the deficit and the public debt.
Mr. Harper (Calgary West): Mr. Speaker, I thank the hon.
member for his question.
We too went through similar exercises not only in the party
but in our constituency. I held very similar public meetings on
this subject. The process was very similar to that outlined by the
hon. member before I was being paid to be the member of
Parliament. I am familiar with the process. The outcome of that
which the hon. member had outlined was very similar to the
kinds of results that I saw in my riding.
At some of the public meetings we had I took the additional
step of working through with the constituents who attended a
line item review of the budget. We went over about 100 spending
categories. Because I have done some study in this area I was
somewhat familiar with some of this information. It would be
very difficult for me to go over the whole program in the short
time that I have but let me just elaborate in general terms.
Obviously we all know that the constituents expect there to be
significant reductions at the top of government, led by
ourselves. We have advocated some of these things on the floor
of this House. Our caucus has advocated reducing some of the
expenses around here. To some degree the Liberal Party has
responded on these particular items and will be discussing this
later today in the Board of Internal Economy.
My constituents outlined a number of areas of administration
of government services and programs where they would expect
there to be a reduction in the whole area of bureaucratic costs.
That is an area that the Bloc Quebecois is, of course, prone to
talk about quite frequently. Obviously we are going to be
looking at the Auditor General's reports. We are hoping that the
government will look at the Auditor General's reports in
implementing those kinds of considerations.
The third major area where I think my constituents are
prepared to see a large reduction and even elimination is the
entire area of government involvement in business, both
through direct expenditure as well as some of the tax concession
programs. In our zero in three plan we had laid out a number of
areas where we believe there should be the elimination of that
kind of spending.
Finally, in the area of social policy it has been my experience
that when one lays the facts before the people, that nearly
two-thirds of our current spending is in the area of social policy,
they do anticipate there will be some reductions. The key is that
the benefits be retained in the programs that are most valued by
Canadians, like health care; that people who contribute to
programs are able to receive those kinds of programs, like
unemployment insurance; and, also that people who need those
programs the most are able to receive money from those kinds of
I think if you take those three things into account, Mr.
Speaker, you will see that even after those criteria there is room
for reduction in the social policy area.
I see that you want me to wind up and I apologize to the hon.
member that I have not been able to explain in any more detail.
Mrs. Jane Stewart (Brant): I wish to congratulate the
Minister of Finance for recognizing that the success of our next
federal budget will be as dependent on the quality of the process
that we use to identify and implement our budgetary measures as
it will on the substance of those budgetary measures themselves.
Our Minister of Finance understands quite well that over the
last number of years Canadians have come to feel very
uncomfortable with the ways and means of government, and in
fact this has translated into the inability of the previous
government to implement effective and efficient government
initiatives. Consider, for example, the GST.
We all know that if we are going to bring our financial
situation into an acceptable state of control, we are going to
need the combined and national commitment of all Canadians.
It is not going to be good enough just for 176 Liberal members
to say: ``We can make a difference''. We have to ensure that
every single Canadian is committed to helping us bring down
a $45 billion deficit and rein in a $500 billion debt.
This debate today provides us with a good opportunity to
ensure that we get the commitment of Canadians to manage our
deficit and our debt in a humane and acceptable way that is
consistent with getting them back to work.
I applaud our Minister of Finance for his original speech,
given on November 29 to the students at the Universities of
Montreal and McGill where he committed himself and his
ministry to an open and transparent process with no more private
delegations. He wanted to hear what Canadians have to say. I
congratulate him on the completion of four very good
cross-country townhall meetings.
The minister in doing this gave each and every one of us as
members of Parliament an opening to do the same thing in our
constituencies. I challenged the minister on that and asked him
if he would not send a member of his ministry into my riding to
hear what the people of Brant have to say on this very topic of
budget management. I was not surprised and was very pleased
that he responded very quickly in the affirmative. On January 6,
1994, Mr. Karl Littler, a member of the minister's office, came
to the riding of Brant and listened for three hours to what my
constituents had to say on this topic. It is that information I
would like to share with the House today.
First of all, and it was not surprising, my constituents said we
have to restore integrity in government. Otherwise meetings
like the one I held and debates like this mean nothing.
Fortunately, Mr. Littler's attendance at the meeting indicated to
my constituents that this government does intend to do business
differently and so we carried on with our agenda.
My constituents said they wanted a clearer and a more
understandable way of keeping on top of how the government
spends its money and collects its revenues over the course of the
year. They were extremely uncomfortable with the previous
Prime Minister's response, or lack of response, to the now
Leader of the Opposition's question during the leadership
debate on the state of the nation and what the size of the deficit
We talked at length about the GST, about its failure and about
possible solutions to it. By and large my constituents felt that a
melding of the federal and provincial retail sales tax would
make sense but small business warned us against implementing
procedures that would negate the money, the time and the effort
they had already put into accommodating the goods and
services tax to date.
Other small business owners and the farmers in my riding
indicated the importance of capital gains exemptions and RRSPs
to them. For them they are the main tools, in fact, in many cases
the only tools they have to provide and plan for their retirement.
They understand changes may be necessary but they want them
done in a fair and equitable fashion.
Other members of my constituency, some who work in the
real estate business, others who build homes and others who are
looking to buy their first house asked that the minister consider
continuing the home buyer's plan. At the point of our
conversations they understood that plan was a no cost plan to the
government and had in fact encouraged economic development
in our community.
I was interested by other constituents who spoke in support of
arts and culture. One constituent in particular stated he believed
that for every dollar spent on the arts $7 more were generated in
spin-off purchases. It was suggested that a tax break for
Canadians who choose to donate to the arts be created,
something like what we have for Canadians who choose to
contribute to political parties.
We talked about a number of other things. There was support,
for example, for a national debt reduction fund. There was
support for an interesting idea where we might provide tax
breaks to businesses that offer new, permanent and long-term
jobs to the community.
There were a number of very interesting ideas but the one
which received the most debate, most conversation and the most
support was one which was presented by an individual. He
called it GAMI, a guaranteed annual minimum income.
We have talked about guaranteed annual incomes for a
number of years, since the 1960s in fact. Every time we take a
look at our income support systems we think about a guaranteed
income. The Croll Senate report on poverty talked about a basic
income, as did the Castonguay-Neveu report in Quebec and
later on the Manitoba basic annual income experiment. In the
1980s the Macdonald commission and the Forget commission
all talked about and gave real consideration to a guaranteed
There are those who will say that this kind of negative tax
strategy will not work, it will instil poverty across our nation. I
believe there are strategies to avoid that and some of them are
mentioned in the Macdonald commission report.
There are others that say we cannot offer a guaranteed income
to able-bodied Canadians because they will not work. I submit
that Canadians will work. We found over the course of this
election that Canadians want the dignity of work and a
guaranteed income will not stop them from going to work.
In fact data we are now analyzing from the Mincome
experiment in Manitoba suggests there is not a really strong
relationship between a guaranteed income and a refusal to work.
It does not exist.
Others will say we cannot afford that approach. Interestingly
enough the gentleman who proposed the GAMI at our meeting
was to my mind probably more a part of the right wing of the
political spectrum than the left wing. He saw real opportunity to
streamline the number of programs we have now to support
Canadians and their income. He saw an opportunity to reduce
the bureaucracies we have built up around unemployment
insurance, old age security, WCB, some provincial programs as
What I am seeing is that we may have a window here where
the left and the right and where all provinces across this country
may now be able to come together.
I started my comments by congratulating the Minister of
Finance on a step change in process toward budget consultation.
I now ask him to consider a step change in the substance of what
many of our programs might look at, the one that we spend a
majority of our money on, income security.
It will take some work and we will not be able to do it in the
1994 budget but I believe as Liberals we have a mandate for a
number of years and we do have to seriously consider the notion
of a guaranteed annual minimum income.
I have given you some highlights of the meeting I held in my
constituency on January 6. In closing I would like to recognize
that the citizens of Brant know that the minister has a difficult
task ahead. They appreciated the opportunity to share their
ideas, provide advice and direction.
They hope and expect that he will listen to a number of their
ideas and they also expect that those ideas which are not
incorporated are talked about after the process and the reasons
why they were not considered will also be shared. The process
must continue. It must go on.
This is the kind of process to which our government is
committed. Certainly our minister has indicated that is the way
it will be. I wish him well on the tough road ahead and would like
him to know that the people of Brant appreciate his continued
support and openness.
Mr. Simon de Jong (Regina-Qu'Appelle): Mr. Speaker, I
wish to congratulate the member for Brant for presenting some
interesting ideas, particularly concerning some form of the
guaranteed income. I think she will find that notion has wide
support in this House. I hope that the Minister of Human
Resources Development will look at the option as he reviews
social policy as well.
My question for the hon. member concerns the government
and the Liberal Party's promise of solving the problem of the
deficit through more employment. It is an argument I totally
Statistics Canada did a study as to the cause of the debt. I
believe that study was done last summer. Statistics Canada said
that of our accumulated debt, 50 per cent was due to interest
payments, i.e. the high interest rate policies of the former
Liberal government that the Conservative government
continued. I believe 44 per cent was due to loss of income. The
loss of income is due to the tax breaks of the former Liberal
government that the Conservative government continued and
only 6 per cent was due to increased government expenditures of
which only 2 per cent was due to increased social spending. This
is a study by Statistics Canada on the cause of the debt.
We have to increase our revenues. In other words we have to
plug some of the tax loopholes. I encourage the government to
continue to look at that but also we have to get people back to
The free trade agreement killed over 400,000 jobs. NAFTA is
going to kill more jobs. Since coming into power the
government has increased the tax on employment, discouraging
employment by increasing the UI premiums. Second, it has
ratified the NAFTA which is going to create more
unemployment. How can the government in fairness state that
creating more employment and therefore more revenues is its
central concern when in fact the record so far indicates it has
taken the opposite direction?
Mrs. Stewart (Brant): Mr. Speaker, I would like to comment
particularly on the unemployment insurance issue. I believe that
the Minister of Human Resources Development has taken a very
responsible approach to the UI increases. We have a debt in that
bank. He took a minimum increase and froze it for two years.
Hopefully our businesses can use that stability to help plan for
With regard to NAFTA, I think we can compete. In my
community we are currently working very hard to develop new
economic clusters we believe will revitalize our economy.
I am certainly very much a part of the Liberal strategy that
says debt and deficit management come from three areas,
spending cuts, increased revenues, but most importantly
Hon. Jean J. Charest (Sherbrooke): Mr. Speaker, I also
want to make a comment and ask a question of the member for
Brant. First I want to offer her my congratulations on her
election to this place and for her speech and comments.
I want to get the reaction of the member for Brant on some
information released yesterday by the Canadian Life and Health
Insurances Association of Canada, which voiced some concern
about federal taxation of group health and dental insurance.
The information put forward yesterday was to the effect that
the government is seriously considering taxing group health
insurance and dental insurance. This insurance is paid by
employers in a lot of instances for about nine million working
Canadians. It benefits about 20 million Canadians, I understand,
according to the information, families across this country who
receive these benefits.
My understanding is that this would be a pretty important tax
grab. The association has offered some numbers from its
research. It indicates that for a worker who has no dependents
earning $25,000 per year the impact of this tax measure would
be about $275 a year in additional income tax. It goes on to say
that a family with one bread winner who earns about $40,000 a
year would pay $425 in additional income tax on the same
I will just finish the quote: ``For a two income household with
$80,000 a year it would be $700 more in additional taxes a
year''. That is a pretty big increase, even for retired people.
My question for the member for Brant is the following. If
there is going to be a debate in this country about health
insurance and how we apply it, and I understand that is what the
government intends to do, would it not make more sense to have
the people and employers involved in the industry participate in
that debate before such a dramatic tax grab takes place that will
affect 20 million people and nine million working men and
Mrs. Stewart (Brant): Mr. Speaker, I do not pretend to speak
on behalf of the Minister of Finance. I cannot say that is going to
be part of the budget. I will only reiterate his comments that he
will develop a fair and equitable budget. I have every confidence
in his ability and his commitment to do that.
* * *
Mr. Peter Milliken (Parliamentary Secretary to Leader of
the Government in the House of Commons):
Mr. Speaker, I
am sorry to interrupt the proceedings, but I think you will find
there is unanimous consent of the House for the following
That the ordinary hour of daily adjournment be extended to 10 p.m. this day
and that during the extended sitting no quorum calls or dilatory motions shall be
received by the Chair.
(Motion agreed to.)
The House resumed consideration of the motion.
Mr. Pat O'Brien (London-Middlesex): Mr. Speaker,
before I begin my first speech as a member of Parliament, may I
first congratulate you on attaining your important position of
responsibility. I assure you of my full support and co-operation
as we strive to do the people's business in a more orderly and
No doubt everyone will understand that my first thoughts are
of my wife, Evelyn and our three children, Mark, Laura and
Carl. During my 13 years of service as an elected representative
in the municipal government of London, Ontario and now as the
member of Parliament for London-Middlesex, I have always
enjoyed their full love and support. I wish to thank them most
As you well know, Mr. Speaker, the adventure of democratic
politics is never a solo flight for no one achieves public office
without the help of many people: family, friends and
acquaintances alike. I wish to thank publicly in this House the
army of dedicated volunteers who worked so indefatigably on
my campaign and whose efforts produced the most decisive
victory ever in the history of the riding of London-Middlesex.
To all of the people of our riding, to the 54 per cent who did
support me and to those who did not: I pledge to you my very
best efforts to represent you at all times with honesty, integrity
and hard work. I am indeed honoured to be your member of
Parliament in this the 35th Parliament of Canada.
My riding is most definitely a challenge to represent given its
geographic size and the diverse heritage of its peoples. Indeed,
in many respects it is almost a microcosm of Canada itself.
Eighty per cent of our people live in the urban areas of east and
south London, while the remaining 20 per cent make their homes
in the very productive rural and agricultural settings of the four
townships of Biddulph, London, West Nissouri and North
Demographically, London-Middlesex is an interesting
riding encompassing peoples of many cultures, languages and
religions. Although primarily of a sturdy Anglo-Saxon
character, it is home to such fascinating peoples as the many
descendants of the historic Irish pioneers. After World War II
many Dutch, Italian and Portuguese immigrants came to our
area and worked very hard for a better life. Most recently,
significant numbers of Arabs and Poles, as well as Croats,
Caribbeans, Southeast Asians, East Indians and Chinese have all
made their important contributions to our communities.
As is fitting in this great nation we call Canada, some of our
people are French Canadians who, though not many in number,
are both proud to be francophone Canadians and are determined
that this blessed land must stay united.
Economically, the range of activities in my riding includes
many different types of farming on some of Canada's richest
soil, a plethora of small businesses of every type imaginable,
several major industries such as General Motors Diesel and 3M,
and such important institutions as Parkwood Hospital,
Fanshawe College and London's airport.
It is in juxtaposition to this description of my riding that I now
offer my synthesis of the opinions and concerns of my
constituents as well as my personal views on the state of the
economy and possible budgetary decisions to deal with the
Having consulted widely with my constituents of
London-Middlesex, which included a public pre-budget
roundtable forum held in London last week along with my
colleagues, the hon. member for London West and the hon.
member for London East, I have received a very clear message
that our government must do its utmost to encourage the
creation of jobs while at the same time taking difficult decisions
necessary to reduce the national deficit and debt. A balanced
approach is the key to a true economic recovery.
In the field of taxation, it is readily apparent to middle income
Canadians that they bear an unjust share of the tax burden in this
country. The majority of my constituents favour the elimination
of tax loopholes for wealthy individuals and corporations in
order to create a more equitable tax structure. Across the board
tax increases however would be beyond comprehension at this
It is a real concern to many that severe restrictions on RRSP
contributions and the elimination in one fell swoop of the capital
gains exemption could be unduly punitive and could actually
slow our economic recovery.
I have heard the clarion call to establish better priorities for
government funding as part of the overdue effort to reduce the
national deficit and debt. Surely no priority can be more urgent
than the need to invest our tax dollars wisely in the children and
youth of Canada. To sell young Canadians short is to condemn
this nation to a future of mediocrity, to a future in which Canada
would experience horrendous social problems.
It is my personal view that one enormous problem dominates
the economic landscape. That is the devastating unemployment
crisis and the desperate need for new jobs. Yes, we must slash
the deficit and the debt. Yes, we must make our system of
taxation more equitable. But any so-called economic recovery
which discards hundreds of thousands of Canadians onto the
scrap heap of indefinite idleness is no recovery at all.
A Liberal government true to its principles can never accept
the economics of indifference which preaches that 5 to 7 per cent
unemployment constitutes full employment. We must never
write off even one of our fellow Canadians as a faceless statistic
for whom we offer no hope. Like many of my hon. colleagues in
this House I have seen the human face of these unemployment
statistics day after day in my constituency office. It is a face
etched with fear and despair. Women and men, young and old,
the highly educated and the unskilled, too many Canadians are
crying out for the dignity of daily work and a chance to earn a
decent living for themselves and their families.
Unfortunately, the cruel reality of our unemployment crisis
offers no quick fixes, no easy solutions and no panaceas waiting
to be discovered. But let us at least begin.
As a Liberal, one of my fundamental beliefs is that
government must play a role in partnership with the private
sector if Canada is to pull out of this economic nightmare. To
deny that is to deny the lessons of history. And so let us with
heroic hearts and strong in will strive, seek and find a better
economic course for all Canadians.
In closing, as the member of Parliament for
London-Middlesex, I pledge my best efforts to join in the fight
to help create a new and better Canada.
Mr. Ghislain Lebel (Chambly): Mr. Speaker, I heard the
speech made by the hon. member opposite and I basically agree
with him, except that I am about to turn 50 and all previous
governments have invoked tax fairness to impose new taxes
again and again to all taxpayers, always in the name of tax
My question is twofold: first, tax fairness and, second, the
creation of steady jobs. I remember that from 1982 to 1987, in
Quebec, and the situation was probably the same elsewhere in
Canada, we did not wait for the chicken to lay the egg: we went
and got that egg while it was still inside the chicken. In other
words, we found all kinds of incentives to stimulate the creation
of temporary jobs. So much so in fact that recovery in the
construction sector in Quebec is currently at an all-time high.
Does the hon. member have a suggestion to promote the
creation of steady jobs, and can he give us his views on tax
fairness? I am particularly curious about lowering the ceilings
for registered retirement savings plans, as well as eliminating
the capital gains exemption. I wonder if the hon. member could
answer that question.
Mr. O'Brien: I thank the hon. member for his two-part
Dealing with the job creation situation, obviously he is aware
of the infrastructure program of the new government. We hear
criticisms of it. I heard criticism of it during the campaign and
still hear it, but not from many of the unemployed I might add.
Frankly, I can say that having come from 13 years in municipal
government it is applauded coast to coast to coast in this
country by municipal leaders of every political stripe. So that
is a major step in the right direction.
Obviously we recognize that the private sector will and
should create most employment in this country. The
infrastructure seeks to look for a partnership with the private
sector to help do that.
In terms of the second part of the question dealing with tax
loopholes, quite frankly the statistics will show that since 1984
under the previous government those earning high incomes, in
the top 3 per cent in this country, paid less in income tax. To me
that is fundamentally unfair and immoral. It must stop. I am
confident the Minister of Finance will do everything possible to
address that what has to be the ultimate inequity.
Hon. Audrey McLaughlin (Yukon): Mr. Speaker, I would
like to congratulate the member for London-Middlesex on his
remarks, particularly to show this House that perhaps we are not
going to hear the nonsense and clap-trap of the previous
government about a jobless recovery because there is no
recovery unless there are jobs for people and unless we can
really have people back working again. I congratulate him on
addressing that very profound question of jobs in our
community and in our country.
Would the member go beyond just simply saying that we do
need jobs and really put that into action by having his
government put forward specific targets for the reduction of
unemployment which we could debate in this House? I would
like to see this.
I would like to know the member's reaction to having the
government come forward and being accountable to the people
by saying: ``Here is our target not just for the reduction of the
deficit''-and I agree the deficit is a problem-``but here is our
target to reduce unemployment. We are going to put it before the
House, we are going to defend that target and we are going to
have a debate on it''. Does the hon. member think that would be
a useful thing for his government to do?
Mr. O'Brien: Mr. Speaker, I thank the member for Yukon for
her kind good wishes, her remarks and for her question.
I think that small l liberals, the two of us, are probably of very
like minds on this very question. Sure, the deficit is important
and has to be slashed. I fully agree that any so-called recovery
which leaves hundreds of thousands of Canadians unemployed
is simply not a recovery by my definition of the word.
I fully support the idea that one ought to have specific targets
to try to reduce that unemployment level just as our party has
laid out specific targets in wanting to reduce the deficit. It is a
logical suggestion and a good one. I will pass it on to the
Minister of Finance.
Mrs. Dalphond-Guiral: Mr. Speaker, I rise on a point of
The Acting Speaker (Mr. Kilger): The hon. member for
Laval Centre on a point of order.
Mrs. Dalphond-Guiral: Mr. Speaker, I want to inform the
Chair that, from now on, members of the Official Opposition
will make 10-minute speeches, followed by a 5-minute period
of questions and comments.
The Acting Speaker (Mr. Kilger): Thank you. Resuming
debate. The hon. member for La Prairie.
Mr. Richard Bélisle (La Prairie): Mr. Speaker, this debate
on government finances is extremely important for all
Quebecers and Canadians. I am particularly pleased to
participate in this exercise and I want to take this opportunity to
thank the Minister of Finance for having made this debate
As the member for La Prairie, I have the honour of
representing in this House the citizens of Brossard, Candiac, La
Prairie and Saint-Lambert. These people are middle-class
workers. They have worked very hard to get what they have and
they often find it revolting to see political leaders and elected
politicians unable to control the public debt and the budget.
They are annoyed because, in many cases, they have saved every
dollar by not going over their weekly budget and, more
importantly by not relying on other people's money, money
which is not theirs and which leads to debt and dependency, as is
the case for Canada right now.
The lack of control over government finance is reflected by
the fact that from 1960 to 1994, the debt-to-GDP ratio in
Canada went from 34.6 per cent to 71.8 per cent. This means that
the debt increases faster than the government revenues which
could be used to pay off that debt. While the debt-to-GDP ratio
is an indication of the scope of the problem inherited, the
evolution of the deficit versus the GDP enables us to find out
when, over a period of time, the federal debt simply grew
Between 1970 and 1984, the deficit as a percentage of GDP
rose from a negative balance of-0.3 per cent-in this case, a
minus sign means a budget surplus so in Canada, in 1970, we had
a budget surplus-to 8.1 per cent, which was exceeded only in
1985. So in 1984, this percentage peaked at 8.1 per cent.
Subsequently, the ratio gradually declined to 4.5 per cent and
then rose to 6.2 per cent in 1994, under the new government. In
other words, the Liberals have been mainly responsible for the
deterioration of public finances in Canada. The Liberals are
responsible for the ensuing expansion of the public debt, and
they mismanaged the impact of the oil crises in 1973 and 1980.
The Bloc Quebecois is aware of the need to revamp public
finances. We must stabilize the debt/GDP ratio over time.
However, we cannot increase the tax burden on a middle class
that has already been severely affected by the recession and is
particularly vulnerable during this period of slow and painful
According to the Bloc Quebecois, to put the government's
financial house in order means, first of all, introducing tax
reforms that aim for greater fairness by eliminating tax
loopholes enjoyed by taxpayers with high incomes. The hon.
member for Saint-Hyacinthe-Bagot spoke at length on the
subject earlier today. Second, we must reduce government
spending. We believe such measures would generate greater
flexibility and a potential savings of $10 billion for the
government. The aim of this budget policy is to avoid shifting
the burden of federal deficit reduction to the provinces. Its aim
is also to protect the neediest in our society and prevent any cuts
in the budget envelope for social programs.
The Bloc's budget policy wants to strike a balance between
two priorities: job creation and revamping public finances. That
is why we intend to allocate the $10 billion saved by cutting
gross expenditures and tax spending as follows: $5 billion
would be allocated to job creation and $5 billion to reducing the
Our plan to reduce spending consists of two parts: first, a $3
billion cut in the defence budget. The budget of the Department
of National Defence for 1993-94 totals nearly $12 billion. The
budget breaks down as follows: $9.1 billion for operating
expenditures, $2.9 billion for capital expenditures and $356
million in transfer payments. Our proposed spending cut
represents 25 per cent of the current budget of the Department of
The remainder of our expenditure reduction policy is about
eliminating waste and poor management. The hon. member for
Joliette discussed this at some length this afternoon.
Eliminating duplication of services by provincial and federal
governments would, we believe, generate a potential savings of
$2 to $3 billion, while duplication among various federal
departments would also be a prime target. Operating
expenditures of departments and federal agencies would be cut
Incidentally the government's gross operating expenditures
totalled nearly $35 billion, or 27 per cent of gross program
spending, in the 1993-94 Estimates. Some departments have
relatively high operating expenditures: Public Works, 10 per
cent; Transport, 6 per cent; National Revenue, 6.5 per cent;
RCMP, nearly 5 per cent; Supply and Services, 3 per cent.
Our policy for reducing operating expenditures also aims to
increase the relative size of government capital spending in
relation to operating expenditures. Capital expenditures help
generate income for several years because these are
investments. No more borrowing money to pay the groceries.
We also have to change the nature of the government's capital
In the 1993-94 Estimates, more than 53 per cent of gross
capital spending was for the Department of National Defence,
mainly to purchase warships and weaponry. The Bloc Quebecois
feels this kind of investment is not very productive.
With respect to managing public expenditures, the Bloc
Quebecois also advocates a thorough evaluation of government
spending programs. Program evaluations address three needs.
The information gathered is used, among other things, to help
make decisions about resource allocation, to help Quebecers
determine the value obtained from their tax dollars and to enable
public servants to take responsibility for results rather than
I would also like to point out that departments spent only
$28.5 million of the overall government budget on the program
evaluation function in 1991-92. The central branch reporting to
the Office of the Comptroller General spent only $2.9 million on
It should also be noted that two major problems, one
quantitative and the other qualitative, are associated with the
evaluation of government programs. As for the quantitative
problem, it is worth noting that in 1989-90 and 1991-92,
expenditures related to program evaluation fell by 28 per cent.
In fact, the number of program evaluations has been declining
for the past seven years, that is since 1987-88. Since that time,
99 program evaluation reports have been produced, whereas in
1991-92, only 90 evaluation studies were produced. That is very
few indeed and the number is steadily declining.
Government expenditures for 16 programs totalled $124.5
billion in 1991-92. Only two of these programs were the subject
of a thorough evaluation. Not enough attention is paid to major
programs. Evaluation studies conducted over a seven-year
period covered approximately 24 per cent of the government's
program expenditures in 1991-92.
Thus, if we take into account expenditures on servicing the
national debt, only 18 per cent of expenditures were in fact
covered in the last seven years. Evaluations did not focus on the
most expensive programs. It is estimated that the rate of
coverage of programs with expenditures of over $250 million is
less than half that of programs spending $250 million or less. In
short, the number of evaluations is steadily decreasing. Very few
have been conducted and those that have been cover programs
with smaller expenditures.
As for the qualitative problem I referred to earlier, by
locating the evaluation units in the departments, the immediate
needs of managers take precedence over the needs of
government and the interests of the general public. When
questioned by the Auditor General, those responsible in the
departments for the program evaluation function responded that
in their view, the main purpose of an evaluation was to help
management solve operational problems. Thus, they are
overlooking the essential purpose of program evaluation which
is to assess the efficiency of programs and call them into
question if necessary, all in the interest of ensuring optimal
It should be noted that this kind of information would be most
useful to Parliament in helping it decide how best to allocate
resources and to the public in helping it rate the government's
performance. The fact of the matter is that evaluations cover
only operational matters, not those aspects relating to the
relevance or cost-effectiveness of programs.
Evaluations cover only portions of programs or small-scale
programs. There is no systematic process in place for evaluating
programs affecting more than one department. We in the Bloc
Quebecois find the situation within the federal government with
respect to program evaluation totally unacceptable. The
President of the Treasury Board and the Minister of Finance
must take action as soon as possible to remedy the problem.
The information that could be culled from well-produced
program evaluations would be very useful to parliamentarians.
Indeed, it would make it possible to identify successful
programs which no longer produce the desired results and which
could be replaced by more efficient ones.
Given the size of the deficit and the to say the least anemic
economic recovery, it is critically important that existing
resources be allocated and utilized as efficiently as possible.
Program evaluation becomes an essential exercise under the
circumstances. Without effective program evaluation, the
government is simply not in a position to allocate in the best
possible way the financial resources it receives from the
taxpayers. Parliamentarians are being asked to work in the dark
and to allocate resources without knowing all the facts.
According to a study made by the Auditor General, proper
program evaluation can result in significant savings. For
example, in 1990, the Department of Finance carried out an
evaluation on the effects of the Cape Breton Investment Tax
Credit. Since the study indicated that the program was not doing
what was expected of it, it was abandoned. This tax measure
involved more than $500 million in tax revenue foregone during
the period it was in effect. The loss in revenue would have
continued to accrue while this inefficient program was allowed
to go on, which is why it was abandoned.
The people would benefit from better program evaluation and
would also be able to assess the performance of their elected
representatives, which would help to improve democracy.
In conclusion, I would like to say that, in order to avoid waste
and to optimize the allocation of tax resources, the Bloc wants
all programs to be subject to an evaluation process and the civil
servants in charge of program evaluation to report directly to a
Standing Parliamentary Committee on Program Evaluation. The
officials in charge of these programs have to be accountable to
Parliament and justify the allocation and use of public resources
on their programs.
Hon. Jean J. Charest (Sherbrooke): Mr. Speaker, allow me
to congratulate the hon. member for La Prairie on his comments
and on his election. This is the first time I have the opportunity
to do so since he became a member of this House.
His comments on program evaluation are interesting. I urge
him to pursue these issues with the chairpersons of the various
committees, because these people can undertake program
evaluations and they do so in a larger context than is possible for
the Auditor General, and even with the departments themselves,
as I and other members opposite have seen in the past; indeed,
there are numerous opportunities to do so.
In any case, I have a question for the hon. member and I would
like to know the position of the Bloc Quebecois on a statement
made yesterday by the Canadian Life and Health Insurance
Association, which suggests that the federal government is
considering taxing group insurance benefits, as well as health
and dental insurance benefits. Such a measure would have an
impact on some 20 million Canadians and would directly affect
nine million workers across the country.
Using its own data, the Association indicated that a person
with no dependent and an annual salary of around $25,000
would have to pay $275 more per year in taxes. A family earning
about $40,000 a year would face a tax increase of $425.
Similarly, a family with two salaries totalling $80,000 a year
would have to pay $700 more in taxes if, in its next budget, the
federal government decides to introduce this measure.
I want to put this in the appropriate context, so that the hon.
member for La Prairie can give me the Bloc Quebecois position
on this issue. This measure would be introduced while we
anticipate a very comprehensive debate on health care in Canada
and, I suppose, on the role of the federal and provincial
governments, the private sector, the taxpayers, and so on and so
Does the member not find it alarming that this measure could
have such serious consequences on the budget of every
individual and family? Does he not find it even more alarming
that the government is proposing a comprehensive debate on
health care but would introduce such a measure before even
holding that debate?
Mr. Bélisle: Mr. Speaker, I thank the hon. member for
Sherbrooke for his question.
The position of the Bloc Quebecois on this matter is that
poorer Canadians are protected by universal social programs.
People who want more protection can contribute to a private
supplementary plan, and that is what they do. As I was saying
earlier, my constituents are mostly middle-class people and
they already are the most heavily taxed. By taxing those
insurance premiums, the Liberal government would be
increasing, in a covert way, the tax burden of middle-class
We, in the Bloc Quebecois, are totally opposed to this covert
way of taxing even more heavily middle-class taxpayers who
already carry most of the tax burden. There has been a lot of talk
about tax shelters. Canadians with high incomes can use tax
shelters to avoid paying thousands of dollars in taxes.
The disadvantaged are protected by a series of social
programs and, often, it is the middle-class people who find
themselves in the middle of the social or economic pyramid and
who have to shoulder all the burden. As I said earlier, we, in the
Bloc Quebecois, are totally opposed to this covert way of taxing
even more heavily those who already pay most of the taxes.
Mr. Pierre Brien (Témiscamingue): First of all, Mr.
Speaker, let me say that the subject we are debating today is one
of great concern to me. The present state of Canadian public
finances threatens certain established social programs and
affects individuals as well as businesses.
One of the main reasons for this debate is the urgent need for
action in that area. New policy directions must to be laid on the
table. I would like to say that the decisions we will be making in
the next couple of years will determine our future, especially for
the people of my generation. In spite of the fact that, in some
regards, we have enjoyed many services and a relatively
comfortable life, what we have inherited has all the appearances
of a heavy burden that does not make the future look very bright
When you combine this cumbersome debt with a tight job
market for young people, you can easily understand part of the
reason for their despair.
I want the members of this House to know that it is through the
eyes of the young generation that I will judge the actions of this
government over the next few years. Its decisions will have to
reflect a real concern for the long term.
Pre-budget consultations have often given Ministers of
Finance an opportunity to put forward, concerning their
forthcoming Budget, ideas about which they had already made
up their minds. Take the idea of eliminating the $100,000 capital
gains tax shelter. Several people were able to take advantage of
this shelter and have already reached the limit. So, they will not
be the ones affected in the future, but rather it will be the young
generation. Either this shelter will not be available to them or
they will not be able to take advantage of it in the future.
I simply want to make it clear who will in fact be affected by
the proposed measures. We will be called upon to contribute
significantly to solving the public finance problem in the future
and we are prepared to do our share starting now, but there is a
need to identify-and rightly so-who will be affected by the
measures put forward.
Moving to the main thrust of my remarks, three approaches
can be contemplated to solve the public finance problem:
expenditure reduction, higher revenues or lower refinancing of
the debt. Of course, the best course of action would be a
combination of these approaches. I will only deal with revenues.
The Liberals, in their famous red book, and the Conservatives
before them, based their deficit reduction estimates on the
expectation that the economy would grow in the years to come.
The Prime Minister referred to this during question period
We are all looking forward to a recovery in the not too distant
future, but it is far from certain that governments will be able to
raise as much money as they expected during this growth period.
Let me explain.
In the past, a 1 per cent growth in the economy used to
produce a 1.5 per cent increase in government revenues. Today,
a 1 per cent growth in the economy or its leading indicator, the
Gross Domestic Product, produces a mere .5 per cent increase in
We can clearly see a big problem looming on the horizon. Let
us take the current year. The Minister of Finance estimates that
the current year deficit will be $12.4 billion higher than was
forecast in the March 1993 Budget. It must be noted that 72 per
cent of this deficit is due to an unexpected shortfall in revenue.
An analysis of the first seven months of the year provides
valuable insight. During this period, government revenues fell
5.7 per cent, as compared to the same period last year. And there
is cause for concern due to the fact that this drop occurred as the
Canadian economy was recording a slight growth.
Also, the 1993 Budget forecast that the growth in revenues
was going to keep pace with the increase in the Gross Domestic
Product over the following five years. I guess I do not need to
tell you that much will have to be done to readjust these
How can such a situation be explained?
Obviously, the first explanation that comes to mind is the
extent of the underground economy. The Minister of National
Revenue himself said soon after the election that he estimated
this underground economy at $56 billion, a conservative
estimate according to some analysts. The underground economy
accounts for close to 15 per cent of economic activity and comes
a lot closer to $100 billion.
To illustrate how dramatic this is, last November Gallup
asked Quebecers and Canadians whether they had participated
in the underground economy in the last 12 months. In response,
33 per cent of Canadians and 42 per cent of Quebecers admitted
having paid cash to avoid paying taxes. Two words explain this
reaction: fairness and equity. People feel that the way the
government collects revenues is unfair and inequitable.
Let us look at personal income tax: this year's receipts from
personal income taxes are $1.1 to $1.5 billion lower than
forecast in the 1993 Budget. People feel overtaxed. In the last
few years, we have gone beyond tax effectiveness, especially for
the middle class.
The GST was the last straw. It is clear that government
revenues can only increase through higher income tax levels for
the middle class, directly or indirectly.
The dissatisfaction of the middle class is understandable
when we look at a few figures. In 1991, 368,000 people reported
revenues of $60 billion, for an average personal income of
$163,000, on which they only paid 18 per cent federal tax while
the basic taxation level in this category is 29 per cent. On this
point, the Bloc intends to press the government to eliminate tax
shelters benefiting high-income taxpayers.
Let us move on to the taxes on corporate profits. Revenues
from corporate taxes are very sensitive to economic activity
since corporate profits are less stable than personal incomes.
This year's corporate tax revenues are about $850 million lower
than forecast in the 1993 Budget. The Finance Minister told us
during today's question period that the next few years will not be
easy in this regard, since many businesses will be allowed to
carry forward the losses incurred in the last few years.
Individuals often complain that many companies in Quebec
and Canada do not pay taxes on their profits. Let us look at 1987,
a year of strong economic growth, when 90,000 Canadian and
Quebec businesses made $27 billion in profits without paying a
single cent in tax. That is one reason why Canadians are
To prevent such unfairness in the future, the government
should impose a minimum tax on corporations. It would then be
able to collect a minimum level of taxes from profitable
businesses even if they try to avoid paying taxes through tax
shelter strategies. A global solution to the debt problem calls for
involving businesses in this collective effort.
A few words on auditing. Auditing is one element of revenue
collection that should be improved. A significant part of the
economy avoids taxes because of fraud or of errors made by
taxpayers in their tax returns. In fact, in a 1990 study the
Department of National Revenue estimates at $1.2 billion the
potential supplementary contributions. Additional audit
measures taken in the past produced promising results. We
should think about doing more in this respect in the future. We
must not only reinforce auditing but also simplify taxation,
which has become so complex that its effectiveness is affected.
In conclusion, Mr. Speaker, to help the government avoid
losing significant revenues due to incorrect or fraudulent
returns, the Bloc Quebecois thinks that the Department of
National Revenue should have better resources available to
audit returns, as the Auditor General has been proposing in his
reports for the last few years.
I would like to say a few words on the infamous GST. The
revenues from this source will be almost $1 billion lower than
forecast in the 1993 Budget. Moreover, this tax is so complex
that arrears will amount to between $800 and $900 million in
1994 according to the data in the Auditor General's last report.
The GST replaced another tax. Its advantage is that it is a
value added tax. From an economic standpoint, this type of tax
is more efficient as it does not affect the relative costs of
resources to the same extent. Nevertheless, administering it is
very complex, both for the government and for businesses,
especially small ones. The fact that 576,000 registered GST
collectors have not produced all their returns illustrates this
The Prime Minister promised to replace it with another tax by
1996, but that target date is too far off. We must start to work
now to replace it much sooner. People are expecting results on it
quickly and we will have to act much more speedily. People are
expecting results soon and the whole administrative aspect of
this goods and services tax will have to be improved. We
definitely intend to press the government to keep its election
commitments and to keep them sooner.
One final point on sources of revenue, namely excise taxes
other than energy taxes. Of course, this means taxes on tobacco,
alcoholic beverages and jewels. Everyone now knows the extent
of smuggling. Although taxes on products which affect health
are justified, cigarettes taxes and the whole tax system have
contributed to creating a monster in our society today.
A fast way to end smuggling must be put forward and this
solution must involve lower taxes. Control must also be
tightened and the same standard of justice must apply to all.
Nothing prevents the government from pursuing a plan to fight
tobacco consumption and to discourage tobacco use especially
among young people and even including this plan in its strategy.
We must realize that the smuggling problem is very serious and
does much to undermine the confidence people have in our
In conclusion, the recovery will not do as much as believed to
improve the government's finances. The reason is simple: the
underground economy and people's lack of confidence in the
whole system, the whole Canadian tax system. This
underground economy is growing out of this lack of confidence
and especially because of two words that I mentioned
previously: justice and equity, on which a lot of work needs to be
done in the future.
The balance between individual and corporate taxation and
between the middle and wealthier classes must be restored by
abolishing unfair tax shelters which are often unproductive.
Audit controls must be increased and tax returns simplified. The
administrative difficulties with the GST must also be resolved
quickly. Finally, the problem of cigarette smuggling must be
ended once and for all.
Our future and our social contract are at stake in the way the
government collects revenue. Much of the mistrust of
institutions, parliamentarians and people in authority and power
is due to the unjust, unfair tax system. It is time to move and the
government must improve efficiency in the management of
Mr. Don Boudria (Glengarry-Prescott-Russell): Mr.
Speaker, I listened carefully to the comments made by the
member opposite, and even though I seldom agree with the Bloc
Quebecois members, I must say that I share his feelings
regarding the need to put a stop to smuggling. Needless to say
that, as the member representing the riding of
Glengarry-Prescott-Russell, which includes Akwesasne, I will
fully support any measure which might be taken, and which I
hope the federal government will take soon to eliminate
contraband. I do hope we will convince those stubborn members
of the Ontario Legislature that the problem is not one which
exists exclusively in Quebec, or in a region of Canada called
Quebec, to use the words of Fred Laughren, the Treasurer of
Two other comments were made by the hon. member and I
want to ask him a question on those. The member referred to the
issue of streamlining income tax returns. It just so happens that
today I contacted Revenue Canada about something currently
allowed in the tax return, namely the possibility of contributing
or overcontributing to a registered retirement savings plan. As
the hon. members know, we and our constituents all have the
option of making an overcontribution of up to $8,000 to an
RRSP. However, Revenue Canada has currently no way of
keeping tab of these overcontributions, unlike, for example, in
the case of the capital gain exemption, for which a cumulative
total is calculated, thus enabling Revenue Canada to know
whether a taxpayer has used $25,000, $30,000, $35,000,
$40,000 or more of the total tax-free capital gain. However,
such control does not exist for overcontributions made to a
registered retirement savings plan, and I wanted to point this out
to the members of this House. As for simplifying tax returns, I
think that rather than being an area requiring streamlining, it is
one where we need to keep data which are not currently being
Finally, the hon. member opposite tells us that we cannot
replace the GST in two years because it will be too late. Are we
then to conclude that when this House asks its members to refer
the GST issue to the Finance Committee, we can expect a quick
and even a unanimous approval from the Bloc Quebecois, so that
this review can be completed and a recommendation can be
made as quickly as possible to the House?
Mr. Brien: Mr. Speaker, I thank the member for his very long
I would like to mention, first of all, that he said he agreed with
me on the smuggling issue; I hope he agrees with me on the other
points of my speech, particularly as regards tax breaks.
The member said we should consider another very special
measure, that is to keep a record of overpayments or
overcontributions to RRSPs. As you know, it is for such reasons
we have, for a long time, requested the creation of parliamentary
committees who would study public expenditures, including tax
expenditures. It would be a pleasure to hear such comments
through these committees and to participate in the proceedings.
The last point in the member's question dealt with GST.
Naturally, we will be happy to proceed diligently, provided, and
I want to stress this point, provided we work towards replacing
this tax with one that will be more efficient, that will respect this
and that will not be, contrary to what we heard during the
campaign, a hidden tax which could be much higher.
I ask the member, in that context, to convince his prime
minister not to implement a hidden tax, but a visible one so that
people can trust our tax system; if that is the case, the opposition
will be happy to co-operate.
Hon. Audrey McLaughlin (Yukon): Mr. Speaker, I am
pleased to speak in this very important debate today. I have over
the past couple of years had a number of meetings with my
constituents in the Yukon during which we have discussed
details of a budget and what kind of society and what kind of
Canada we want to live in.
I want to make the point at the outset that a budget is more
than simply figures. It indicates whether we will have the
hallmarks of prosperity or whether we will have the seeds of
I have been here for pretty well all of the debate today and I
remind members of this House that I have not heard anyone refer
to the fact that we have to look at this budget in terms of being
able to accomplish the tasks that are outstanding in Canada as
Regarding the resolution this House took unanimously in
1989 to eliminate poverty by the year 2000, I hope the House
will rededicate itself to that goal and this budget will be the
beginning of that. Also, to accomplish the goals to which we as
Canadians and the New Democratic Party are committed which
are to ensure that Canada's First Nations are truly and fairly
dealt with and that there is funding available because it does cost
money to complete the very important land claims and
self-government negotiations which must take place in this
On the specific areas of the budget there are three that I want
to briefly touch on in the time that I have; namely, taxation, debt
and deficit and employment creation.
The first is a fair taxation system. The middle class is
overburdened. We certainly do not need to see a whole raft of
new taxes to cause further cynicism in our population about our
tax system. To deal with that cynicism we also have to deal with
the inequities and the fact that individual Canadians are now
paying a far greater proportion of the tax revenue than
corporations and that many wealthy individuals have the
opportunity to avoid paying taxes.
We urge the Minister of Finance to bring in a fair and
equitable tax system. I want to give several examples of how
that could be done. The first is in terms of closing costly tax
loopholes and making the system fair.
The government can look at such things as the business
entertainment deduction which costs hundreds of thousands of
dollars to Canadian taxpayers. While some people cannot even
afford a lunch, I am not sure that people should be privileged to
be deducting their high cost lunches at taxpayers expense.
Mr. Taylor: A very good idea.
Mr. Solomon: Two martinis.
Ms. McLaughlin: There are other such things that the
government can do in terms of the family trusts, those trusts that
allow the rich to shelter their income from the tax revenues.
Clearly a fair tax system does not allow this.
I must say in the last Parliament the members opposite in the
Liberal government were not outspoken against the previous
government's attempts and legislation to even extend the period
of time that these family trusts would be exempt from taxes.
I challenge the Minister of Finance to show a new path and to
show that we are really prepared to deal with this element of tax
Mr. Taylor: Hear, hear.
Mr. Solomon: Hear, hear.
Ms. McLaughlin: Certainly the area of tax expenditure that is
not helping the majority of Canadians is that we should reduce
the upper limits on the RRSP contributions. We feel the RRSP
program is important but if we reduce the upper limitations
which right now are basically directed to those making $90,000
a year we would bring more fairness into that particular area.
A minimum corporate tax is absolutely essential. We still
have over 63,000 profitable corporations not paying one cent of
tax. We cannot ask individuals to do more and continue to allow
those profit making corporations to do nothing.
Some hon. members: Hear, hear.
Ms. McLaughlin: On the debt and deficit question I think we
must take a minute to look at how we got in this mess in the first
place. As was said, we are doomed to repeat history if we do not
pay attention to what has happened. It is true that in the 1970s
many of the tax measures of the previous Liberal government
did begin to create the inequities that we see and lead to this gap
which meant that we began seeing an ever increasing debt.
In the following years subsequent governments and the
previous government over the last nine years implemented
monetary policies which dealt only with controlling inflation,
ignoring the effect on rising unemployment.
They brought in a North American free trade deal and the free
trade agreement with the United States which cost Canadians
hundreds of thousands of jobs leading again to decreased
Look at the monetary policy of the past government, the effect
of bad trade deals on employment and decreased generation of
revenue. It was disappointing that the Liberal government
decided once coming into power that it would continue those
two regressive monetary and trade solutions.
An hon. member: It embraced Mulroney.
Ms. McLaughlin: At the same time after the Liberal
government embraced the policies of the previous Conservative
government in terms of trade and monetary policy, I want to
remind the government that one of the things that lead again to
increasing debt and deficit was the implementation of the goods
services tax at a time when we saw decreasing revenues from
employment and high interest rates devastating the agricultural
sectors, small business and on top of that they got the GST.
We in this party have fought long and hard for tax fairness. We
believe that the goods and services tax is certainly a tax measure
which has not only not worked but has increased the economic
recession that we are in at this time.
Finally, on the whole issue of employment, without an
employment strategy, without a clear industrial strategy we will
never deal with the structural problems of debt and deficit. The
fact that we see decreasing revenues is directly related to
increasing unemployment statistics. Every unemployed person
in this country costs the federal revenue $17,500 a year. If you
take 1.5 million people unemployed that is something like $26
or $27 billion a year that we are losing in revenue because of
It is time for parliamentarians and this government to say that
Canada cannot afford unemployment. That is what we cannot
afford. The social and human costs are far too great and the
economic costs are devastating this country.
Mr. Solomon: Right on.
Ms. McLaughlin: I therefore want to urge the government to
implement programs that will be an investment in our future
such as research and development, the education of our young
people, retraining for those who are displaced in the work place.
I would also say that we in our own job creation plan have
supported an infrastructure program and think it is very
important but there are two kinds of infrastructure. There is the
physical infrastructure of highways, roads, municipal services
and information technology, and there is also the social
infrastructure. If we ignore the fact that the social infrastructure
is a part of our economic system we will have missed the point.
I urge the government to ensure that the social infrastructure
of education and health care is maintained at a level which will
be important for our country. On that point, I would like to
specifically mention the need to go forward once and for all with
a national child care program so that parents can work and the
children will have an opportunity for the responsible care that is
in the interest of our future citizens.
Mr. Taylor: Hear, hear.
Ms. McLaughlin: There are many things that the government
can do in this budget. We all must be cognizant of the reduction
of expenditures. When it comes to following the Auditor
General's report, I hope this government will do better than the
previous one which seemed to simply ignore it. I urge the
government to look at the recommendations in this report. They
are very clear and can be acted upon now without further major
We must look at expenditures. We have to be prudent in our
expenditures. However, we must also balance that in a fair and
equitable way for all Canadians. This government has an
opportunity in this budget to lead a new way, not simply to
follow the regressive ways of the previous government. I urge it
to do so to give Canadians hope and to get Canadians back to
Mrs. Elsie Wayne (Saint John): Mr. Speaker, I thank the
leader of the NDP for her comments.
I have great concerns because in the city of Saint John I have
3,500 people who work at our shipyard building Canadian
frigates for the government. That program will be winding down
at the end of this year, 1994. On two occasions in the House I
have heard my colleagues from the Bloc question the Minister of
Transport, my friend from the province of New Brunswick,
about the Lucy Maud Montgomery ferry and whether he was
going to give that contract to the Davie shipyard which also
I do not have a problem with this if the contract is going to that
shipyard because its workers need jobs, but I have a great
problem if there is not going to be a contract for the city of Saint
John shipyard. If that is the case, then I would like to know from
the Minister of Transport if the Lucy Maud Montgomery ferry
will go out to tender so that our shipyard will be able to bid on it
or if there is a special contract for the shipyard for the city of
Saint John. If not, I have 3,500 people at the end of this year who
will be looking for work and that is a major concern.
Ms. McLaughlin: Mr. Speaker, I would be happy to answer
for the Minister of Transport. We used to sit very close together
on this side of the House.
I would like to address the very serious comments made by the
previous speaker. While I will not answer directly the specifics
that she raised, which is obviously for the government to
answer, I would like to raise in part what she is referring to and
has something to do with her issue and that is the whole issue of
economic equity in this country and the fact that we are a large
and diverse country with large rural populations as well as urban
populations. It must be indicated to Canadians in the budget that
the government has a true concern for every region of this
country. We in the north often feel we have been left out. I know
many areas of the country feel that way, that there is a lot of
attention on central Canada and not so much on other parts of the
country. It will be extremely important that the minister show
through this budget that the government wants to see fairness
and equity in economic development in every part of this
country, rural and urban.
Mr. Jim Gouk (Kootenay West-Revelstoke): Mr. Speaker,
I found myself strangely agreeing with some of the comments
made by the hon. member for Yukon, which did surprise me.
However, there are a couple of points I would like to make.
First of all, it was mentioned by the hon. member that it cost
$17,500 to have someone unemployed. I would hasten to point
out we know by statistics that it costs $60,000 for the
government to create a job that will employ that same person.
With regard to national child care, I would like to ask the hon.
member if she is suggesting a multi-tiered system which she
abhors so much in the medical system in child care or,
conversely, is she suggesting that we should have a national
system which will allow the people she is concerned about not
paying their fair share, the rich, and allow them to drop their
children off so that those who really need help can have theirs
free instead of helping only those who need it.
Ms. McLaughlin: Mr. Speaker, I presume the member is
referring to a child care system that is universal and accessible.
Those two hallmarks are extremely important in any kind of
child care system.
We have proposed a national child care system that would be
participatory between the federal government, the provinces
and territories and those using child care service. I think that is a
fair and equitable way to do it.
The hon. member who said he finds himself surprised to agree
with me will want to also agree that the children of this country
deserve a chance from this House.
Mr. Jean-Robert Gauthier (Ottawa-Vanier): Mr.
Speaker, in the few minutes I have, I would like to talk about
efficiency and effectiveness in public administration.
I tabled today, as hon. members know, a Bill which would
allow the Auditor general of Canada to prepare ad hoc reports on
audits conducted by his office. At the present time, the Auditor
general can only table an annual report. We know that it usually
is a substantial tome which captures the interest of the media for
about 24 hours, 48 hours at the most, and is then forgotten. Very
few people are following up on the recommendations made with
respect to the management of public spending.
Yet, those reports contain many recommendations to improve
public administration and save substantial amounts of money
for Canadian taxpayers. If Bill C-207 tabled today is passed by
this House, it could strengthen government administration. It
will be more efficient and more effective if the House of
Commons and the general public are better informed, on a
timely basis, on the problems encountered by a large and
complex administration like the federal government.
This pre-budget debate provides us with an opportunity to
talk about economic recovery, job creation and deficit
reduction. Some argue that in order to reduce the deficit, we
have to cut spending drastically. The Reform Party wants a 6 per
cent cut, an amount which would have, in my opinion, a serious
and negative impact on the poor, the elderly and the less
Others believe that a reduction of the deficit can only be
achieved by increasing revenues and creating jobs. I will talk in
a moment about solutions which seem appropriate to me in order
to reduce the deficit.
I am among those who believe that in the present situation, we
must increase revenues to create jobs and ease our financial
If we want to get rid of the deficit and the debt, without
compromising existing benefits and disappointing Canadians,
we must act quickly.
As we all know, the federal debt now exceeds $500 billion; it
represents 70 per cent of the GDP. This year only, servicing the
public debt will probably cost more than $40 billion or 6 per cent
of the GDP. The debt management program, the largest the
government administers, costs $40 billion. The amount of
taxpayers'money used to pay off what we borrow drains the
economy, there is no doubt about that. Because of the debt, we
cannot afford to take advantage of many opportunities for
growth. The billions of dollars we spend on the debt could be put
to a much more productive use. Hence, the urgency to balance
I believe we can grow out of our deficit. We can get out of our
financial and fiscal difficulties through growth. Tough decisions
will be needed. We have to be more efficient so we can be more
We are re-evaluating some existing programs at this time.
Social programs are under scrutiny. Our defence and foreign
policy programs will each be under public review soon. Why not
evaluate some of our fiscal programs? Why not look at all
government programs to ensure that they are efficiently
provided and just as importantly they are effectively reaching
the goals that were set by Parliament when we adopted those
Our debt management program, the largest program this
government administers, has never been evaluated as to its
efficiency or effectiveness. This huge program should be
critically examined by Parliament as soon as possible.
I can speak with some knowledge of the subject because I
chaired the public accounts committee for about three years. We
continually came back to the House and said it was absolutely
essential that a program the size of the debt be managed as
efficiently and effectively as possible. We recommended the
program be subjected to that kind of program evaluation. It has
not been and I ask the government to listen attentively to this
We should examine the type of instruments we use to borrow;
Canadian funds versus foreign funds, long term versus short
term. We dipped into the employee pension funds last year to the
tune of $75 billion. This year we borrowed $7.2 billion to pay off
Is it the appropriate thing to do? Is it efficient? Is it effective?
I do not know. I know we are doing it. I would like to have the
House look at this program and evaluate it as to its efficiency
We must review the government's fiscal expenditures, all of
them, and assess how appropriate they are. Some of them have
become tax loopholes costing the federal government several
billions of dollars. Due to such shortfall in tax revenues and
public mismanagement, honest taxpayers are paying
increasingly higher taxes and receiving decreasing services.
I hold federal public servants in high esteem. I have a lot of
respect for the loyalty and commitment of federal public
servants who, as we know, were mistreated by the previous
government for several years.
To increase the productivity of public servants we must
empower them with authority, give them clear objectives,
effective policies, which will then give us an efficient
administration. We must insist on program evaluation in an
aggressive manner, to identify and eliminate or improve
programs that are less than efficient and do not respond to the
needs of Canadians.
There are two ways of reducing public expenditures. On the
one hand, the government could cut expenditures by a certain
percentage across the board, regardless of consequences, as the
Reform Party is asking. Personally, I call that the easy but stupid
On the other hand, the government could and must evaluate
the appropriateness of its programs and activities.
For a long time I have supported the principle of program
evaluation. It makes it possible to know whether the raison
d'être, the goals, anticipated and actual results and program
designs are satisfactory.
If one does not do this then we are a bunch of navel gazers and
will not succeed in bringing better administration to this
country. When such evaluations are made public they increase
the accountability of this House with the people of Canada, with
government officials, by allowing the Auditor General to
publish regular reports as he should to give all of us more
information as to the administration of public funds.
It is essential in the context of budgetary restraint that we
have in place a good program evaluation of our administrative
practices. It is one of the best ways to improve the allocation of
ever scarce resources. I am not the only one who is saying this. It
is in the report of the Auditor General, and I invite members to
read it. That may be difficult because it is a lengthy document
but it is worth while for any new member of Parliament at least
to try. The report will tell you where we are going and how the
administration of this government or the past government has
been lacking in certain areas. It is not always easy. It requires
time but I would recommend that members do read the report.
Managing the debt presents specific problems. As a
percentage of the GDP, government revenues dropped from 18.1
per cent, in 1991-92, to 17.6 per cent, in 1992-93. Such a
downturn is due in part to a decrease in revenues from personal
and corporate income taxes.
Personal income tax accounted for 48 per cent of all revenues
in 1992-93, compared to 50.2 per cent in 1991-92.
Instead of cutting public expenditures blindly, the
government should protect its tax base by evaluating the
efficiency, appropriateness and raison d'être of all tax
expenditures and eliminating tax loopholes.
Before assessing how pertinent tax expenditures are, we must
first ascertain whether or not they are having the desired effect.
For example, in 1992, the Auditor General reported that
multinationals were abusing the rules allowing them to take
home profits tax-free thanks to tax havens. Hundreds of
millions of dollars were lost from corporations operating abroad
and bringing back non-taxable dividends. We said then that this
loophole should be eliminated. I hope it will be.
In its twelfth report, published last year, the Public Accounts
Committee, which I chaired, recommended that the Finance
Department review the list of designated countries. It also asked
that we examine if it would be appropriate to transfer home, tax
free, any income of subsidiaries or divisions operating in these
The list is very long. Some 25 countries are identified as tax
havens. When we asked them to define a tax haven, they said it
was a developing country. Two former committee members will
be my witness on this. Do you know what a tax haven is? Any
developing country. Switzerland a developing country? Sure!
Bermuda a developing country? Why not? This is total
nonsense. Mr. Speaker; we must examine this list, we must
tighten up our practices. We must be serious in the evaluation of
I know my time is almost up, but do I have a few minutes
The Acting Speaker (Mr. Kilger): You will have a few
minutes left for questions and comments provided you end your
Mr. Gauthier (Ottawa-Vanier): I have so much to say. The
Department of Finance should explain what constitutes income
from active business carried on by a corporation. I wish
someone would give us a clear and precise definition of what the
Department of Finance means by a tax loophole, of what they
mean when they talk about income from active business carried
on by a corporation as opposed to ``passive business''. I know
this is complex, but these are all food for thought if we want to
really understand our duty as politicians, as members of
Parliament who must manage public affairs.
Mr. Simon de Jong (Regina-Qu'Appelle): Mr. Speaker, I
listened attentively to the remarks of the hon. member for
Ottawa-Vanier. I know the member well and I appreciate the
work he has done in the House.
I would like to put forward a notion and wish to have the
reaction of the hon. member. This House has passed legislation
on environmental review assessment. Before the government
undertakes any major piece of construction there is an
environmental review so that we know the impact it has on the
I have maintained in the past that before we present the budget
or any changes in social policy that we have a human assessment
review. Modern social statistics indicate that if poverty goes up
and unemployment goes up, so do suicides, so does crime, so
does alcohol dependency, et cetera. Therefore we could figure
out the human costs. Before there are changes in social
programs by a budget, should there not also be a human social
assessment that would clearly lay out that if that measure
produced so many more unemployed we would have so many
suicides, so many more people in jail? In other words, lay out
what the social costs will be before government undertakes any
measure such as a budget.
Mr. Gauthier (Ottawa-Vanier): Mr. Speaker, I appreciate
the question which is an interesting one. We are dealing with a
budget which in all honesty must be seen under current
constraints. The government must protect its taxpayers. I
understand that. However, there is value in what the member has
just said, that there are social costs. Everybody must pay their
fair share. What I was trying to address when talking about
efficiency and effectiveness deals with the problem he just
raised, that is, if everybody paid their fair share we would have
no problems putting forth good, solid social programs, health
care programs and good day care programs.
What is happening right now is that too many people are
getting away with not paying their fair share of taxes. That is
causing the rest of the population which is honest and pays its
fair share a lot of problems. That is why we have a large deficit.
The underground economy is a problem we should address.
The way they get away with not paying any taxes by using all
kinds of loopholes must also be looked at seriously and these
loopholes must be closed.
* * *
The House resumed from January 28, consideration of the
motion for an address to His Excellency the Governor General in
reply to his Speech at the opening of the session.
The Acting Speaker (Mr. Kilger): It being six o'clock p.m.,
it is my duty pursuant to order made Thursday, January 27, 1994
to interrupt the proceedings and put forthwith every question
necessary to dispose of the address in reply to the Speech from
the Throne. Call in the members.
(The House divided on the motion, which was agreed to on the
(Division No. 3)
Axworthy (Winnipeg South Centre)
Gray (Windsor West)
LeBlanc (Cape Breton Highlands-Canso)
MacLellan (Cape Breton-The Sydneys)
McLellan (Edmonton Northwest)
Scott (Fredericton-York Sudbury)
Axworthy (Saskatoon-Clark's Crossing)
Brown (Calgary Southeast)
Grey (Beaver River)
Harper (Calgary West)
Harper (Simcoe Centre)
Hill (Prince George-Peace River)
Martin (Esquimalt-Juan de Fuca)
McClelland (Edmonton Southwest)
Mills (Red Deer)
White (Fraser Valley West)
White (North Vancouver)
The Speaker: I declare the motion carried.
Mrs. Wayne: Mr. Speaker, on a point of order. It was my
intent to vote for the budget-I am sorry, for the speech from the
throne. I might vote for the budget but I want to wait and see. I
am sorry that I missed that. It was not my intent to vote against
the speech from the throne.
The Speaker: Colleagues, we are new at this game, especially
me. Changing a vote would require unanimous consent. Is it
Some hon. members: Agreed.
The Speaker: So ordered.
Hon. Herb Gray (Leader of the Government in the House
of Commons and Solicitor General of Canada): Mr. Speaker, I
want to assure my colleagues that I do not intend to change my
I have a motion that is customary to move at this point in the
proceedings. I move:
That the address be engrossed and presented to His Excellency the Governor
General by the Speaker.
(Motion agreed to.)
The House resumed consideration of the motion.
Mr. Guy H. Arseneault (Restigouche-Chaleur): Mr.
Speaker, it is with great pleasure that I take part in this historical
debate today. Before starting my remarks however, I would like
to congratulate you, Mr. Speaker. I am convinced that, under
your direction, the House of Commons will be run in such a way
that the faith of the people of Canada in their government and in
this institution will be restored.
I would also like to take this opportunity to thank the residents
of Restigouche-Chaleur for their show of trust. I am grateful to
them for renewing my mandate and I look forward to
accomplishing great things with them in the years to come, not
only for Restigouche-Chaleur, but also for Canada as a whole.
I want to thank the Minister of Finance for his speech this
morning and for holding this debate. This kind of consultation
reflects a major change in how power will be exercised under a
Liberal regime as opposed to another one. I welcome such a
change and hope that there will be many more debates like this
one in the future.
A strong economy is the very foundation of a strong society.
But how can we have a strong economy when we are facing
numerous challenges as a nation and have many interconnected
problems to resolve?
Soon after coming into power, this government took major
steps relating to infrastructure and residential renovation. By
the way, I would like to mention the excellent work my
colleagues have done in quickly implementing these major
Yet, much remains to be done. The federal debt and deficit are
stifling this country's potential. I think that no one here can deny
that. It is on the process of deficit reduction that we disagree.
I would like to remind the Minister of Finance of a few crucial
words, and I quote: ``Deficit reduction is not an end in itself. Its
rationale is to improve productivity, real wages, and living
standards of our children and their children. If the measures to
cut deficits actually diminish GDP, raise unemployment, and
reduce future oriented activities of government, business, and
households, they do not achieve the goals that are their raison
d'être: rather they retard them.''
This quote is from Nobel prize winner James Tobin and
appeared in the Liberal red book.
I urge the minister to take a balanced approach in reducing the
deficit. The deficit cannot be further reduced on the backs of the
middle class. Furthermore, any move toward further drastic
expenditure cuts will undoubtedly lead to increased
As part of a balanced approach the Minister of Human
Resources Development began the process of renewing
Canada's social safety net yesterday. Today's debate is an
important step in renewing our budgetary process.
I would suggest to the minister that we take steps toward total
tax reform. The GST did not bring balance to the Canadian tax
system. Today the money that runs this government is coming in
a disproportionate manner from the taxes paid by the middle
Over the course of the past decade the percentage of taxes
paid by the middle class has risen dramatically while the taxes
paid by corporations have declined. Moreover, the taxes paid on
investment income have all but disappeared.
What kind of message is this sending to the Canadian public?
It says that the most expensive way to make a living is to have a
job working for someone else. It is time for everyone to pay their
fair share of taxes. Corporations can no longer expect to gain
from the numerous benefits of doing business in Canada without
contributing to the system.
I would suggest that the minister take steps toward the
institution of a minimum corporate tax. When one mentions a
minimum corporate tax the business community cries that such
a tax would make the cost of doing business in Canada
unreasonable and therefore force it to relocate.
These are empty threats. Over half of the total untaxed profits
in 1987 were derived from the top 145 corporations which
reported annual profits of $106 million on average, while 2,000
firms earning on an average of $1 million accounted for 80 per
cent of untaxed profits.
These companies are reporting profits, huge profits at that,
and they refuse to pay their fair share of taxes.
I urge the minister to take steps to end this practice. A
minimum level of taxation would go a long way toward
resolving our deficit problems. May I add there are some
individuals out here as well who pay no tax whatsoever and
again we should look at making sure they pay their fair share of
taxes as well.
I would also like to remind the minister that the big losers in
this recession have been the very future of our nation, our youth.
The jobless rate among youth is unacceptably high. While
some of the jobs lost by youth over the past few years have been
recovered nearly 60 per cent of these new jobs were part time.
Our education programs must prepare our youth for the
challenges that lie ahead. We must prepare them to face the 21st
century. We must provide them not only with the knowledge and
skills to meet the challenges that lie ahead, we must provide
them with the hope of a better future.
The steps the government has made toward the formation of a
youth apprenticeship program and a Canadian youth corps are
important in this regard.
We must continue to increase the literacy and numeracy skills
of our young people. We must work to ensure that there is
increased co-operation between all levels of government and
the establishment of national educational standards.
We must remember that our youth will be the driving force
behind the economic recovery and we must provide them with
the tools to effectively and successfully meet this challenge.
I realize that the Minister of Finance has been handed a
difficult task. Expectations are high. I and the citizens of
Restigouche-Chaleur understand that there are no easy
solutions. We believe in a balanced approach, an approach that
recognizes that the deficit must be reduced, but only in a manner
that is compatible with putting Canadians back to work.
We believe in the evolution and renewal of our social
programs so that they remain responsive to the needs of
Canadians. We believe in major tax reform, a reform that sees
fairness and equity as the basis of all future fiscal and monetary
decisions by government.
Finally, we believe in our ability as a country to overcome our
challenges and build an even better future.
Mr. Ron MacDonald (Dartmouth): Mr. Speaker, I listened
with a great deal of interest to my colleague who has outlined a
number of proposals that I think would be very constructive and
I am sure that they will be considered by the Minister of
I have known the hon. member for a number of years. He has
worked diligently over the years in trying to be productive and
positive and constructive in this place and I think that he has
contributed a great deal in his pre-budget debate that we are
having in the House of Commons.
However, I just want to throw out a couple of other things that
I think would aid not just the region but aid nationally in our two
pronged approach. One is, obviously, to create jobs and to
stimulate the economy through the budget that will be coming
down. Another is to try as best as we possibly can to tame that
demon that is called the national deficit and spiralling debt.
One of the things that I think clearly could be done, and my
colleague here who is chair of the Atlantic caucus might wish to
comment, is to have the Minister of Finance address the real
problems affecting the competitiveness of the port of Halifax.
That will impact on the entire Atlantic region and will create
jobs all throughout the economy.
The problem with the port of Halifax and its competitiveness
is not the port itself, it is the rail line which goes up through
Nova Scotia, through New Brunswick and into Quebec. Over the
last number of years we have seen that rail link become less
competitive. The rates have not gone down, they have gone up.
The on time delivery, the length of time that it takes have all
impacted in a very major way on whether we have competitive
businesses in Atlantic Canada and whether the port of Halifax
would be poised to take advantage of the new global trade
In the past I have raised in this House, and it was supported by
members of the Atlantic Liberal caucus in opposition, that the
Minister of Finance or the Minister of Transport of the day could
look at two very simple things that would have a major impact
on the efficiency and effectiveness of rail transportation in
After all, if we do not have viable modes of transport in
Atlantic Canada we will not have industry. It is as simple as that.
We are not close enough to our markets.
One of the things that we have suggested is that the Minister
of Finance look at the possibility of accelerating the rate of
depreciation for new rolling stock. That would put Canadian
railroads on an even footing with American railroads. It is
budgetary. It is a fiscal measure that can be taken that does not
really cost money but which could have a major impact on the
competitiveness of products travelling over the rail lines in
The second thing we could do, clearly, is to look at the
avoidable costs of rail transportation. We need viable rail
service in Atlantic Canada to be competitive. One of the things
that has been suggested by the Atlantic Provinces
Transportation Commission is that the federal government
remove the excise tax on diesel fuel used for the transportation
of goods by rail in Canada.
Those two measures alone, which we begged the previous
government to look at, would increase in a substantial way the
competitive movement of goods through the Atlantic provinces,
not just into Quebec and central Canadian and western Canadian
markets, but down into the midwestern markets.
I would ask the member who has just given his speech, and a
very good address, if he could comment about those types of
things, those regulatory changes which in a major way could
have an impact on the viability of competitive industries, not
just in Halifax, not just in Dartmouth, but in his area as well in
Mr. Arseneault: Mr. Speaker, I say to everyone listening that
the hon. member for Dartmouth presented his case very well in
opposition and in government. He has been a very forceful
speaker and forceful lobbyist. I do not know if I can use that
word; it is not really the right word to use. He has worked very
hard for the port of Dartmouth and for his constituents. Time and
time again I have sat through national caucus and Atlantic
caucus. I have been in the House when he has asked numerous
questions. He has made numerous speeches. He has the port of
Halifax at heart as do all of us in Atlantic Canada. We are all one
region. What happens in one part of the region affects the other
Transportation is vital to Atlantic Canada. It is vital to the
port of Halifax. I would have to go along with the member and
say I agree wholeheartedly with his assessment of transportation
in Atlantic Canada. I wholeheartedly agree with his assessment
of rail transportation.
In northern New Brunswick rail transportation is very iffy at
this point in time. I feel confident we will be able to maintain it.
We have a mining area and we have ports. I think the suggestion
of the hon. member that the rate of depreciation with regard to
rolling stock be increased is a very good. It would make us more
competitive with the U.S. The removal of the excise tax on
diesel fuel whenever anything is transported via rail is also a
good point. I hope the Minister of Finance will take them into
I would like to mention another point in closing. If no one else
has a question perhaps the member could comment on it as well.
I am referring to the establishment of a strategic procurement
plan where the government, rather than give out contracts carte
blanche, would try to use the plan to stimulate the economy, to
see if companies would put money into research and
development as a result of receiving contracts or make money
available in venture companies as a result of receiving
Mr. Jim Silye (Calgary Centre): Mr. Speaker, I would like to
begin by complimenting the government on its use of
pre-budget conferences in the House of Commons. A debate
like today is an attempt to open up the budgetary process to
Canadians and House members. I realize there are problems
with two-way communication because the government cannot
do what everyone says, but the process will be a real sham if the
finance minister suffers from selective hearing to justify his
We look forward to his budget which will be the proof of his
ability to listen and to keep his promises. Because previous
Liberal and Conservative governments have neglected the
deficit and the growing burden of debt for so long, the easy
options for correcting the problem no longer exist.
As a constructive alternative today I forward the idea that less
means more. Less taxation means more revenue for government
and commerce. Less taxation means more money in the hands of
people who know how to spend it better. Less government
spending means more revenue can be applied to the debt. The
vehicle through which the government can achieve economic
revival is a new simple, visible and proportional tax which will
also eliminate the need for the GST.
The need for tax reform is obvious. The Minister of Finance
has said that many Canadians ``have withdrawn their consent to
be governed and are demonstrating that by resorting to the
underground economy and refusing to pay taxes''. The
government is losing billions of dollars on an underground
economy which is valued at $60 billion to $80 billion because
the public has lost confidence in the government's ability to
manage money, resources and live within its means like
taxpayers have to do.
Even the Prime Minister himself has acknowledged the fact
that our present system is not working. This is not surprising.
The present tax system is too complicated, too high and too
unfair. These factors in combination with consistent
government overspending are stifling our economy. The current
government is presently acting as though there is a revenue
problem, not a spending problem.
However when we examine the facts we find revenues in
excess of $126 billion. Total expenditures excluding the interest
payments on the debt are less than $126 billion. It is the interest
on the debt that creates the deficit. Does that sound familiar?
Interest expenses on federal debt now total 33 cents of every tax
I submit it is the debt and the interest expense to service the
debt that put in jeopardy the viability of existing programs.
Therefore we should not be adding to the debt annually at a rate
of $35 billion to $45 billion.
We have misspent and overspent money for the last 25 years.
Since 1968 we have spent more money each and every year than
was brought in. We cannot survive like this. Creditors are
watching this 35th Parliament very closely. The problem needs
solving now, not next year.
It is my belief that to stimulate the economy and to increase
revenues for government, lenders, investors and consumers
must possess a larger pool of disposable income. If the current
government continues to take more money out of the economy
through higher taxation, it will in actual fact serve as a deterrent
to the economy creating higher unemployment and keeping us in
this recession much longer.
That is why I recommend the implementation of a flat tax
on individual and corporate income. A creation of a flat or
proportional tax is a way to increase constructively the revenue
side of the budget, remove incentives for an underground
economy, restore fairness and, most important, stimulate
economic growth which is a priority of the Liberal red book.
This concept is not new to the House or the government. The
member for Broadview-Greenwood who supports a single or
flat tax wrote: ``Lower marginal rates and more take home pay
would be an incentive to work harder and smarter. The new
incentives plus elimination of avoidance and evasion would lead
to this tax taking in more revenue, even with this lower rate''.
The objective of this tax would be threefold. First, it would
simplify current complicated tax forms so that all Canadians
could understand them. This would increase savings for the
Department of National Revenue in the collection of taxes and
the monitoring of all personal and corporate tax exemptions.
Second, it would restore equity into the tax system
eliminating the perception that one group of taxpayer is
favoured over another.
Third, it would restore integrity and bring effectiveness to the
system by eliminating the need for so many tax concessions and
loopholes, an objective that was also stated today by the finance
The finance minister said today that he planned to build
equity into the budgetary process. He then proceeded to commit
the Liberal government to the preservation of the current social
system without reducing any expenditures on it and hinted that
he planned to close tax loopholes and exemptions.
Our social programs are gold plated Cadillacs we cannot
afford. They can be replaced with a less expensive model
without hurting the efficient delivery of the same social
programs. The finance minister stated that Canadians can expect
another deficit in the range of $40 billion.
Once again for the 26th year in a row government will spend
more money than it brings in. When will it stop? There is no
commitment by the government to balance the budget or cut the
deficit. One does not build equity as the finance minister wants
by continually adding to the debt.
Should the finance minister be serious in his comments that
he is seeking input on how to balance the fiscal scales, here are
some suggestions. First, he could target social spending to the
truly needy and perhaps eliminate OAS payments to seniors
whose household income is in excess of the national household
average of $54,000. The saving would be $2 billion to $3 billion.
Second, he could make UI self-sustaining, not by increasing
premiums but by tightening benefits and eliminating payments
to abusers and seasonal workers whose incomes are above
$54,000 per year. The saving would be $3 billion to $6 billion.
Third, he could eliminate subsidies to businesses,
megaprojects and regional development programs. The saving
would be $1 billion to $3 billion.
Fourth, he could cut the Department of National Defence
budget by 6 per cent. The saving would be $660 million.
Fifth, he could privatize crown corporations and apply the
sale proceeds to our national debt. The saving would be $2
billion to $3 billion and perhaps a reduction of the debt by $5
billion to $10 billion.
Sixth, he could rationalize spending on government programs
to generate growth and confidence in the economy and eliminate
the money guzzling programs in government operations. The
saving would be $600 million, plus or minus.
Increased taxation and a reliance on infrastructure spending
alone will not significantly reduce the deficit or encourage a
economic recovery. Make work programs do not create long
term jobs. They are simply another way to spend taxpayers'
When the money runs out for the contractors and construction
workers under the Liberal plan, the jobs will stop. Taxpayers
will then be left with an even bigger debt to be serviced through
increased taxation. What if the interest rate goes up? How will
we service that debt? Where will the money come from?
Canadians are still paying for programs created by previous
governments during the seventies and eighties. The federal
government's responsibility is to create a healthy economic
environment that favours investment, encourages initiative and
risk taking, and protects the environment.
It is widely known that outside investors prefer to do business
where governments are fiscally responsible. This is why the
government must get a firmer handle on expenditures, not just
Alberta Treasurer Jim Dinning said recently: ``If you put
more money into government hands they don't save it; they
spend it''. If the purposes of taxes is to provide peace, good
order and good government in Canada then let us do it and let us
not just talk about doing it.
In conclusion I hope the Liberal definition of fairness in the
taxation system does not mean let them overtax everybody.
Mr. Ronald J. Duhamel (Parliamentary Secretary to
Minister of Public Works and Government Services): Mr.
Speaker, I want to ask but one question and I will do it briefly
because I see other colleagues want to raise some as well.
The hon. member who has just spoken will realize that the
Liberal Party formed the government because it had the largest
vote of any other party in the last federal election. During that
election the Liberals stated that we wanted as a first priority
to create jobs. We put forward a job creation plan in the short
term to boost the economy immediately, the infrastructure
program. We laid out our long term program: the youth corps
and more apprenticeships, ensuring that small and medium
sized businesses have the climate to permit them to create jobs
as they have during the last decade. They create over 85 per
cent of new jobs.
I have a specific question. Is the hon. member now
questioning, subsequent to the election, the wisdom of Canadian
people in having elected the Liberals as a majority government?
We said that jobs were our first priority. Is he suggesting, now
that we have been elected, that we should now change that? He
did say, if I recall correctly, that we should not be spending on
the infrastructure program because it would simply increase the
debt and it would not really make any significant difference. His
leader made similar comments. Whose side is he on? Is it the
people's side or his party's side?
Mr. Silye: Mr. Speaker, in response to the hon. member, I
would like to clarify a couple of points the member asked about.
I did not say that we did not support or justify spending on
infrastructure. The government has $126 billion. It should
priorize spending. If it means including infrastructure, by all
means it is the government's responsibility now to decide how
that money is spent efficiently and effectively.
What we are talking about and are concerned about is
increasing the revenue take through increased taxes. If the
government wants to balance the budget by increasing the
revenue just through that infrastructure program, it is not
enough to generate new tax dollars to cover increased costs.
With respect to another point, we also want to create jobs as
does the Liberal Party, but our philosophy or suggestion is that
jobs are created by the private sector which does a much better
job. We should redistribute the wealth and put it back in private
sector hands, not keep the money in government hands which
has proven over and over again for the last 26 years that it does
not know how to create long term meaningful jobs. All it knows
how to do is take in money and mess it up. We would like to put
that money back where it should be.
The hon. member asked a tricky type of question regarding
whether I supported the will of the majority of the Canadian
public. We all know how the electoral system works. We all
know how they got their majority. We all know where they got
Many people in the country also support our point of view. It
is not just that the Liberals have carte blanche. It is also their
responsibility as government to listen to some constructive
alternatives and to listen to some constructive suggestions.
Members of the opposition are here to help them improve their
programs. If they do not do that and if they just dictate to us,
they will breach their commitment and responsibility just as the
previous government did and will end up with the same fate.
Mr. Paul Crête (Kamouraska-Rivière-du-Loup): Mr.
Speaker, let me start by saying that I agree with the hon. member
who just spoke about the urgent need to act. He made a number
of suggestions and while I do not necessarily agree with them, I
do nonetheless find many of them to be interesting.
Perhaps I could add to this by saying that what really matters
is not necessarily reviewing all social programs or adding to the
tax burden, but rather taking advantage of this pre-budget
period to review expenses carefully. On this point, I would like
to draw the attention of the House to three areas in which, in my
opinion, significant waste occurs.
With respect to manpower, among other things, government
duplication costs Quebec $250 million annually. The same holds
true for regional development where fixed costs are estimated at
Lastly, there is much duplication as far as officials are
concerned in the fields of education and social affairs. I believe
it is important for the federal government to seriously consider
withdrawing from these areas. Tangible savings would be
achieved and the goal of increased efficiency would be
Mr. Silye: Mr. Speaker, I feel that was a supportive comment
by the hon. member and therefore I do not feel I have any need to
add to his comments.
Mr. Elwin Hermanson (Kindersley-Lloydminster): Mr.
Speaker, before I begin my remarks I would like to thank the
government for this apparently unprecedented pre-budget
debate. May I commend the government for holding this
discussion. It is an example of a more open consultative process
which I hope will lead to a better budget than Canadians have
recently been accustomed to.
The finance minister will hear advice from all corners of this
place during the debate. This advice will include the thoughts of
2.5 million Canadians who voted for Reformers sitting on this
side of the House. We will be expressing the concerns of all
Canadians who believe that their tax money is not being spent as
wisely as it could be. I ask the minister to act on these concerns
when preparing the budget document.
The introduction of a budget is one of the most important
functions a government performs. The budget is an outline of
the government's fiscal plan for the country in the coming year.
It directly affects every other government program, service and
initiative by the way it distributes tax dollars. For this reason
the consultative process must balance the needs and wants of
Canadians with their ability to pay for those needs and wants.
When preparing a budget a government must do two things.
First the government's primary task is to lay out a plan which
allocates the hard earned money Canadian taxpayers have
entrusted to them. This must be done in a way to deliver federal
services and programs in as fair and economical a manner as
The second consideration is one that often gets forgotten. The
government must also treat future generations of Canadians
fairly. It must ensure that their opportunities and quality of life
are not hindered by the millstone of massive debt. It is unfair
and immoral for us to spend money on ourselves today and leave
the bills for our children and grandchildren to pay tomorrow.
All Reformers have a mandate from Canadians to reduce the
tax burden through controlling government expenditures. I have
chosen today to comment about federal agriculture expenditures
because agriculture is the primary industry in
Kindersley-Lloydminster and, indeed in much of Canada,
because the production of food stuffs is vital to adequately
sustain over five billion human beings, many of whom depend
on food produced by Canadian farmers.
The purpose of funds earmarked for agricultural support
should be primarily to assist agricultural producers who through
no fault of their own find themselves financially disadvantaged.
There are at present almost 50 different agriculture support
programs and initiatives. They are far ranging and include loan
guarantees for farm improvements and marketing
co-operatives, a special Atlantic livestock initiative, a national
farm business management program, a provincial potato
diversion program, the southwestern Ontario soil and water
quality enhancement program as well as the national soil
conservation program, the Canadian agri-food development
initiative and economic regional development initiatives.
There are even some in my province of Saskatchewan; a
Canada-Saskatchewan partnership agreement on rural
development, a Canada-Saskatchewan partnership agreement
on irrigation based economic development.
We have not even heard of most of these programs. They are
not very well known and we are not sure of their actual value.
The administrative costs of running so many different and
sometimes overlapping or outdated programs is staggering.
Over $3 billion per year is spent by the Ministry of Agriculture
of which almost $900 million is spent on operating and capital
costs alone. These figures do not include the additional $728
million spent under the Western Grain Transportation Act.
This appallingly high level of overhead signals waste and
mismanagement. By consolidating those 50 programs and
initiatives into just a few, the government could probably save
over $400 million and provide better support to the industry as a
We must expose the myth that more money spent always
results in more effective programs. In the case of agriculture it is
not only possible to provide better support with fewer dollars
but it is essential to the long-term sustainability of the industry,
given the financial shape of the government. We must be
continually vigilant to ensure that whatever programs we
establish today will be economically viable tomorrow.
Reform of agricultural programs is essential because we must
be able to defend the cost of agricultural support to taxpayers,
consumers, and future generations. Support programs that
protect farmers and producers from situations beyond their
control are defensible and desirable for the maintenance of our
Defensible support programs include, first, an actuarially
sound federal-provincial-producer funded crop insurance
program to protect the farmer from natural disasters such as
floods, frosts or droughts. I urge the Minister of Agriculture to
review the program at least in my province of Saskatchewan
where increased premiums, lower coverage and truckloads of
bureaucratic red tape are ruining the program. For the record I
also want this government and all Canadians to know that
Reformers supported the crop insurance program in the last
election and campaigned to strengthen it.
Second, we need an income stabilization program to help
protect farmers from market cycles inherent in an open market
environment. This shared federal government-producer
program should have universal application and be based on the
whole farm level rather than being commodity specific.
Producers in the supply managed sectors should have access to
this program as tariffication has been introduced. This program
has the additional benefit of helping farmers make the transition
into retirement, as remaining funds could be transferable to an
RRSP account if the government does not dismantle the RRSP
A third program promoted by Reform is a trade distortion
adjustment program designed to compensate exporting
producers as a direct countermeasure to foreign subsidies. The
program should include an automatic triggering mechanism and
be based on the historic volume of exported products. Such a
program would not require producer premiums and should
ensure timely payouts within the same market period. We
suggested taking funds from the ill-designed GRIP program and
the slowly eroding Western Grain Transportation Act and
thereby provide a
tool to beleaguered producers that is superior to anything
available today at no more cost to taxpayers.
Reformers believe that if these improved programs are
targeted to those producers most in need there will be many
benefits. First, support dollars that are strategically targeted
increase their effectiveness manyfold. Second, by delivering
support more directly to the farmer rather than through a large
bureaucracy the money gets where it is needed faster. Third,
reduced overhead costs frees up more money for those in need.
This is but one example of how the government can increase
the effectiveness of a program for those who need it and at the
same time reduce the burden on the taxpayers.
If we can save dollars in something so basic and important as
the Department of Agriculture surely there are many other
government departments where substantial savings could be
made. The department of aboriginal affairs for instance could be
similarly realigned. Fewer dollars appearing in the budget could
still mean more money in the hands of our aboriginal people.
Another example is the Department of Multiculturalism and
Citizenship. Justifiable functions of that department such as
citizenship registration and human rights protection could be
transferred to more appropriate departments such as
employment and immigration and justice respectively. In this
way almost the entire cost of a government department can be
saved at the same time as continuing to deliver defensible
In conclusion, I would repeat that if within the Ministry of
Agriculture we can increase program effectiveness and save
$400 million by reorganizing the programs, surely there are
economies to be made in all other departments as well.
Once again I want to congratulate the government for holding
this debate. I urge the Minister of Finance as well as the Minister
of Agriculture to consider these suggestions carefully. I have not
made these suggestions for partisan reasons or for party
bragging rights when progress is made. I have made these
suggestions for the good of Canada not only today but for future
generations as well.
Mr. Don Boudria (Glengarry-Prescott-Russell): Mr.
Speaker, I listened to the comments of our colleague. He
referred particularly at the beginning of his remarks to cutting
and eliminating some loopholes in the tax system. He gave a few
I seem to remember only a few days ago the leader of his party
talked about getting assurances from the government that a
measure that existed for utility companies in his province
whereby they did not have to pay taxes would be retained. I find
the discourse rather interesting in that regard.
I want to ask him about another so-called loophole, at least in
the eyes of some, not me. I consider the lifetime capital gains
exemption of $500,000 on the disposition of farmland to be a
very valuable instrument. It is a form of pension for farmers as
they accumulate wealth gradually. When they dispose of their
assets they are able to keep those funds without taxes. This is
much the same way that people accumulate by making tax
deductible contributions toward their pension fund if they are
teachers, factory workers or what have you.
Does this capital gains exemption fit into one of the loopholes
to be abolished? Does my colleague agree with me and hopefully
with all the officials of the finance department who may be
listening to us making these remarks now that it should be
retained for the benefit of farmers so they can have what is the
equivalent of a pension plan for the agricultural community?
Mr. Hermanson: Mr. Speaker, I welcome the hon. member's
He may have a couple of speeches confused. In my address I
did not address the tax loophole issue although that certainly is a
concern that I, many other members and also Canadians have.
With regard to his comments regarding the $100,000 or
$500,000 capital gains exemption, our party has looked at those
programs as well as the RRSP program as being an effective tool
to help Canadians to plan security for later years in life so as not
to be a burden on Canadians through needing assistance in other
I feel quite comfortable in saying that our party would be
fairly supportive of maintaining the $100,000 tax exemption for
persons and also the $500,000 tax exemption for farmers which
as the hon. member points out has been an effective tool to
provide for their security in later years, once they are not
actively in business and have sold or transferred their operations
Mr. Simon de Jong (Regina-Qu'Appelle): Mr. Speaker,
first I wish to congratulate the member for
Kindersley-Lloydminster especially on the fact that he
brought forward the position of the Reform Party on agriculture.
I also come from Saskatchewan where agriculture still
remains our most important industry. There is a lot of coffee
shop talk about what the Reform platform on agriculture really
means. Today I heard more detail about the program of the
Reform Party concerning agriculture.
I entirely agree with the hon. member that much of the
existing systems should really be wiped out. They are a
bureaucratic mess. They create more uncertainty for many of
our producers in trying to figure out whether they should apply
or whether they qualify. Quite often they do not know until the
next crop year. It just creates a whole bunch of uncertainty.
Part of the problem with the existing system is that it really
rewards the bigger producers. Approximately 75 per cent of the
tax dollar that goes into agriculture goes to around 25 per cent
of the producers. When the payments are based on seeded acres
or on so many bushels then the bigger the one is, the more
subsidy and support one receives.
We feel that to maintain a viable rural community one has to
maintain the medium sized family farms. That is why our
election proposals had a basic cost of production for a certain
number of bushels. If one was bigger the rest was done at his or
her own risk.
Does the Reform Party also encompass the notion of a cap to
ensure that the tax dollar that goes to agriculture gets more
evenly distributed among all of the producers?
Mr. Hermanson: Mr. Speaker, I thank the hon. member for
Regina-Qu'Appelle for his comments and also his question. If
he had followed our election campaign positions on agriculture
and other issues he would be aware that Reformers promoted the
targeting of funds in a way most beneficial to producers. We
expanded that in a larger way. We even suggested that by
targeting funds for social programs we might be able to salvage
them rather than see them eroded by the government's inability
to sustain them because of lack of funds with a growing debt.
I concur with the member's suggestion that some of our
programs right now are badly managed and very little thought
has been given to how effective they could be. For instance,
some of our agriculture programs are not good for the
environment. One instance is the Western Grain Transportation
Act which has no cap on it. Someone produces canola at $12 a
bushel and receives the same benefit from that program as
someone who is growing wheat and struggling at $2 a bushel.
What we are suggesting is a trade distortion adjustment
program that would target those funds to producers who are hurt
by the trade war and thereby sustain their economic viability.
Mr. Francis G. LeBlanc (Cape Breton Highlands-Canso):
Mr. Speaker, since this is my first real address since the opening
of the new Parliament, I would like to begin by congratulating
you and your colleagues on your election and appointments to
the speakership. I pledge my entire co-operation with you in the
sometimes difficult job that you have in maintaining the order
and decorum which is so necessary for parliamentary debate.
I would also like to express my thanks to my constituents in
Cape Breton Highlands-Canso for renewing their confidence
in me on October 25. Whether or not they supported me, I would
like to pledge to my constituents that I will work as hard as I can
on their behalf in this House of Commons and also within the
party of government over the next four years.
I am always moved and deeply touched by the support,
comments and requests for assistance which I receive from my
constituents. It has been a source of learning and inspiration for
me over the last four years to have been able to be their member
in Cape Breton Highlands-Canso. I really want to express that
I want to comment on the new mood of co-operation and
constructive debate which has characterized this House. It has
been a very pleasant change from the previous Parliament to see
from all sides of the House such an expression of earnest
willingness to participate in sincere debate. We can give a lot of
credit to our friends on the opposite side of the House,
particularly the new members who have shown in a very
impressive way their determination to address the problems we
faced in the past in the House of Commons of not showing the
voters that we were serious about the business for which we
I welcome the motion of the Minister of Finance and his
decision to open the budget process to a broad range of
consultation across Canada and also to have the process in this
House. It is a new endeavour for this government. It also reflects
the new mood of consultation and willingness to work with
members of Parliament and Canadians which has characterized
this administration from the beginning.
I believe it is already bearing fruit in terms of the mood of
Canadians and the fact that Canadians can see that the difficult
years are behind them. That mood of confidence is starting to
reflect itself in the economic indicators and in the spirit of
confidence which is occurring throughout the economy. I hope
that will make the tough decisions which the Minister of Finance
has to make over the next few weeks a little easier.
Obviously the most serious and difficult problem presently
facing the Minister of Finance and the Canadian economy is the
high deficit of the federal government, as well as the deficits
faced by Canada's provinces. It has been a serious handicap for
the Canadian economy. Reducing that deficit has to be a priority
of the Government of Canada and of the Minister of Finance and
As the minister mentioned earlier today this problem cannot
be addressed in isolation. The budget cannot deal with the
question of raising taxes or drastically cutting expenditures
without regard for the need to produce growth and jobs in the
Canadian economy. Nor can the Minister of Finance address the
deficit on the backs of the most disadvantaged Canadians. It has
to be addressed over the longer term.
We have to begin with this budget. We have to produce
measures which will increase growth and increase the revenue
generating capacity of Canadians so that the deficit can be
brought down as part of the growing Canadian economy. That
is the underlying message which should be conveyed to the
Minister of Finance as part of his budget preparation process.
With respect to the basic decisions of tax policy which
inevitably will form part of the budget, I want to associate
myself with those who would stress the need to simplify the tax
system and eliminate the many loopholes and overlaps which
exist in the federal tax system and to work toward a more simple
I am very sympathetic to the work which has been done by my
colleague, the member for Broadview-Greenwood, in moving
toward the single tax. The extra revenue derived from a very
steep regressive tax system, one that is so full of loopholes that
it pays people with higher incomes to avoid the tax, is not
serving Canadians well. Without mentioning any specific areas I
urge the Minister of Finance to consider tax simplification as an
objective of his tax policy measures.
Important as they may be, there will be more in the budget
than simply tax and expenditure measures.
This budget as the first budget for the next term of this
government has to lay the foundation for growth in Canada. As
part of the way of doing that it will have to deal with the many
areas of government policy that have in one way or another
restrained growth for example through excessive taxes on small
businesses or through the many complicating features of such
programs as unemployment insurance.
I understand and am very pleased to be part of the committee
that will examine the whole range of social security reform in
Canada including the unemployment insurance system. I
believe there is work to be done in that area to make those
programs more streamlined, more simplified and less inhibiting
on growth and job creation.
Young people in many parts of Canada are finding themselves
lured into traps through regulations in the Unemployment
Insurance Act that encourage and lead them away from seeking
higher education and into positions or jobs which are dead end.
It even encourages businesses to provide those kinds of jobs
because it is advantageous. We have to work toward eliminating
these disincentives in that program and in other similar
programs in order to encourage the kind of creation of
employment and the kinds of jobs Canadians will need in the
However that is only part of the equation. Another part of the
equation has to be to work toward fostering the industries of the
future. The government has a very active role to play in this. In
creating those industries of the future the government has to
make sure that all parts of Canada are included.
Because central Canada has been the focus of the
manufacturing industries in Canada it is very easy to forget the
east and the west. I come from the east where the economy has
depended on resource industries which everyone knows have
The fishery is a primary employer in my own constituency.
Over the last four years it has been devastated. Forestry is a
resource industry in Canada which has been undergoing very
difficult times in my constituency.
The government has to promote measures that will help
Atlantic Canada be part of that economy of the future so that it
will not always consider itself a have-not region of Canada. On
that point there are measures that this budget can do to begin that
Mr. Monte Solberg (Medicine Hat): Mr. Speaker, I
commend the hon. member for his speech. I certainly agree with
him that we need to take a close look at reforming the taxation
system. I also commend the member for
Broadview-Greenwood for his work on the single tax. I think it
is a great way to go.
I also agree that we have to take a look at reforming
unemployment insurance. There are many disincentives to work
in the program as it is presently constituted.
My question for the hon. member has to do with
infrastructure. He mentioned that he was supportive of the
government's infrastructure program. Does he think that the $6
billion that will come from taxpayers for the infrastructure
program is going to be more wisely spent by the government
than it would be by taxpayers, investors and small businessmen?
Mr. LeBlanc (Cape Breton Highlands-Canso): Mr.
Speaker, the infrastructure program that this government has put
into place is exactly the right stimulus to the economy at the
present time. It will create jobs now and increase confidence
precisely in those communities where that confidence is most
It will have a spin-off effect. The income from the jobs in
those communities which will be created in building
infrastructure will end up in the pockets of taxpayers. It will be
recycled in those communities, not by themselves but they will
begin a process of building those communities, so that they are
more competitive in the future.
That is the point of that program. By itself, it will not get us
out of the recession but it is an important initiative and an
important immediate term measure as part of the government's
Mr. Ron MacDonald (Dartmouth): Mr. Speaker, I listened
with a great deal of interest to my colleague from Cape Breton
In the last number of years he contributed a great deal on our
side when we were in opposition. He ensured that there was a
sense of realism in the debate we were having on economic
matters specifically dealing with taxation reform, fundamental
restructuring of the economy and things like unemployment
insurance changes. He also ensured that when we led off that
it was not just a lot of bravado coming from the opposition.
I am very pleased to see that he will be making a major
contribution as we set out to restructure social benefit programs
as outlined by the minister.
I want to pick him up on a point. It is very clear that there are
two problems that face the government today. One of the
problems is in expenditure. If one looks at the graphs over the
past 20 years, one will see that the percentage of dollars spent
overall by the government on programs is actually decreasing.
Contrary to what members of the Reform Party and others
may think, government spending is not out of control.
Government spending seems to be well in control. The problem
appears to be the second problem, that is revenue generation.
Over the last number of years we watched as successive
governments, even Liberal governments a few years ago,
tinkered with the tax system. It seems that every single time that
we try to make some modest changes to the tax system we end up
by downloading on to the middle classes.
Many would believe that the recession is stubborn and that we
are not coming out of it very quickly because the tax burden has
been shifted too heavily on to the consuming classes. I would
like to support what he said about the efforts of the member for
Broadview-Greenwood to put forward at least a proposal that
seems to go in the right direction with the single tax.
I would like to ask my colleague if he believes that type of
program without any tax increases would lead to the federal
government taking in the amount of taxes that it currently does
with the economic activity that is going on. Does he believe the
single tax system would lead to less tax evasion which we have
now seen by witness with growth of the underground economy?
Mr. LeBlanc (Cape Breton Highlands-Canso): Mr.
Speaker, there is no doubt that there would be much less tax
evasion and less tax avoidance with a simpler, more
comprehensive tax system.
Indeed that is the system which we started with in the early
1960s with the Carter commission and its proposals for reform
in the Canadian tax system. Progressively over the years, we
have got away from that.
What the member for Broadview-Greenwood and others
who are advocating a simplification of the tax system in various
ways are saying is that by making the tax system more
comprehensive we can lower the rates and burden on the middle
class and all Canadians.
As well, we can eliminate a lot of unproductive activity which
goes into avoiding taxes and which costs the economy much
more than the revenue lost by taxation. It costs the economy jobs
and real economic activity.
Mr. George S. Rideout (Parliamentary Secretary to
Minister of Natural Resources): Mr. Speaker, it is always a
pleasure to rise in the House and be given an opportunity to
expound on one's views.
This is a particularly unique circumstance to have an
opportunity to talk about the budget and the process in advance
of the budget. Usually we were taken by surprise and then had to
react afterwards. I congratulate the Minister of Finance and the
government for having the courage of its convictions to make
Parliament a working Parliament rather than a rubber stamp.
I think the budget process also provides an opportunity to
re-evaluate how government works. It is not just numbers. It is
the whole concept of what government is all about. As I listened
to the debate today I heard a lot of really good ideas, some good
suggestions, some crazy ones, but all in all some good
suggestions as to how we can make government work better.
I do hear from the Reform Party this idea that cuts are the only
answer; the only solution is to cut, cut, cut. There are other
opportunities available to us. My colleague from Dartmouth
alluded to it.
We have to re-invent how we run government. We also have
to look at the top line of the balance sheet once in a while to see
how we can make the country more productive, the economy
more productive, and thereby make government more
productive with an inflow of revenue.
In my view, the critical role of government is summed up in a
recent publication entitled ``Re-Inventing Government''. It
makes a point which I think is something we should consider. It
states: ``The word governance is from a Greek word that means
to steer. The job of government is to steer, not to row the boat.
Delivering services is rowing; government is not good at
What we have to do is provide the general direction, the
guidance, the approach. I am going to talk about a few of those
things and some of the concepts that may be a little unique or
For an Atlantic Canadian this is a crazy thing to say, but I
think we have to look at the idea of getting out of the
grant-giving business and government's role in trying to foster
economic growth by grants, loan guarantees, interest
deferments and things of that nature. If the enterprise cannot
stand on its own without those supports it is going to die soon
after they run out.
We have to take a look at how we do government.
The government should reassess its mission and look at the
best way to fulfil that mission. All governments must work
together to eliminate overlap.
We see a lot of duplication between the provinces and what we
do. That is one of the areas we have to look at in re-evaluating
government and reinventing it.
We have to look at some things here on the federal scene that
perhaps will make a difference. We have to make government
more competitive. Perhaps we should force government
departments to bid on work that they now get automatically
because they are government. Let government departments
compete with the private sector and see whether we can get a
better bang for our taxpayers' dollars.
We should also take a look at the budget and ask why we
tolerate this incessant spending from February to the end of
March: ``Make sure that all of the money is gone. We don't want
one penny left in our budget''. Perhaps we should put into the
system a rule that says: ``If you don't spend all the money in
your budget this year you can still keep it. You will be
responsible for justifying where you're going to spend the
money but you don't have to blow it all in February and March.
It will still be available to you next year''.
As we look at expenditures and the Auditor General's report
which criticizes how the government spends money, the
directions in which the money goes and how we have one
boondoggle after another, perhaps for a change we should also
ask the people the government serves whether they were served
properly. If they were not, then maybe we should start
re-evaluating what government is doing and perhaps the people
who are doing it.
I think it would be interesting to know what the satisfaction
level is with the clients of the government, namely the citizens
and the enterprises, those that are dealing continually with
government and those only once in a while. Rather than looking
at the dollars and cents and where we could cut all the time,
perhaps we had better look to see whether we actually do deliver
a good service.
We have to start investing in our small and medium sized
businesses and look at new ways to do things. I previously said
that I think we should get out of the grant business. That is a
process that we will have to wean parts of the country off. In the
long run if we set up venture capital systems throughout Canada
that will be the best system.
I want to offer an example of one that can work, in my view. It
is going to require some tax changes and it is going to require
some courage, but it is one I think we can use as a model
proposed by an entrepreneur in Moncton, Dick Carpenter. He
has suggested that we put together a meeting place for people
who want to invest money, people who have ideas but need
money to get started because the financial institutions will not
finance them. What we want to do is set up a situation in which
the people who want to loan money will receive a tax credit.
That requires a change in the tax system for provinces and for
the federal government. Those funds that would be introduced
into the system of venture capital would also be shored up by
agencies like ACOA or western diversification. Therefore the
person who makes this investment in the venture capital
organization would not run the risk of losing everything. There
would be the benefit of a tax credit and a shoring up of part of
their investment by ACOA. What that will do is make ACOA a
backstop rather than leading the process. In my view, that is a
way for us to proceed.
I am very limited in time, so I want to move very quickly to
another area of interest to me and that is in my role as
Parliamentary Secretary to the Minister of Natural Resources.
What we do not realize in this country because we are always
tied into new knowledge based technology and all of those
exciting things that go with it, is that the resource industries of
this country provide a million jobs and affect about 500
communities of this country. In 1992 natural resources
accounted for 14 per cent of the GDP and generated $69 billion.
If one looks at the statistics, the trade surplus that we talk
about in international trade, is in large part supported by the
natural resources sector. The foundation of the economy of this
country over the last 100 years is still there providing that
We have to be sure, in the changes that we make in the budget
and in the directions that we proceed, we remain world
competitive. We acknowledge the environment, safeguard our
natural resources and the way that we utilize those resources so
that we are providing sustainable development. We also have to
stop, and stop quickly, the flow of capital out of this country to
other countries. Canadians are not investing in our natural
resources. They are investing in the natural resources of other
We have to change the tax system to allow Canadians to invest
and re-invest in the natural resources of this nation. At the same
time we have to put those dollars and cents into research and
development relating to natural resources so that we can market
that technology in the rest of the world.
Again, we have to look at fine-tuning our tax system so that
research and development by the private sector is encouraged
through the benefits of tax credits and those types of things.
Rather than focus entirely on cuts and on the negative, let us
focus on the positive. We have a great country with great
resources and a great knowledge base. We have an opportunity
to move into the 21st century as a dynamic economic force. If we
sit with the naysayers who say: ``No, we cannot; we must cut; we
are going to fail'', then we are going to fail.
I believe in this country. I believe that this budget process is
going to put us on the right course.
Mr. Paul Crête (Kamouraska-Rivière-du-Loup): Mr.
Speaker, the hon. member's speech made me think about the
issue of natural resources. I must say that I agreed with him, but
I wish that we could find a way to ensure that the productivity
gains made in recent years and which will be made in the years
to come as a result of the use of equipment are channelled back
to the forestry workers, because today, machines are being used
to cut far more trees and far fewer workers are needed to operate
this equipment. However, the resulting productivity gains stay
in the companies and are not reinvested in workers who are laid
off and often left to subsist on unemployment insurance or
I think the budget should contain mechanisms, through the tax
system or otherwise, for putting workers back to work. For
instance, in the forestry industry, some people do not get
retraining, and not everyone can be retrained for high tech jobs.
There will always be people who prefer and in fact have the
ability to work in forestry operations.
Again, I agree with the hon. member who just spoke that it
would be useful to find ways to involve these workers in the
industry, so that the forest is given a chance to regenerate and
become the forest of the future that can fulfil our requirements.
Today, with our huge lumber exports to the United States, we
may run out at any given time, and that is something we have to
The hon. member also made an interesting point when he said
it might be a good idea for the federal and even the provincial
government to withdraw from certain tax areas and let local
governments manage local facilities. And of course in my case,
the example that comes to mind is the wharves. It does not make
sense for a wharf 300 kilometres from Quebec City and 800
kilometres from Ottawa to be managed by officials who have
only seen photographs and plans and are not familiar with the
day-to-day concerns and the importance of this infrastructure
for the community. I ask the government to consider whether it
would be appropriate to withdraw from an area where it cannot
really play an effective role, and I also refer to what the previous
Mr. Rideout: Mr. Speaker, I thank the member for his
question. It highlights a number of points without going to great
lengths in order to permit other questions.
In his second question he is talking about harmonization. As
we look at the overlap occurring in government we are presented
with an excellent opportunity to start to harmonize the tax
system, harmonize the regulations, harmonize in a number of
areas. If we did this, we could really do some very good things.
I am saying that maybe we can look at opportunities which
will see the federal government getting out of certain taxing
areas and the provincial government taking over. He mentioned
the forestry industry and forestry in general. I have to wonder
whether we need two departments, a federal department of
forestry and a provincial department of forestry. In that sense,
maybe we have to look at a more efficient way of dealing with
those types of circumstance.
All resource based industries create a large amount of
employment. I do not think there is any question about that. The
issue is what is the best way to make our forestry industry
competitive. It will mean, in all candour, more mechanization.
More research and development will take place in that area so
we can compete on a world-wide basis.
We have to look at ways to better utilize our forests. We must
create a larger forestry industry and create employment that way
rather than just creating employment and making our forestry
industry, in effect, uneconomical. We have to find the right
I thank the hon. gentleman for his suggestions. I am sure the
Minister of Finance will respond to those as well.
Mr. Stéphane Bergeron (Verchères): Mr. Speaker, I would
like to take this opportunity to discuss a very significant aspect
of the subject before the House today, and I am referring to the
close relationship that exists between the economic situation,
public finances and international trade.
I think we cannot overlook the fact that the disastrous state of
Canada's public finances has an impact on the competitive
position of Canadian and Quebec companies on foreign markets.
I will therefore attempt to put the problem of our public finances
and the federal debt into an international perspective.
Canada's net public debt is now over 70 per cent of our Gross
Domestic Product. This ratio is well above the average for the 17
industrialized countries in the OECD. Furthermore, 25.8 per
cent of the securities issued by the Government of Canada to
finance its deficit are held by foreign interests.
This means that annually, we pay more than $10 billion in
interest to our international creditors. The problem is therefore a
major one, something which a number of financial institutions,
including the International Monetary Fund, have indeed pointed
out to us. On February 11 last year, the IMF submitted a
confidential report to the Canadian government on the country's
economic situation and especially on the problems of the public
Among other recommendations, the IMF advised Canada to
deal with this problem, which was seen as giving rise to grave
concerns about the state of the Canadian economy. The tenor of
this report should surprise no one, since this was the IMF's third
warning to Canada about its public debt.
The federal and provincial governments borrow massively on
the domestic market, pushing up interest rates and thus
depriving Quebec and Canadian companies of the capital they
need to renew their production infrastructures and invest in new
and more efficient production processes.
Furthermore, to make them more attractive to foreign
investors, Canadian Treasury Bills must bear higher interest
rates, thus pushing up the value of the Canadian dollar on
international money markets and undermining the competitive
position of Quebec and Canadian products on international
Restoring our control over Canada's recurrent deficits would
help provide companies with the capital they need, at a lower
cost, to modernize their plant and would make the Canadian
dollar more competitive with the currencies of our principal
If the public debt problem makes our companies less
competitive on international markets, conversely, international
trade may prove to be one of the solutions to this problem.
In fact, Canadian exports rose dramatically during the first
ten months of 1993. There is every indication that this increase,
which was 16 per cent over 1992, should make this a record year
for Canadian exports of goods and services.
It is important to realize the direct impact of exports of goods
and services on the creation of jobs and the creation of wealth.
According to recent studies referred to the Quebec bureau of
statistics, every $10 million increase in exports generates more
than 100 direct jobs. Moreover, these $10 million would include
more than $6 million in added value.
There is no doubt about the correlation between exports
growth and improvement of public finances. When exports
grow, so does employment, therefore we see a decrease in public
spending for social programs like unemployment insurance,
welfare or health care, as well as an increase in revenues due to
the greater number of employed people who pay taxes.
The government should see international trade as a factor
essential to economic growth, and this is especially true in a
country like Canada which derives a quarter of its GDP directly
from exporting goods and services. I should point out that the
Quebec economy is also largely dependent on exports of goods
of services which account for almost 16 per cent of its GDP.
The warm welcome given to free trade with the United States
and then the North American Free Trade Agreement in Quebec,
by federalist as well as sovereigntist supporters, should surprise
Quebecers understand that only the access to larger foreign
markets will guarantee economic development to a small
society of 7 million.
In that regard, the lack of enthusiasm for these trade
agreements in English Canada seems rather strange. It is easy to
see, as the data on recent export increases and on their positive
impact on our economy clearly show, that better access to
dynamic markets is a source of increased wealth for our country.
Therefore, government must examine without delay what
measures to implement in order to promote international trade.
They must, among other things, review in depth all assistance
programs for small and medium-sized businesses which are the
driving force of all economic activity in Quebec and Canada and
the main source of job creation.
That review must be made with a constant view to eliminating
the multiple overlappings and duplications that exist between
federal programs and those of some provinces. We must
optimize resource distribution according to the real needs of
businesses. Those provinces who wish to do so should manage
these resources directly in a way that will ensure they are best
adapted to regional economic realities.
On the other hand, the government must ensure that business
assistance programs take into account the service sector which
is increasingly important in the context of international exports.
In conclusion, we must, once again, question the
government's strategy and ask Parliament to participate in this
new debate on public finances. We must, of course, welcome
this new approach adopted by government which is a sign of
increased openness and of greater respect for democracy.
However, given the scope of the financial disaster at the
federal level, and given the determination shown by the Liberal
Party during the election campaign, we had the right to expect
the government to launch a much larger consultation process.
Under such circumstances, it would have been appropriate to
take measures more in line with the seriousness of the situation.
We would have liked the government to follow through with
the request presented by the Bloc Quebecois several months
ago, asking it to set up an ad hoc parliamentary committee to
carry on an item by item review of federal tax and budget
expenditures. The Reform Party, through the member for
Calgary North, answering a question I asked her on January 21,
and earlier today, through the member for Lethbridge
answering a question from my colleague for
Saint-Hyacinthe-Bagot, already indicated that it was willing
to participate in such a process.
With such unanimity, the government had the opportunity to
undertake a consultation of a magnitude yet unknown in the
history of this country and ferret out all sources of waste, costly
overlapping and excessive spending.
That exercise would have allowed the government to avoid
having to consider easy solutions, such as increasing the already
excessive burden on taxpayers or cutting social programs.
Instead the government chose the easy way out: business as
usual! Yet, if I remember, this government was not elected for its
lack of courage and determination. Nobody expected that it
would quietly carry on a traditional policy of day to day
The government's answer to the proposal made by the
opposition is that it would table the budget in a few days. Be that
as it may, we will wait for the budget, but make no mistake, we
will be ready for it.
Mr. Ron MacDonald (Dartmouth): Mr. Speaker, I am glad
to see the spirit of cordiality that we started off with was evident
in the member's speech.
I would hasten to say at the outset that this government does
not believe it is business as usual. We have suffered through nine
years of Tory mismanagement of the economy. We have seen a
government induced recession. All of the policies of the last
government were supported by the current leader of the Bloc
Quebecois who is now the Leader of the Official Opposition.
Some of the new members on this side the House find it very
difficult to listen to lectures from the Bloc Quebecois about
what is wrong with Canada. They talk about how the economy
has been mismanaged and that if they had their way things
would be better.
I would like to indicate to the member opposite that many of
his colleagues, indeed the only colleagues he has who have any
experience in the House with the exception of one, sat as
members of the Conservative government. Time after time when
debates took place in the House those same members, when they
were members of the Progressive Conservative Party, supported
the very policies that have got us into the mess that we are in
today. I understand he is a new member here. He has some very
forceful points of views and I am pleased he put them in debate
today but he has to recognize that you cannot have your cake and
eat it too.
The individuals in this place that are the biggest proponents of
the Bloc Quebecois are the same ones that ran on the Tory ticket
in 1984 or 1988. Indeed some were in the cabinet of the previous
government that voted for all of those measures, that saw not
just the province of Quebec's economy go downhill but the
economy of every province in this country go downhill.
I want to tell the hon. member it is not business as usual. This
government was elected because it offered some hope and it
offered some hope for every province in Canada.
I can speak quite eloquently about the problems in Atlantic
Canada. They are tough and they are bad but I know that the
vision, the policies and programs we have heard from this side
of the House, and indeed the way we are approaching
governance by open debates like this, show that times are
This is a different House. It is a different government. We
have support from nearly 70 per cent of the electorate even in the
province of Quebec.
I would suggest to him that this is the beginning of a
productive time. If he listens long and hard I think he will find
out that the processes and policies that are in the best interests of
Quebecers are the same processes and policies that are in the
best interest of Nova Scotians, Newfoundlanders, people from
the Northwest Territories and British Columbia. They are
policies that are good for Canadians.
I would close by asking the member why he believes, and I am
sure that he believes strongly in his views on separation for the
province of Quebec, that the pursuit of separatism, because it is
not sovereignty association, it is separatism for the province of
Quebec, is in the best economic interest of the people of Quebec
when he knows full well it will lead to international instability
in the investment market and it will probably lead, at least in the
short term, to job losses for Quebecers as well as other people in
Mr. Bergeron: If you allow me, Mr. Speaker, I would like to
have time to answer everything my hon. colleague just said.
First, I note with undisguised pleasure that every time we
make statements, he and I are always together and I wonder if
that will go on for long. I do not find it unpleasant, I must tell
you, but I do find it interesting that the member lost his cool a
little and immediately tried to defend his government. Could it
be that his government has something that needs to be defended?
Also, my hon. colleague spent much of his speech explaining
that some members of our party were once with another party
that they left, I must remind my colleague, because perhaps
they learned something after they had joined it. We should not
keep going back to that because the fact that they are now
sitting on this side of the House, under the Bloc Quebecois
banner, means that they have done some thinking and that they
realized something which has taken them further in their
thinking about the political and constitutional future of Canada
I would remind my colleague that the government which got
Canada onto this debt treadmill is not the Conservative
government which he complains about having had to put up with
for nine years; it is the Liberal government which preceded that
Some hon. members: Hear, hear.
Mr. Bergeron: Someone just questioned my right as a
parliamentarian here to express my opinion on issues affecting
the economic future of Canada, and thus Quebec, because
Quebec is still part of this country called Canada.
I find it offensive that the member should have questioned
Bloc Quebecois members' ability to speak in the House on the
economic future of this country. We have the right, and if you
paid attention for a few moments to the speech I made, you may
find in it some good ideas for putting Canada back on track.
Perhaps you should reread it.
Furthermore, I would point out that my colleague's argument
had little or nothing to do with my speech and I must deplore
Mr. Michel Guimond
(Beauport-Montmorency-Orléans): Mr. Speaker, as my
colleagues have pointed out, the current economic situation in
Quebec and Canada is far from encouraging. The unemployment
rate exceeds 11 per cent and the federal deficit is growing
steadily. These figures reflect an increasingly unacceptable
reality: poverty has got its claws into the middle class now and
there is no doubt that action is urgently needed.
In a context of scarse financial resources however,
government action must be carefully targeted to achieve
As my colleagues said, the federal deficit results both from a
structural problem and a-
Mr. Speaker, could you ask the hon. member for Kingston and
the Islands to go and sleep it off somewhere else. For a
An hon. member: Lots of before-dinner drinks and
The Acting Speaker (Mr. Kilger): I know that members
sometimes wish to discuss among themselves but in this case, I
do not know.
Since the members in question have left I ask the hon. member
to continue his speech.
Mr. Guimond: So, Mr. Speaker, the federal deficit is the
result of a structural problem as well as of particular economic
conditions. I will concentrate on this aspect.
The deficit resulting from economic conditions is enormous.
It represents roughly half of the federal deficit. We must react
right now if we do not want to jeopardize the future of our
children. We must invest in projects which will foster permanent
employment, as well as in promising sectors which will put our
creativity to full use. We must take advantage of our expertise
and of the relative lead which we were able to develop over the
last few decades. We must promote projects which will give
Quebec and Canada an international prestige that will allow
them to export their technologies.
Economic recovery is based on projects geared to the
industrial sectors which hold the most promise for the future.
The Bloc Quebecois proposes a project which meets those two
criteria: the development of a high speed link along the
The Liberal government is aware of how important it is to
invest in infrastructure programs in order to foster growth and
employment. The Bloc Quebecois is also of that opinion.
However, our concept of infrastructures is wider than that of the
Liberal government which seems content with upgrading the
road system. We recognize the importance of maintaining and
repairing roads everywhere in Canada and in Quebec. Canada is
a vast territory and it is absolutely necessary for it to have a
quality road network to reduce transportation costs.
However, the upgrading of the road system will be totally
insufficient to sustain economic recovery. Road maintenance
does not generate permanent employment. The high-speed train
or HST is an example of the type of investment needed.
A high-speed link along the Quebec-Windsor corridor would
cost close to $7.5 billion over ten years. It would be financed at
70 per cent by the private sector, while the remaining 30 per
cent, or approximately $2.3 billion, would be provided by the
Quebec, Ontario and federal governments. By getting involved
in the HST project, the government will help generate a $5.3
billion investment from the private sector in the Canadian
economy, not to mention the indirect benefits of the project.
During the construction period, tax revenue generated by the
project would reach $1.8 billion. This means that the financing
of the project would be quickly made up for. This federal
investment would not increase the national debt and would
allow us to make VIA Rail a profitable venture. The HST would
create close to 120,000 person-years employment, of which
80,000 would directly be generated by the construction of the
link and related equipment. Moreover, there would be 40,000
new jobs upstream and downstream of the project.
In 1991, the task force on a high-speed train linking Quebec
and Ontario, which was co-chaired by the hon. Rémi Bujold, the
former Liberal member for
Bonaventure-Îles-de-la-Madeleine, made an important
pre-feasibility study. Wide public consultation revealed that the
communities affected by such a project support this initiative.
The crucial impact of the development of such a corridor on
the national economy was mentioned on several occasions, as
well as the need to make the cities in that corridor more efficient
so that they can succeed in a competitive market.
The Bloc Quebecois proposes the development of an
environment-friendly technology. Even at 300 km/h, the HST
burns almost half as much energy per passenger as an
automobile, and four times less than a jet used to transport
The use of a high-speed train would reduce government
expenditures. A high-speed train would be a much cheaper way
of providing inter-city passenger service than would the
expansion of the country's road or air network. Rationalizing
government spending is a critical factor in the economic
In a country as vast as Canada, the government must have an
efficient public transportation policy. At a time when the
government is thinking about dismantling the rail system in
Canada, it cannot get around replacing it by a technology better
suited to the challenges of our society.
The spin-offs of the high-speed rail project will help drive
local economies. The European experience has shown that a
high-speed rail venture stimulates job creation and economic
recovery. High-speed rail attracts hotels, office buildings,
convention centres, restaurants and other commercial or
During the election campaign, the current Minister of Finance
acknowledged Montreal's inadequate industrial infrastructure
and pledged to focus on ways of remedying the situation. The
Minister of Finance diagnosed the problem as follows:
Montreal's industrial infrastructure is outmoded and fragile and
is not being replaced by new, dynamic and technologically
advanced manufacturing firms. What is the government waiting
for to follow through on its diagnosis? The Minister of Finance
is now in a position to perform the surgery that can cure the
The government must respect the public's priorities. It must
reduce the defence budget by at least 25 per cent and invest some
of this money in projects that will be useful to society. The end
of the cold war and the crisis in public finances do not justify
directing funds to the military.
The $12.3 billion defence budget for 1993-94 represents a 3
per cent increase over 1992-93 levels. Is the federal government
prepared to make a commitment to the people that it will slash
the defence budget substantially and redirect the money to
high-tech civilian projects? Is the government prepared to help
companies such as MIL Davie in Lauzon become less dependant
on military projects and convert their operations to civilian ship
The high-speed train represents a major industrial investment
for Canada and Quebec. Our standard of living and our
competitive position depend on decisions that are being made
right now. We cannot mortgage our future by postponing the
introduction of the high-speed train. The clock is ticking and
time is not on our side. If governments take immediate action,
we will have a strategic head start on the North American
high-speed rail market. Twenty similar projects are in the
development stages in the United States, where the market is
estimated at more than $200 billion over the next 15 to 20 years.
If we are the first ones in this market, our companies will be the
ones to benefit from exports of this technology.
The Canadian government must demonstrate that it has vision
and it must get the economy working again by implementing
Mr. Simon de Jong (Regina-Qu'Appelle): Mr. Speaker, I
listened with interest to the member advocating a high speed
train between Quebec City and Windsor. I am certainly a strong
supporter of the high speed train form of transportation.
Ecologically and economically it makes so much more sense.
My concern in part is that the members of the Bloc envisage a
separation between Canada and Quebec. My question to the
member is would he feel that the government would be loathe to
enter into long term, capital intensive projects in Quebec that
might become difficult to resolve if there were separation? It is
similar to a couple going through a divorce. Do not enter into
new mortgage agreements and invest a lot of capital in long term
projects. Would the member not agree that perhaps the
uncertainty of the future relationships between Canada and
Quebec might slow down the construction of a high-speed train
between Quebec City and Windsor?
Mr. Guimond: Mr. Speaker, I would have been surprised if
that issue had not been raised in this debate.
First of all, we must set things in the proper context. Every
year, Quebec taxpayers pay Ottawa $28 billion in taxes. I hope
that no one is operating under the illusion that, when the federal
government invests in projects in Quebec, it is out of sheer
benevolence. Benevolence it is not; they are simply giving us
back some of our money. So, let us just be clear about that.
So, until further notice, until the people of Quebec have
democratically decided whether to have a country of their
own-and we are sure they will-until then, there is no reason
not to go ahead with projects such as the high-speed train and I
do not see why this train could not travel across two countries, as
is the case in Europe and many other countries. The train would
travel across Quebec, for the portion of the line between Quebec
City and Rigaud, then from Rigaud to the border with the
neighbouring country, Canada, in the province of Ontario. From
the border to Windsor, it would travel across another country. I
do not think that the future of Quebec lies in the feasibility of the
HST project. I think that arrangements could be made, as they
were in Europe.
Mr. Paul DeVillers (Simcoe North): Mr. Speaker, as we
approach this year's tabling of the budget the government is
faced with a tremendous debt which has surpassed half a trillion
dollars and a record deficit of nearly $46 billion. Given the
magnitude of these numbers this government's fiscal and
budgetary policies will impact many generations to come.
In the words of Mr. Leonard Cohen, we have a wonderful
opportunity to steer this ship of state to the shores of need past
the reefs of greed. It will take wisdom, courage and firm resolve
to steer a course which will benefit Canada and be equitable to
Before going any further, I would like to congratulate the
Minister of Finance for his pre-budget consultations with
Canadians representing various views as well as with the
members of this House. If we are to steer Canada in a new
direction, we will need the support of all Canadians.
Over the past few years we have been told by some
economists, bankers and business leaders that we can no longer
afford the quality of life Canada has attained. This may be true.
But should Canada abandon its commitment to its social
programs, programs which are the envy of the world? Is our
fiscal deficit the result of our aspiration to be a just and
compassionate society? I think not.
I believe that by fine tuning and adjusting social programs, by
plugging tax loopholes and by creating and maintaining
incentives for all Canadians to work and contribute to our
economy we will increase revenues and address the deficit and
I said earlier in this House that I believe we have a revenue
crisis and not a spending crisis. A symptom that this is a revenue
crisis is the way Canadians perceive Canada's tax system.
There is an unprecedented lack of trust in our tax policies
among Canadians, as reflected by the increase in popularity of
the underground economy, and particularly cigarette smuggling,
following the introduction of the GST. If we want the Canadian
people to obey the law, they have to be convinced that these laws
are fair and equitable.
Patrick Grady's 1992 study clearly demonstrates that the tax
burden has not been shared fairly in the past decade. Lower
middle income families have borne the brunt of tax increases.
An average Canadian family earning between $45,000 and
$75,000 has had to pay an average of $1,900 more in taxes than
they did a decade ago. However, the amount of tax increases
paid by income earners making $150,000 or more has been
$3,782. According to the author, this amount is much less in
proportion to the middle income Canadians.
It is important to compare the proportion of taxes paid by
individuals and corporations. Personal income tax is the biggest
source of federal revenue, accounting for almost 50 per cent of
total revenue. This proportion is bigger today than in the last two
Meanwhile, corporate taxes are at their lowest level ever.
They now account for 7 per cent of federal revenue compared
with about 15 per cent in the 1970s.
While personal tax levels have kept growing in the last ten
years, corporate levels have fallen from 36 to 28 per cent.
We must also examine the tax exemptions and deductions
available to these corporations and wealthy Canadians. There
exist loopholes associated with off-shore affiliates of Canadian
companies, the family trust rules, deductions of limited
partnership losses and non-taxation of lottery and gambling
Business people are allowed to claim 80 per cent of the cost of
entertainment and meals. If this were reduced to 50 per cent,
business would still receive a tax deduction. In addition,
restaurant, hotel and resort businesses would continue to receive
the revenue generated by these deductions.
There have been suggestions that this budget should reduce
the amount of RRSP contributions. I do not support this
proposal because I feel it would be a disincentive to the
self-employed small business persons and professionals. These
are the people who will provide the jobs called for in our
Also we hear that the Canada pension fund as is presently
structured may not be able to provide for the retirement needs of
Canadians. Therefore it makes little sense to restrict Canadians'
ability to provide for their own retirement. We must also
remember that the RRSP contributions are only tax deferrals and
not complete tax avoidance.
I have already written to the finance minister asking him to
extend the RRSP home buyers plan. The program has been very
successful in enabling first time buyers to purchase a home that
they otherwise would be unable to acquire. The RRSP home
buyers plan has had and would continue to have a tremendous
affect on our country's economic renewal. We must take into
account that the immediate costs incurred by the federal
government for this program will undoubtedly be offset in the
I have cited some examples of revenue losses which must be
corrected to bring fairness to our system. However we must also
recognize that government can and must operate more
efficiently in delivering services. The Auditor General's recent
report underscores the need to evaluate every department and
program. This should be done to fetter out unnecessary spending
and waste while maintaining the integrity of these programs.
Simcoe North constituents tell me they want changes to our
tax system and a full review of our social programs without a
reduction in the quality of services.
I think this government has recognized that the problem lies
with our tax system and that our social programs must be
renewed. I am happy to know that the government will take
The throne speech clearly stated that our priority must be job
creation. This approach is essential if we are to put our fiscal
affairs in order and successfully bring the deficit down to an
acceptable level. By putting people back to work we will not
only save on unemployment insurance and welfare but also
broaden our tax base.
In conclusion let me summarize what I suggest we need and
what we do not need. We need to remember that job creation is
this government's number one priority. We need more people
paying taxes and not people paying more taxes. We need plans
and incentives for those currently unemployed to gain
meaningful employment. We need to examine the privileges and
tax loopholes currently enjoyed by the wealthy while
maintaining incentives for business to remain competitive and
provide employment. We need to remember that our social
programs require constructive reassessment to make them
realistic and responsive to those in need.
We do not need a slash and burn approach that would
ultimately deny social services to the poorest and most needy
citizens in this country. We do not need reactionary simplistic
solutions to complex problems. We do not need to abandon our
liberal roots of tolerance, fairness and compassion by reacting
in a knee-jerk fashion to neo-Conservative agendas.
I know we can bring in a budget that will promote wise and
careful spending while increasing revenues by broadening the
tax base to include Canadians moved from the ranks of the
unemployed to employment.
Mr. Pierre Brien (Témiscamingue): Mr. Speaker, I listened
to the hon. member very carefully and I must say that, on several
points, he seems to agree with what I said in the speech I
delivered in this House earlier today. First of all, he said that we
are faced with a revenue problem, and I wholeheartedly agree
with him. He used the words fairness and equity, which are key
words in our taxation system. And I also agree with him on that.
He talked about the need to reform our tax system, not by
targeting the middle class which is the driving force behind the
economic recovery and which directly supports the economic
cycle, but by increasing the tax base to reach those who do not
pay their fair share of taxes. I would like the hon. member to
comment a little further on this.
There is another issue I want to raise. In his speech, the hon.
member did not mention spending cuts. Does that mean that he
thinks the present level of federal spending cannot be reduced
and that a revenue-based approach is the only way to put public
finances back in order?
Mr. DeVillers: The comments I made about the careful
review that is required in federal spending has been highlighted
in the Auditor General's report. If the hon. member will recall
those comments I think they are the ones he is seeking
clarification on on the reduction in spending. There are many
programs with lots of room to cut spending while maintaining
the integrity of the programs themselves, ensuring that we do
not diminish the services for the most needy among our citizens.
Mrs. Jean Payne (St. John's West): It is a pleasure for me to
participate today in this most important pre-budget debate. I
would like to begin my remarks by saying that this debate shows
the government's commitment to listen to the opinions of
Canadians as well as to make Parliament a more relevant
The budget being prepared by the Minister of Finance will
be the most widely discussed budget in history. The previous
government left the country in a desperate financial situation.
Their economic policies increased unemployment and caused
corporate profits to decline. As revenues declined, spending on
items like unemployment insurance and social assistance
With a budget deficit of $46 billion, Canadians and this
government are faced with some very difficult choices. Do we
raise taxes, reduce spending, cut services, or let the deficit
increase? Whatever decisions are made, they must be fair to all
Canadians in all regions.
The people in St. John's West are facing a number of
challenges. Unemployment is very high, business confidence is
low, the fishery continues to decline and people are burdened
with personal income taxes.
The crisis in the east coast fishery is a problem for all
Canadians. It is not just a concern for Newfoundlanders. The
fisher people and plant workers are not to blame for the situation
they find themselves in. The previous government mismanaged
the resource and pulled the rug out from under the people who
depend on the fishery for a living.
As people adjust to the new realities of the fishery they need
support. The former government set up a short term assistance
program that is due to run out in a few months. What people need
is a co-ordinated, long term assistance plan that will meet the
needs of those involved in the industry.
The people affected need income assistance to compensate for
some of their lost income. Useful retraining programs are a must
for those who choose to leave the fishery. As well, more research
on conservation and certain harvesting methods is necessary to
ensure the future health of the entire industry.
The half-measures taken by the previous government simply
will not do. I am confident the ministers of fisheries, human
resources and finance will design programs that meet the needs
of Newfoundlanders and still keep within the government's tight
There has been a lot of talk recently about tax increases and
broadening the tax base. Increasing the tax base is not a tax grab
by government. It is a way to ensure that all Canadians pay their
fair share of taxes.
For the past few years Canadians have seen their incomes
decline and taxes increase. Consideration should be given to
measures to ensure that wealthy individuals pay a fair share of
taxes. RRSPs are a common tax loophole that many people will
take advantage of. While governments should encourage people
to save for their retirement, it is a fact that the more money they
have the more likely they are to make use of RRSPs to reduce
their taxes. Tax reductions for RRSPs should not be eliminated,
but we should look at lowering the ceiling and reducing the tax
break to those who are better off.
The number one priority of the budget must be job creation
and measures to put Canadians back to work. The people of my
riding are eager for the infrastructure program to move into high
gear. I applaud the Prime Minister and the Minister responsible
for Infrastructure for their efforts in getting this off to a quick
start. However there is a greater need for job creation.
The federal government can do a great deal to stimulate job
creation directly. It cannot create every job we need. That is
where small businesses come in. Small business is the engine of
the economy. Unfortunately the previous government did a
terrific job of hurting small business owners and keeping them
from doing what they do best, creating jobs.
A mixture of the GST, high interest rates, tight credit and
problems with the Small Businesses Loans Act put a crunch on
small businesses, preventing them from expanding or hiring
Our new government needs to address these problems. Small
businesses need an understanding federal government.
Businesses need access to capital to fund product and market
development. The GST must be replaced with a tax that is easier
for businesses to collect and that reduces the growing
underground economy. Only when small businesses find their
feet will the economy really begin to pick up.
All measures of the budget should be designed to increase
employment. When people start working once again they will
start paying taxes again. The biggest problem faced by the
government is not where to cut or increase taxes. The biggest
problem is the lack of people working and paying taxes. Instead
of people drawing from the system, we need to have them paying
back into the government purse.
The finance minister has a difficult job ahead as he tries to
balance the need of Canadians to work and the government's
need to reduce the deficit. The constituents of St. John's West
are watching. I know the minister will do his best to strike the
balance that is necessary to get this economy rolling once again.
Mr. Monte Solberg (Medicine Hat): Mr. Speaker, my
question for the member concerns her comments on RRSP
limitations. She spoke in favour of reducing limits for
Canadians with above average incomes.
Does it also follow that the member believes retired
Canadians who have above average incomes should not receive
old age security benefits? If not, why not?
Mrs. Payne: Mr. Speaker, I am of the firm conviction that
anybody who is receiving above average incomes or pensions
should not be permitted to dip into the government purse.
I am not quite certain at this stage how the Minister of Finance
is going to deal with this situation but, if in fairness to all
Canadians it means having to claw back pensions from those
people who are receiving above average income either by
pensions or otherwise, it is my firm belief we should look at it.
Mr. John Williams (St. Albert): Mr. Speaker, I congratulate
the member for St. John's West on a fine speech.
I note that she said there was a lack of people working and
paying taxes and that in this country we have tax consumers and
tax producers. She also spoke about the problems with small
However I find that very little was put forward as proposals to
address the problems we have. I hear so much about how we
must do this, how we must do that and how we must do
something else. I hear that we have an abundance of unemployed
and a lack of jobs available. I hear that we have too many people
on welfare and not enough people working.
I am looking for some real answers as to what the hon.
member would propose to get Canadians back to work and to
bring the deficit down in order that we can look forward to some
kind of reasonable future for our children.
Mrs. Payne: Mr. Speaker, I thank the hon. member for his
question. I believe the Minister of Finance has made a fine start
in the development of the infrastructure program he has put
As I said in my maiden speech earlier this week, the people in
my riding are very happy with the infrastructure program that
has been put forward.
Again I say to the hon. member that in order to reduce the
deficit I believe we need more people working, more people
paying taxes than taking out of the government purse. The way
to do that is to increase employment and the infrastructure
program is certainly a good jump start in that respect.
The Acting Speaker (Mr. Kilger): Before continuing with
debate, I would like to preface my remarks by reminding all
members that as your presiding Speaker at this time I am in your
However I would like to make you aware that I have a list
outstanding of nine speakers consisting of two government
members, two members from Her Majesty's Loyal Opposition,
four members from the Reform Party and one Independent.
I would be prepared at 10 p.m. not to see the clock but I would
not want to extend today's sitting beyond this list of speakers. If
I could add to my suggestion that if you were to forgo the five
minutes of questions and comments for the remaining nine
speakers for a total of 90 minutes, it would bring us to the end of
the day at 10.10 p.m.
I am your hands and I am seeking your direction and your
consent, if possible.
Some hon. members: Agreed.
Mr. Monte Solberg (Medicine Hat): Mr. Speaker, I give my
sincere thanks to the government for permitting this precedent
During this pre-budget debate I rise to offer an analysis of the
government's infrastructure program that will add $2 billion to
federal government spending. During the election campaign and
in the throne speech the Liberal rationale for the infrastructure
program was twofold. First, this jointly funded program would
create jobs. Second, it would encourage public investment in our
roads, sewers and public buildings, all of which would increase
the nation's productivity and therefore our competitiveness.
Together these measures are supposed to jump start our
economy. I would argue however that this rationale is deeply
flawed. I would argue that this program is not only premised on
faulty assumptions. I would also argue that its design is
coercive, inefficient and unfair in nature.
Let us look at the assumption that this program will create
50,000 to 60,000 new jobs. As the government has already
admitted it has not taken into account how many jobs will be lost
by raising taxes to pay for this $6 billion program.
This program betrays the government's belief that it will use
that $6 billion more efficiently than taxpayers, than investors
would use it, despite the mountains of evidence indicating that it
just is not so.
I can guarantee the House that the owner of a small business
would not charter a jet to fly to Boston and New Orleans for
$172,000 if he could get a commercial flight for $5,000. The
Minister of Consumer and Corporate Affairs has demonstrated
in an exaggerated fashion what happens on a smaller scale a
thousand times a day in government.
Instead of taking that $6 billion out of the hides of taxpayers, I
urge the government to leave that money where it is. The small
business owners, taxpayers and investors will spend that money
a lot more efficiently and effectively than government ever
Another assumption the government makes is that we are
somehow lax in funding infrastructure in the country. This is
despite the fact that public infrastructure spending increased 40
per cent between 1986 and 1993 to $17.5 billion.
Meanwhile private infrastructure investment last year was in
the tens of billions of dollars. This was an investment that
businesses were counting on to pay some immediate dividends,
or else they would not have spent the money at that time.
However the same cannot be said of the infrastructure works
program. It will only fund new projects that until now municipal
governments were not planning, presumably because they were
not the best use of taxpayers' money, or in the case of repairs and
upgrading because the roads or sewers still had a few more years
in them. Perhaps it was because new taxes would have to be
raised to fund them which would enrage taxpayers who are
We should have deferred to the good judgment of the
municipalities. Instead the government's infrastructure works
program coerces the provinces and municipalities into joining
the program and requesting funds for projects that may or may
not need doing. After all, if a municipality does not participate
then the federal tax dollars that come out of that jurisdiction
would just fund the next municipality over. Thus local
municipalities are pressured into participating.
When the federal government tells the other levels of
government that the only way for them to get a dollar is to spend
a dollar, we have a taxpayer's worst nightmare. Sadly this is not
the only design flaw with this program. Although this program
is supposed to create 50,000 to 60,000 jobs the government does
not, to my knowledge, have any way of monitoring how many
jobs will be created or whether these jobs will teach new skills or
will lead to permanent employment.
As the government knows, the Auditor General has been very
critical of past government programs that spend millions and
millions of dollars but never check to see if those programs are
actually accomplishing their objectives. I hope some day the
government can enunciate its plan for monitoring the progress
and income of its infrastructure works program.
I am also concerned that this project will perpetuate the
problem of dependency on government, a problem that has
become the hallmark of Canada's social programs. On one hand,
the government is saying that it wants unemployed Canadians to
get their skills upgraded so that their long term job prospects
will be improved. On the other hand, it is enticing them to go to
work for two years on a dead end job creation project, a project
that in all likelihood will leave them unemployed in two years
with no new skills to show for it.
I am also concerned that the control over this program is so
loose that we see projects like the Quebec City Convention
Centre getting the go-ahead before any criteria are even
established. Again it causes me to question the government's
implicit contention that the minister for infrastructure knows
better than taxpayers how their money should be spent.
The government's infrastructure works program will kill
more jobs than it creates. It coerces other levels of government
into participating and encourages unnecessary infrastructure
investment. It lacks clear measurable objectives. It is
susceptible to political pork barrelling. It provides a
disincentive for unemployed Canadians to seek training and
long term employment. It drives up taxes and impedes our
ability to tackle the root cause of unemployment and slow
economic growth. I refer of course to the deficit and the debt.
I quote now from the Investment Dealers' Association 1994
The Keynesian agenda is no longer a viable option. Indeed, even if one
abstracts from the deficit and debt problem, it is difficult to reconcile increased
government spending with a rebound in economic growth. Government
expenditures have already reached unprecedented levels, with spending
accounting for about 40 percent GDP, and yet economic activity remains in the
doldrums. In this regard the proposed $6 billion infrastructure program, while
boosting overall productivity, would have a minimal effect on stimulating
Government expenditures must be viewed within the context of government
finances which have run amok. The stimulative Keynesian impact of higher
spending is overwhelmed by commensurately higher taxes to blunt a
deterioration in finances, or higher interest rates in response to larger budget
deficits. Never before has fiscal policy turned completely on its head to the
extent that policy initiatives must be considered in terms of their impact on
government finances to the exclusion of everything else.
The other day the finance minister offered to give the leader
of the Reform Party a lesson in economics. On behalf of our
leader I will gratefully decline. Instead we will take our
guidance from a small business owner who attended the finance
minister's pre-budget consultation conference in Calgary on
Saturday. Vicki Dutton told the minister and the conference you
cannot tax a country back to health.
I would argue that simple truth is worth all of the finance
minister's elaborate theories ten times over.
We should abandon the infrastucture works program
immediately and begin the overdue process of cutting
Mr. Werner Schmidt (Okanagan Centre): Mr. Speaker, let
me compliment the Prime Minister and the Minister of Finance
for initiating what I hope will be a new approach to putting
Canada's financial house in order.
The budget is the most influential of all government
documents because it affects the lives of all Canadians more
deeply than anything else. It contains the vision and the
direction of government and provides the means of
implementation of those programs. Therefore it is particularly
important that we recognize the Auditor General's admonition
in this regard when he said a compelling need is required to
reconcile the convention of budget secrecy with open
consultation and debate.
The taxpayers' interests must be protected and who is in a
better position to do so than the taxpayers themselves?
In the pursuit to open up the consultation process and improve
economic health we have turned toward big, small and medium
sized businesses for answers. In this regard I wish to direct the
attention of the House toward the management of government
grants and contribution programs.
At this crucial time it is necessary that we ask ourselves
whether this traditional means of supporting the economy
continues to be the most efficient. Are the billions of dollars
spent to support these programs used in the most efficient
manner? Are Canadians getting the best value for their tax
dollar? I submit, no.
As an example, let us go back to October, 1986. The
government of the day through the Federal Business
Development Bank, signed a share subscription agreement that
provided $79 million of equity to a publicly held company as
part of a multi-million dollar plant modernization project. A
similar investment of $55 million was made by the province of
British Columbia, representing $134 million in government
funding for the first stage.
In total, $161 million was spent on stage one with only $27
million subscribed by the company.
In December 1992 the company advised the government that
it would not be able to meet its obligations by the December 31,
1992 deadline. To date the government, through the Federal
Business Development Bank, has not received any dividend
payments or redemption of any of its shares. The investment
before the company declared it could not meet its deadline was
written down to zero in March 1992.
Did we receive the best value for our money? No. Did the
contribution of funds generate revenue? No. Were the interests
of the taxpayers protected? Certainly not.
Quite clearly, the government and taxpayers took most of the
risk and saw no return.
Whether one agrees or not with the various government
programs, the process is not effective if it allows the
government to undertake the major risks with little or no risk on
the part of the companies involved. Canadians cannot afford
these kinds of losses. They only add to the already large deficit.
It is time that the government allows big business to grow up. It
is time that we recognize big business will take its own risks if
government provides the right climate. Big business can get in
step with the new information based economy without subsidies
provided by the taxpayers' money.
Where can Canadians get the most value for their money, and
how can they use that money to create employment?
Small and medium sized businesses are the backbone of
employment in this country, providing well over 80 per cent of
all the jobs for Canadians. It is not done easily.
When I talk to business people about the difficulties of
operating their businesses, they tell me there are two major
problems. First, tax burdens make it increasingly difficult to
operate, to expand and to employ people. Second, they lack the
knowledge about programs and assistance available to them.
Given that small and medium sized businesses employ most of
Canada's work force, create new jobs and help to build strong
communities, it is unthinkable that this sector must suffer from
an inordinate level of taxation which inhibits growth and thus
We must recognize that small and medium sized businesses
will be the primary sources for employment of those Canadians
who have lost their jobs because of downsizing. Small and
medium sized businesses will put Canadians to work in new
occupations. Success in these new jobs will require that both
employer and employee work together to develop the skills
necessary to accomplish that transition.
The major factor for success of this re-employment strategy
will be a reduction of the tax burden to the small and medium
sized business. A reduced tax burden will do much more to
stimulate the economy and reduce the deficit than broadening
the tax base.
The second major problem for small and medium sized
businesses and the one which relates directly to my discussion
here this evening is the lack of knowledge among these business
people about government programs and assistance.
Allow me to run through some of the current government
programs designed to assist Canadian business people.
Among them are the Small Businesses Loans Act, Community
Futures including business development centres,
self-employment assistance and the Community Initiatives
Fund, the Small Business Financing Program and the Regional
Assistance Program including western economic
diversification, the Atlantic Canada Opportunity Agency, the
Federal Office of Regional Development (Quebec), and the
Federal Economic Initiative for Northern Ontario.
Under research and development we have the Industrial
Research Assistance Program, the Scientific Research and
Experimental Tax Credit Program, and the Technology Inflow
Under export assistance we have the program for export
market development, the Industrial Co-operation Program and
the Export Development Corporation.
Under programs for aboriginal Canadians we have the
Canadian Aboriginal Economic Strategy, Aboriginal Business
Development, the Aboriginal Capital Corporation and the Joint
That is but a sample of the programs available. I have here in
my other hand 13 pages and each page has approximately 10
different kinds of program descriptions from one department. In
some cases, as many as three departments operate and
administer a single program.
Mr. Speaker, if you were a business person which way would
you turn, which program would be best suited to your business?
Is it not possible that more than one of these could provide
A preliminary conclusion would suggest that there is an
overlap of function and that the potential for bureaucratic
competition exists. Can a business benefit from only one
program or can the same business benefit from a variety of
programs simultaneously? Is it any wonder that there is
confusion? Can we be assured that this system in making
efficient use of taxpayers' money will exist in this budget?
Whether a business is big or small the fact is that the old way
of creating a climate for business success is not the most
efficient. Grants and contribution programs must be
re-evaluated in terms of need, purpose and administration.
It will be the first step in opening up the budget process as we
have seen it here today for consultation and debate and making
the necessary improvements that will ensure that we use our
resources more efficiently so that taxpayers' interests are
protected. Canadians have found ways to cut costs and put their
respective financial houses in order. The government must do
It needs an ambitious budget that demonstrates it is master of
its financial house. Then big, small and medium sized business
will triumph in their pursuits of economic success and Canada
can move forward into the new knowledge and information
based economy with confidence. That is our challenge. Let us do
Mr. Leonard Hopkins (Renfrew-Nipissing-Pembroke):
Mr. Speaker, I want to make a novel suggestion to the finance
minister and it is one that has proved its worth in the past and I
am sure it will work today.
I remember when I was going to elementary school during
World War II and they had what was called war saving
certificates. You brought 25 cents to school whenever you could
afford it and they put a 25 cent stamp in your book. When you
had $4 worth of stamps you tucked them away and in a certain
period of time you got $5 back. A lot of the kids right across this
country bought war saving certificates throughout World War II
and they felt they were helping Canada.
I am going to suggest to the finance minister today that we use
the same system for young people across the country,
elementary and high school age, and for older people as well if
they wish to buy back Canada certificates.
When I say buy back Canada certificates I am thinking of the
debt that we have with foreign countries. In order to cut down
the debt that we owe abroad, these buy back Canada certificates
can be applied to the national debt to pay off foreign countries.
Grandmothers and grandfathers can buy a $20, $50 or $100 buy
back Canada certificate and give it to a youngster for his or her
birthday or whatever. Any Canadian can invest in them.
In other words, it will go the year round. It is not just a certain
period when you buy savings bonds. It will go the whole year.
Let them buy these and it will instil in every young Canadian,
every child, an attitude of Canadianism. ``I am a Canadian
citizen. I am contributing to this country. I am buying back
Canada. I am buying back Canada's debt from foreign
countries.'' They are looking to their future. They are building
their financial future.
I think it would catch on and it would make every Canadian a
part of a Canadian solution. It would help every Canadian
contribute toward the national debt, bring down the deficit and
feel that they are part of the action. In this way we will be
helping senior citizens who are in need because their pensions
can still come through.
I had a lady phone me this morning from Deep River who was
very concerned about her pension because she knew this
discussion was going on in the House today. I told her I would
bring up that item on her behalf. She is the type of senior citizen
who did not have a chance to have a contributory pension during
her lifetime and worked hard. Those are the people we have to be
thinking about at this time.
Medicine in this country is for everybody, not just the sick.
We should be looking after ourselves through preventive
medicine. I went on for years not looking after myself. I worked
15 and 16 hours a day, travelled all weekend, seven days of the
week on this job. I never paid any attention to the fact that my
father and his brother had heart problems and that some uncles
on my mother's side of the family had heart problems. When I
left the farm I kept on eating in the same manner I had been when
I was working actively every day at physical work.
As a result I ran into problems. The good medical care of this
country helped put me back on my feet after a triple bypass
operation, after a triple vessel cleaning. The doctors and nurses
were wonderful. We have outstanding medical care in this
country and we have to support these people.
How can we support medicare? By looking after our own
health, by looking after our own diet. It is not only after we
have had an operation that we should look after our diet. It is
up to every Canadian from the youngest to the oldest. By
looking after our own health and putting some discipline into
our every day life can be preventive medicine. Every one of
us should be paying attention to that.
At a Heart and Stroke Foundation dinner on the weekend I
paid tribute to Dr. Wilbert Keon who is the head of the
University of Ottawa Heart Institute and Director General at the
Civic Hospital in Ottawa. This man was born in a small
community just across the Ottawa River and up a bit from
Petawawa where I live. He spent years in medicine. He
dedicated his training to becoming a heart specialist and he did.
However, after Dr. Keon received his training at Ottawa
University, he received help from Canadians so he could become
a great heart specialist. He did not take off to the United States
where he could demand the biggest buck going. He did not head
off for Britain or some other country to make big money. He
stayed right here in the Ottawa Valley and contributed to
Canada. He is probably the top heart surgeon in this nation right
now. He has trained many others. A top heart surgeon at a
hospital in Edmonton trained under Dr. Keon here in Ottawa.
This is the kind of loyalty that Canada needs from
professionals today, people who are going to stay here and put
their life and soul into their work the way Dr. Keon did. To me
that is the mark of a great Canadian. We need more like him. The
staff around him is so oriented to thinking of the family.
People think the National Defence Medical Centre in Ottawa
is only there for national defence personnel. Canadians who are
in the trade business, Canadians who are diplomats, every
Canadian soldier has the right to go there for their operations
and they do. However, the operations for the Heart Institute take
place at the University of Ottawa Heart Institute at the Civic
Hospital. They do the work and send the patients back for
post-operative care. Those people are wonderful.
We sometimes get very down. We cut this program or that
program. There are other ways of cutting programs. I mentioned
one tonight, preventive medicine, when talking about looking
after ourselves better than we do. Diets are not just for people
who have had problems. They are for people who are still
healthy, to keep them healthy and to keep them out of the
People think that research and development is something that
is very expensive. They cannot see any immediate returns from
it so they get upset and say it is a waste of money.
I wish to say a few words about Crown corporations. Atomic
Energy of Canada Limited is one of my favourites and I talk
about it often in this House.
The Canadian public has invested $4.7 billion in Atomic
Energy of Canada Limited since 1952. But do you know what the
return is on its research? A recent Ernst & Young report stated
that the return to the Canadian taxpayers was over $23 billion.
That is a good investment. If you could get that return on every
investment you made it would be great.
I was part of the legislative committee that steered Bill C-13
through this House and through the committee system. It dealt
with the sale of Nordion International. Nordion provides
radioisotopes to hundreds of hospitals across this country. We
had 90 per cent of the world's market captured. Today what has
happened? The previous government in 1989 sold Nordion
International to a private concern. Now it is in a big dispute over
the contract because AECL says it cannot provide the
radioisotopes for the price the contract provided and the other
company wants AECL to live up to the contract. Today we are in
a position where hospitals in this country may end up with a
shortage of radioisotopes.
I am going to leave it there because it is a subject I could speak
on for the next hour. However, I wanted to highlight that
radioisotopes today are becoming a very serious issue. Research
and development on the medical side is becoming a serious issue
and we have to invest if we want that four and fivefold return on
R and D in this country. It has to happen.
Mr. Joe Fontana (Parliamentary Secretary to Minister of
Transport): Mr. Speaker, let me begin by congratulating you on
your appointment. I also want to take this opportunity to
congratulate my colleagues who were returned and the new
Liberal team. I believe they won the trust and confidence of the
people and that is why we are on this side of the House,
hopefully to do something about the problems we have been
talking about tonight.
I want to take this opportunity to first thank my family and the
volunteers on my campaign. More important, I want to thank the
people of London East who saw fit to return me to this House for
another term. I am truly appreciative.
Being on the opposition side the past four or five years was a
very frustrating exercise and one that sometimes was not as
joyful as one would want. I would like to think that this debate
tonight is our change in direction. I want to take this opportunity
to thank the Minister of Finance and our Prime Minister who
have demonstrated two things in these past weeks, that we do
really want to consult because we have a common mission here.
We were all elected to this House by people who believed that
we have the answers to the problems. Regardless of what side we
are on and of what political stripe, we are all here to do the
The government has demonstrated that it really wants to work
with everyone to accomplish the great task before it. We have
had an open debate on peacekeeping in Bosnia, the cruise
missile and the social nets. Today we are talking about the
budget before the fact. I have never experienced that before in
five years. We could only react to what the former government
had done and therefore it was very frustrating.
I was rather surprised by some of the remarks I heard tonight.
Coming from an opposition that wants to play a constructive
role they tended to be rather negative. Had I been given the
opportunity of telling former Prime Minister Mulroney and his
Mr. Mills (Broadview-Greenwood): Michael Wilson.
Mr. Fontana: Michael Wilson. Some input before the budget,
boy I would have jumped at the opportunity.
Yet tonight I hear nothing but more of the same old thing from
a party that said it was going to come here to change things. I
will not get too partisan. Perhaps some of them are listening.
The ship of state is in trouble. Canadians want change. On
October 25 they threw out a government that was not responding
to their needs. They want men and women who are determined to
change things from the way they were.
We are still in the midst of an economic disaster in this
country where we have 1.6 million people unemployed. We have
455,000 permanent full-time jobs that have been lost. Part-time
jobs have increased to 840,000. We have two million Canadians
visiting over 300 food banks each and every day. Youth
unemployment is over 18 per cent. Among female lone parent
families 62 per cent have incomes below the poverty line.
We have a mission. That is to think about each and every one
of those 29 million Canadians who look to us to try to solve these
problems. I could blame it on the former government that moved
the debt from $120 billion to $500 billion. I could blame it for
leaving us with $46 billion deficit.
However what do we accomplish if we look back at
yesterday? Our mission is to look forward to tomorrow. I believe
that collectively we can. Collectively we can put our minds
together and work in the new spirit of parliamentary reform now
that the committees are struck, now that we have this debate and
now that we have heard from people in our ridings as to what the
proper medicine for this country is.
Last week my colleagues and I had our pre-budget
consultation in London, Ontario. We invited people to come
forward with their views as to how the government should run its
affairs, how it should put its house in order and what their
priorities were. They told us.
Hon. members have probably heard the same thing. I know
that the finance minister heard the same thing at his
consultations. Canadians in London, Ontario are not any
different from those out west, in Quebec or in Atlantic Canada.
They want good government. They want honest government.
They want a government that will solve the problem of the
We know we have a crushing debt and deficit. Yes, we have to
cut programs that are useless. We have to streamline the process
so that each and every dollar we spend counts, so that it helps
people and does not enslave them.
Yes, we have to make changes to our social programs, our net.
The safety net must not only catch people but it needs to be a
trampoline that pushes people back up to take advantage of the
opportunities that are there.
That safety net is important. One only has to look at our
society and compare it to that of the United States. In our
country 85 per cent of people who need help get help from their
government. In the United States 25 per cent of people who need
help get help from their government. Look at its crime statistics.
Look at the problems it has in health care. Look at the problems
it has with its infrastructure and in its cities. Look at the social
problems that country has.
I believe we have succeeded in creating a great country by
working together. In 125 years we have managed to become one
of the economic powers of the world with one of the highest
standards of living in the world. That did not come easy. That
came from the dedication and hard work of a lot of people
working together to create this great country.
That is what we have to do starting today along with the other
members of this House. We need to create jobs. People on
October 25 told us that jobs were their number one concern.
People need to work in order to look after their families.
That is why we are committed as a government to creating
jobs through infrastructure programs, through the residential
rehabilitation program, to investing in small businesses to give
them opportunities. We must invest in their minds and talents
because we know that small businesses will create 85 per cent of
the jobs in this country. However we need to get the capital for
them, the affordable long-term capital and the support of the
banking institutions for them to allow them to grow and prosper.
If they do, people will work. Young people will have hope and
opportunities. Women who want to get into the work force will
also have opportunities. But we have to support small business
and this government is committed to doing that.
We also must look at ways of living within our means, of
looking at the expenditures and renewing our pledge to social
programs. There is nothing wrong with saying that we believe in
supporting people, because our job here is to protect people,
especially those who are not in a position to look after
themselves as much as they would like. We have a social
responsibility to every Canadian.
The budget is a blueprint not only for our economic views but
also for the kind of society we want to build. Yes, we know the
horror stories and we hear of wasteful spending, but there are
ways of saving money and we are committed to doing that.
I will say that in my riding the people said yes to no more
taxes. They all agreed they were already over-taxed. The middle
income group is now paying for the top and the bottom and they
cannot afford to do so. They want us to streamline it and make
sure every dollar counts. They want us to create jobs. They want
us to invest in people, in training and retraining programs. They
want us to invest in small business. They want us to invest in
research and development and work in true partnership with the
universities, the private sector, labour and government, all
working together to forge a new society.
I believe that is what Canadians expect of each and every one
of us. This government is committed to doing that, to putting our
financial house in order, but more important to investing in
people because if we have people working, deficits go down, not
That is the Liberal message and we hope that the opposition
and all parties in this House will work with us to help build a
Mr. Maurice Bernier (Mégantic-Compton-Stanstead):
Mr. Speaker, since this is my first speech in the House of
Commons, let me first of all thank the women and men of
Mégantic-Compton-Stanstead for their support in the
election on October 25, 1993. On the American border in
southeastern Quebec, Mégantic-Compton-Stanstead is a
rural riding with great economic, industrial, agricultural and
In the Mégantic-Compton-Stanstead riding there is an
important English speaking community, not living outside the
French community but side by side fully respecting who they
Mégantic-Compton-Stanstead is much more than a mere
electoral district established by law. Its people are proud and
hard-working and, like many others in Quebec and Canada, they
are likely to be affected by the economic policies and decisions
that will soon be made in the first budget tabled by the Liberal
government. My constituents recently told me that they are
skeptical and concerned about the sorry state of the
government's finances. I must admit that I share these fears and
these doubts. Indeed, many signs suggest that the budget which
will soon be presented will just be more of the same. That is very
disturbing, because we need change. We must react to a deficit
which has reached gigantic proportions. This year's deficit is
more than 6 per cent of the gross domestic product.
What is even more worrisome is that a steadily growing share
of our debt is financed by foreign funds. This reduces the
government's room to manoeuvre and mortgages the future of
generations to come. In fact, the federal government has quite
simply lost control of its debt and large amounts are being used
to pay interest on borrowed capital. This money is not invested
in economic recovery. I will come back to this point.
In the past, the federal government tried to control its deficit
by reducing spending through cuts in social programs and in
transfer payments to the provinces. A cut in transfer payments
would, in an indirect way, reduce the federal contribution to the
social programs provided by the provinces.
Also, the government has increased its tax revenues by taxing
more heavily the middle class. These measures are inequitable
and should no longer be resorted to.
We recognize that the deficit is a major problem which has to
be addressed urgently. Nevertheless, the government cannot cut
social programs when unemployment is at 11.2 per cent, and
even 12.8 per cent in Quebec, and when the number of welfare
cases is growing as lay-offs continue.
Although experts say that the recession is technically over,
the recovery is painfully slow. The people of this country would
like to see tangible signs of economic recovery. In fact, they are
losing hope and faith in their government, if they have not
already done so.
The various Canadian governments promised year after year
to sort out overlapping jurisdictions, to solve unemployment
problems and put an end to the erosion of our standard of living,
but they never delivered. This is irrefutable proof that the
federal system cannot be changed. In this regard, the
Bélanger-Campeau Commission stated in the conclusion of its
report: ``The relationship between Quebec and the rest of
Canada, within the present political system and constitutional
framework, has reached an impasse.'' This was confirmed by
the referendum on the Charlottetown Accord. For the future, the
present government is offering very few worthwhile
But what is even worse is that the last 30 years of centralizing
federalism have created a debt of over $500 billion due to the
government's lack of initiative and financial mismanagement.
The logic of successive federal governments was to make this
federation that was envied all over the world work at any cost.
What they forgot to tell people who believed that the country
was prosperous and stable is that this wealth and national unity
only existed in the books of those who wanted to artificially
preserve the federation without taking into account the price
that future generations would have to pay.
The effects of this mismanagement of public funds by the
federal government are huge and negative, both for Quebec's
economy and the economy of the rest of Canada, because the
country's debt has also reduced Quebec's financial leeway. So,
Quebec has been long contributing and is still contributing
considerably to Canada's debt financing. The cost of this federal
debt is astronomical for Quebec and the whole of Canada. This
phenomenon is all the more frustrating that the decisions which
caused these federal deficits were all taken by federal
governments and, more often than not, they infringed upon
provincial jurisdictions with the stated objective of putting
Quebec in its place.
But let us see how much this federal debt can cost Quebec's
Treasury. The calculation is very simple: the total interests paid
on the debt are roughly equal to Canada's annual deficit, which
is over $40 billion. During a Canadian Broadcasting
Corporation's special program on the debt, someone said that
interest paid to foreign lenders was $28 billion. And using that
as an example, I will simply say that the $28 billion given to
foreigners in interest payments on the debt means a share of
about $6 billion for Quebec and that is approximately the
amount we pay in unemployment insurance benefits.
All that money leaving the country helps to create jobs and
support social programs outside Quebec. In fact, it is money the
federal government sends outside Canada in our name while
Quebec, more often than not, is in minority at the Canadian table
where all great decisions are made.
Quebecers have clearly showed during the last federal
election that they had enough of their representatives defending
the interests of their Canada-wide parties instead of defending
those of Quebec. They decided they should send to Ottawa
representatives who promised to speak loud and clear when the
government makes decisions contrary to the best interests of
And I admit it must be disturbing for the federal
establishment so used to Quebec members abiding by Canadian
policies. The era of subservience is over for Quebec. The time
for shady deals behind caucus doors is gone. We have a country
to build and we will take whatever measures are necessary for
Quebec to become a sovereign and prosperous state, with full
control of its economic levers and full respect for its partners.
But before Quebec rises to full sovereignty, the federal
government will have to act quickly if it wants to save our social
To conclude, I would like to say a couple of words regarding
income security program redesign. This is an example of
overlapping which, if avoided, could save a lot of money. This
week, the minister of Human Resources announced, in his
speech on social programs, a far reaching reform of social
security, including of course, unemployment insurance and old
age security. Whether you want it or not, when you embark upon
negotiations regarding social security, you have to talk about the
Constitution since it is an area of exclusive provincial
Mr. Speaker, I will end by saying that we must indeed tackle
the deficit which is endangering our future, but that we must do
it while preserving our social safety net which provides those in
need with the basic minimum.
Mrs. Suzanne Tremblay (Rimouski-Témiscouata): Mr.
Speaker, the arts and culture industry plays an important role in
the Canadian and Quebec economy. According to a UNESCO
study, a $1 billion investment in this sector generates several
billions of dollars in economic activity over two years.
The vitality of this sector depends on its craftsmen and
women. Through their work, their imagination, their passion,
these people enable producers and cultural industries to provide
us with a range of cultural products: books, sound recordings,
radio, television, films, videos, paintings, plays, dance and
other forms of expression that nourish and define us.
The film and television association is right in reminding us:
``With the exception of the United States, no western country
has succeeded since World War II in developing strong national
cultural industries without active, growing and multiform state
support. Despite the efforts made, maintaining strong national
cultures and identities has become more difficult than ever with
the globalization of markets increasingly dominated by the big
The association goes on to say: ``Unless they react with
vigour and imagination, national states may be powerless to stop
the gradual disintegration of their cultures and identities to be
replaced by a single transnational culture and be forced to
witness the slow disappearance of what made human cultures so
precious: their diversity. It is therefore essential that the
government pay particular attention to this sector in preparing
its next budget''.
Let us look at some figures on the arts and culture industry
to realize how much they contribute to the Canadian and
Quebec economy. In 1990-91, this industry injected into the
economy a total of $22 billion or 3.7 per cent of the GDP. The
Canada Council made the following statement: ``Recent
comparisons with other industries show that arts and culture
contribute more to the GDP than agriculture, mining and
The arts and culture industry helps to create 500,000 direct
and indirect jobs. Employment in this sector has gone up by a
phenomenal 122 per cent since 1971, while the average growth
rate in other sectors of the economy over the same period was 58
per cent. This means that in 20 years employment in the arts and
culture industry rose from 1.8 to 2.5 per cent of the Canadian
workforce. The federal Treasury alone collects some $650
million in annual taxes from cultural industries.
Finally, creating one job in the cultural sector costs about
$20,000 compared with $100,000 for light industry and
$200,000 for heavy industry.
However, this information can hide the fact that most of the
artists, creators and craftsmen active in the arts and culture
industry live in poverty. In 1986-87, Jean-Guy Lacroix
surveyed 6,170 artists and creators in the field of music, theatre,
dance and writing and found that the vast majority were
experiencing considerable economic hardship. Their average
income was $8,170. Seventy-eight per cent of them earned less
than $10,000, 15.3 per cent lived above the poverty line, and
only 2.8 per cent had incomes above $50,000.
Moreover, the employment status of artists and creators is
precarious as they mostly work on a part-time or contractual
basis, which means that they constantly face an uncertain future,
since their self-employed status makes them ineligible for
Cultural and artistic industries have two main characteristics.
They are risk sectors and are vulnerable to imports, especially
imports from the United States.
Since these industries are chronically underfunded, if projects
are to get off the ground, regardless of the field, the producer
needs to put together the necessary funding. Succeeding in this
endeavour is quite a feat and as everyone knows, many
worthwhile projects never see the light of day for lack of
This vulnerability to artistic and cultural imports is confirmed
by the $4.4 billion trade deficit recorded in 1991. It should be
noted that this is a trend. In fact, the trade deficit recorded by
artistic and cultural industries is growing every year. Since
1988, it has increased by 12 per cent.
Yet, consumers are asking for more. In 1991, the people of
Canada and Quebec spent $35 billion on cultural products. The
Canada Council reports that, since 1982, while overall
consumer spending has increased by 7 per cent, the increase in
the area of arts and culture has been 9 per cent. This means that
more and more Canadian and Quebec products must be supplied
to meet consumer demand and eliminate the deficit in the trade
balance for that area. I must remind the hon. members that it
costs less to create employment in that sector than in any other
economic sector, hence the importance of investing in cultural
The previous government made cuts in the cultural and
communications industry without thinking about the long-term
effects of its action. They are even suspected by some of having
tried to challenge the principle of government support to the
Between 1984 and 1992, while overall government
expenditures increased by 41.9 per cent, the GDP rose by 52.7
per cent and inflation climbed 36.6 per cent, the portion of the
federal budget allocated to culture increased by only 3.7 per
cent. This apparent increase actually translated into a 24.2 per
cent decrease in constant dollars. By the way, most of the cuts
affected the CBC.
Finally, further cuts are planned, based on the 1993 budget, at
the rate of 10, 10, 15, 20 and 20 per cent for the five years
This is clearly the work of a short-sighted government,
especially when we know that the government recovers almost
every penny invested in that industry.
Granted, the government has very little financial flexibility.
Where then can we find the necessary funding for the cultural
industry in Quebec and Canada?
For its part, Quebec has long demanded respect for its
exclusive jurisdiction over culture. In the field of culture,
Quebec can no longer afford having two departments, two
councils for the arts and literature, three film development
agencies that provide grants and whose officials do the same
work and even contradict one another at times.
What the federal government is now doing is outside any
sub-agreement between Canada and Quebec. The agreement on
cultural facilities expired in March 1991. Without consulting
the Government of Quebec, Ottawa is giving grants left and
right for cultural facilities projects, while leaving it to Quebec
to pay their operating expenses.
However, the Harpin Report submitted to Quebec's Minister
of Cultural Affairs is clear on this point. It said: ``We can
conclude that the two levels of government clearly overlap in
the area of program structures, clients served and even
legislative and fiscal measures. We can even say that
duplication leads to one-upmanship''.
So one of the first ways to free up funds is to end the overlap
and duplication, to give Quebec back its jurisdiction over
culture and to include the funding that goes with it.
In the meantime, we want the government to cancel its
decision to reduce funding for the Canada Council and Telefilm
Canada by 10 per cent and also to cancel the $250 million in cuts
planned for the Canadian Broadcasting Corporation.
Finally, if through some misfortune, the measures
implemented by the previous government were to be
maintained, the Official Opposition would ask for the
development of a program especially geared to members of
cultural industries. These people who, so far, have been living
mainly off their passion, must not be the victims of the
clear-cutting measures taken by the government; the latter must
provide them with the means to overcome the crisis which it will
impose upon them.
Performers make us dream; they make us cry; they make us
laugh. Creators constantly surprise us and stimulate our
imagination. I ask the government to not let them down. Nobody
can afford that.
For all these reasons, the Minister of Canadian Heritage must
not be content with maintaining the status quo. He must take the
initiative and explain to his colleague the Minister of Finance
that artistic and cultural industries need active, growing and
multifaceted support from the government, because the
decisions made today will shape tomorrow's society and will
determine, to a large extent, our collective future.
Mr. John Williams (St. Albert): Mr. Speaker, first let me
express my appreciation to the government and the Minister of
Finance for this historic debate.
Let this moment not pass without my saying that this debate is
hopefully the first step on a road leading to real contributions
with parliamentarians in the financial and budget planning for
this nation. Therefore, while I doubt that we will solve all the
problems today I do hope that the Minister of Finance will
repeat and expand this exercise in the years to come.
This country has been blessed with a great abundance of
natural resources. We have forests that provide lumber and
wood products around the world, we have vast prairies that feed
millions beyond our shores and we have renewable and non
renewable energy resources that are the envy of the world.
We have natural resources far in excess of any other country
in the world but unfortunately we also have something else far in
excess of what we deserve and that can be described in three
words: debilitating deficits and debt. Not only have we
squandered the resources that have been ours but we have
squandered the resources that rightfully belong to the
generations that will come after us. To say it bluntly we are up to
our neck in debt. As of today there is no plan or consensus on
how we are going to overcome this national disgrace.
The federal debt is now 70 per cent of the gross domestic
product and the annual deficit of the federal government as the
minister said today is 6.2 per cent of the gross domestic product,
not to mention the provincial deficits on top of that. The interest
on the federal debt now consumes 31 per cent of total federal
government revenues and I quoted the Auditor General's report
in my reply to the speech from the throne when he said that hard
choices lie ahead.
Recognizing these hard choices I issued a challenge to the
Minister of Finance to balance the budget by the end of this
Parliament. We have a crisis on our hands and the Minister of
Finance has a choice in this budget. He can dare to be great or he
can play it safe down the middle with more taxes and a little less
spending which is a timid, anaemic approach to the problem.
The Minister of Finance has a hard choice to make. I think it is
a simple choice. He can choose mediocrity or he can choose to
rise above mediocrity to reach beyond himself and lead this
nation out of a dark tunnel of deficits and debt into the sunshine
of renewed prosperity.
History has always given the accolades to the leaders who rise
to the challenge and buries the rest in footnotes beside the
ignominy of their failure.
There is a parallel that some may refute but which is worth
considering today. At the end of World War II the federal
government had an accumulated debt equal to 108 per cent of its
GDP. Soldiers were returning from the war without jobs.
Unemployment was high. Industry was going through a rapid
transformation as defence industries scaled back dramatically
and in may cases closed down completely.
While it turned out to be the dawn of an era of unprecedented
growth and prosperity, who would have known that in 1945?
The government basically had one thing going for it and that
was the savings of the cost of the war effort which today we
would call the peace dividend.
At that time also Europe had to be rebuilt and was rebuilt
under the genius of the Marshall Plan.
The financial future must have looked bleak to the federal
government of 1945 but it used the peace dividend to generate
lasting jobs and wealth throughout the country. That prosperity
seemed to be assured and never ending. When we look at the
statistics we find it came to an end in the early 1970s when Mr.
Trudeau and his Liberal government were running this country.
Mr. Trudeau had a vision of what he called the just society
that would eliminate poverty and inequality in this land. The
cost of eliminating poverty is equal to the price of success in
the long run.
Mr. Trudeau and his Liberal government introduced generous
welfare programs, social programs, and benefit entitlement
programs that discouraged many from working. He paid for
them all with borrowed money.
The point is that he paid for them all with borrowed money. In
so doing he created a debt society and not a just society. I do not
think the taxpayers would have been nearly as accommodating
had they been given the bill at that time. The seeds of our present
dilemma were sown when program spending blossomed to 125
per cent of all government revenues and when you add interest
costs on top of that total expenditures rose to 155 per cent of all
I referred to my parallel of today's problems with those facing
the government at the end of World War II. Federal debt was
intolerably high, unemployment was a major problem, industry
had to restructure but at the end of the war there was a peace
Today we need the money that can be saved from the
restructuring of our social programs to set this country on a
course leading to renewed prosperity. In other words, we need a
deficit elimination dividend.
Using information from the Auditor General's report in the 29
years from 1946 to 1975 the GDP of this country increased 12.5
times from $12 billion to $152 billion and during that same
period the federal government debt only doubled from $13
billion to $27 billion.
I believe that if the Minister of Finance makes serious cuts in
government spending and makes a serious commitment to
balancing the budget by the end of this Parliament then the
private sector will pick up where the public sector leaves off and
will create thousands of long term wealth producing, tax paying
jobs in a similar vein to the 1950s and 1960s.
This time around at the end of the cold war it is the economies
of eastern Europe that have to be rebuilt. China and the Pacific
Rim countries can absorb all our exports that are competitively
priced. Mexico, which is now part of NAFTA, should be
considered a consumer of our products as its standard of living
rises rather than our competitor.
Our technological advantage can be the driving force of that
economic growth and renewed prosperity.
If we put our trust in the entrepreneurial spirit of Canadians
there is more opportunity for job creation in this country than
there are Canadians to fill the resulting jobs.
Remember that the Auditor General said that hard choices lie
ahead. I also think of Shakespeare and his advice to the minister
of finance. He said there is a tide in the affairs of men which,
taken at the flood, leads on to fortune.
Will the Minister of Finance rise to the challenge and commit
this Liberal government to amending the errors of the previous
governments and commit to balancing the budget by the end of
this Parliament or will the minister dwell in the land of
mediocrity and give us a few more taxes and a little less
spending while we watch his vision cause this country to slide
down into the realm of third world economies?
In the last election the Reform party laid out a clear and
simple plan to balance the budget in three years. Now that we
have been told that the deficit is significantly worse than we had
imagined last fall I have given the Minister of Finance room to
manoeuvre. While the choice is his, the bad news is that he will
only have one chance to make that hard decision, which is that
when he introduces his budget later this month I hope he can rise
to the occasion and earn his place in history as the Minister of
Finance who brought this country through the dark tunnel to the
sunshine of renewed prosperity.
I can be done. It has been done before. Therefore, I do look
forward to his budget later this month.
Mr. Simon de Jong (Regina-Qu'Appelle): Mr. Speaker, I
appreciate the opportunity to participate in the debate. There is
much to say and little time in which to say it, so I will
immediately get to my points.
First, as a New Democrat I abhor the fact that every year some
$40 billion in public revenues goes to interest payments. I have
called it a transfer of wealth to the wealthy of momentous
proportions. Who gets the $40 billion every year? A certain
percentage goes to average Canadians. The vast majority goes to
banks, financial institutions and the very wealthy and
increasingly to offshore financial institutions.
If it just went to ordinary Canadians I would have no problem.
However, the fact is that it is a transfer of wealth to the very
The CCF party that originated the NDP had this to say in its
Regina manifesto, a statement made in 1933, and I quote from
this: ``All public debt has enormously increased and the fixed
interest charges paid thereon now amount to the largest single
item of so-called uncontrollable public expenditures. The CCF
proposes that in future no public financing shall be permitted
which facilitates the perpetuation of the parasitic interest
No wonder NDP or CCF governments have always balanced
their budgets, particularly when you look at the history of both
CCF and NDP governments in Saskatchewan under Tommy
Douglas, Woodrow Lloyd, Allan Blakeney and now Roy
Romanow. It is a recognition that interest payments are a
wealth to the wealthy and inhibit the government from fulfilling
its proper duties.
How did we get ourselves into this mess? What I am missing
in this debate is a proper analysis of how we got over $500
billion in debt. In 1991 Stats Canada issued a study. Stats
Canada claims that 50 per cent of that $400 billion debt at that
time was due to interest payments, 44 per cent of it to decreases
in revenues and only six per cent to increases in government
expenditures of which social programs were only two per cent.
In other words, the increase in social spending is only 2 per
cent of the national debt. The former speaker from the Reform
party claims that we are living beyond our means and our social
programs are too rich and that is why we are in debt, I beg to
differ. Compared to other OECD countries Canada is the second
lowest on what we spend of our gross domestic product on social
programs, less than Holland, Italy, Ireland, Germany, Spain or
Greece. We spend less as a percentage of our gross domestic
product on social programs. The interest payments are 50 per
cent of it. The high interest rate policies were started by a former
Liberal government and continued under the former
Conservative government. They escalated into momentous
proportions. There was a 44 per cent loss of revenue.
There were two reasons for that as a Statistics Canada study
shows. One was that the tax breaks the Liberals gave to the very
rich in the 1970s were continued under the Tories. That
accounted for a big hunk of the revenue loss. Then along came
the free trade agreement with the United States which cost us
over 400,000 jobs so we now have 400,000 people not paying
income tax. The combination of high unemployment and tax
loopholes to the very rich created the loss of revenue.
I underline again that it is not increases in government
expenditures, particularly in social programs, that have created
the debt. It is the neo-conservative agenda of the Ronald
Reagans, the Margaret Thatchers, the Brian Mulroneys and the
Grant Devines. No wonder under the neo-conservative
governments we see increases in debt.
Mr. David Stockwell of the United States, who was the budget
director of Ronald Reagan, openly admits that they deliberately
increased the deficit so that it would justify later cuts in social
program funding. That is the agenda of the neo-conservatives. It
is working because governments now being strangled by this
growing debt and deficit have to cut back. Where do they cut
back? They cut back on the poor, on the sick, on the children and
on the social programs. The cutbacks are going to occur on the
backs of the victims. They did not create the deficit or the debt
but I am afraid they will be paying the price.
What are some of the alternatives? I do not believe the
proposal of the Reform Party of zero in three years makes any
sense. It never tested the proposal through an independent firm
or put it through an economic model like Informetrica. In fact it
predicted that over 300,000 jobs would be lost if zero in three
was put into effect.
The Reform platform never talked about the loss of that
revenue and how it would have further added to the deficit.
There was a bit of mischief in the figures that were floated
around when it comes to zero in three. The economic impact of
taking $40 billion out of the economy in a three-year period was
never factored in.
The truth of the matter is that there is no simple, easy solution.
There is no magic wand that in three years time it is going to be
prosperity and happy days will be here again. It is not going to be
that simple. To believe so is to be naive or to lie.
When we go back to the origins of why the deficit is there the
answer to the solution lies in the Statistics Canada study. We
must keep our interest rates down. Our long term interest rates
are still too high. When we look at historical parallels every time
the world has experienced high interest rates we have ended up
in huge recessions and depressions.
Statistics Canada showed that we must also address the
revenue side by getting fairness in the tax system, not by doing
what some would suggest. Instead of adding further tax loads to
the middle class and to the poor, how about the very, very rich.
Over $140 billion in profits have gone untaxed in the last nine
years, $140 billion in profits that have not yielded one cent of
tax. Why are they not totally outraged in the House at the
unfairness of it? This is creating the deficit that is resulting in
cutbacks to the social programs and educational opportunities.
That is the outrage.
Surely another area has to be employment. When Canadians
are out of work Canada does not work. Things like the free trade
agreement with Mexico and increasing the tax on employment,
which the increase in the UI payments surely were, are
counterproductive. They do not create jobs.
I am not opposed to free trade agreements. The European
model makes certain there was a level playing field in terms of
social programs, environmental programs and labour costs. That
makes sense, but we are now being reduced to the lowest
common denominator. Common sense will tell us that at least in
the short term we will lose more jobs in a period of time when we
cannot afford it.
Perhaps somewhere in the future we will benefit from the free
trade agreements. Certainly in the immediate sense I believe
every economist agrees that we will be losing jobs. That is at a
period in time when we cannot afford to lose any more jobs.
Another suggestion I heard that made a lot of sense was the
one of the member for Renfrew-Nipissing-Pembroke. The
debt and the deficit in the country are killing our social
programs and our public sector. That is a threat as serious to
our way of life as was the last war. It is that serious. It will
affect the health, welfare and future of generations of
Canadians to come. There is absolutely no doubt about it.
Why not call upon Canadians of goodwill as we did in the last
war when we issued victory bonds? We could have boy scouts,
girl guides and every public spirited interest group trying to sell
and promote these bonds so that we can buy back the debt. At
least the debt would be here, not offshore.
I heard somebody earlier in the debate say that we will be
spending from $40 billion to some $50 billion on interest
payments this year. That is money out of the pockets of
Canadian taxpayers. Some $28 billion of it will go offshore.
That is a total drain on and waste of the energies and the
lifeblood of Canadians. We cannot continue this way. It is
destroying us. Let us buy back our foreign debt so that it will be
paid to Canadians and benefit Canada to some degree.
In conclusion I wish to say that for myself the issue of the debt
and deficit is not a right wing one. It is an issue that should
concern anybody and everybody who favours the public sector
playing an important role in the social well-being of our society.
As Mr. David Stockwell, former budget director of Ronald
Reagan, is now saying, I believe the neo-conservative
deliberately created the debt to kill the public sector.
Mr. Keith Martin (Esquimalt-Juan de Fuca): Mr.
Speaker, our health care system is one of the best things
provided by our great country and Canadians attach a great
importance to it. Without health, enjoyment of life can be
greatly diminished. The protection of our health is dependent
upon two major elements: the responsibility that each one of us
has to adopt healthy habits, and our national health care
program. The government cannot do much about the first
element, but it can do something about the second one.
As a physician and a consumer I believe the Canadian system
of health care is indeed the best in the world. It is one of which
other countries are envious and one in which any Canadian in the
country can get the best of medical care free of charge.
At the foundation of the system lies the Canada Health Act
which is based on five tenets: universality of care for all
Canadians, comprehensive coverage of all essential services,
reasonable access by both providers and users, portability of
benefits from one province to another, and the administration of
health care on a non-profit basis.
The provinces and the federal government both share the
management of payments. The care however, and the
management of the whole system falls under the provincial
jurisdiction. The federal government now provides
approximately 25 per cent of the necessary funds so long as the
provinces administer their health care plans in accordance with
the Canada Health Act.
Over the last decade we have seen the emergence of a
mounting fiscal crisis. If unchecked it will ultimately lead to the
collapse of publicly funded health care in Canada.
The largest crisis which many of my colleagues have
mentioned today is the mounting debt and deficit. In this
country federally we have gone from $125 billion in 1980 to
over $500 billion this year.
The amount of revenues that are required to service this
obscene debt load has increased. Roughly in 1984 we were
paying about 28 cents out of every dollar for interest payments.
Now it is running around 33 cents. If our spending goes on as it
is going on at current levels, in the year 2000, 40 cents out of
every dollar will be used merely to service this debt. This means
we have less and less money to spend on social programs such as
Another interesting fact that people may not be aware of is
that the amount of money the federal government spends as a
percentage of total program spending has actually declined
since 1970 from 10.9 per cent to 7.6 per cent. This means that the
federal government itself is spending less and less money on
health care regardless of anything else.
I am not taking into consideration the provincial fiscal crisis
which is also going to impinge on the ability of governments to
fund health care.
At the same time that the governments have been reducing
their spending on health care, there is the other side of this
equation. That is that the costs of medical care in this country
are escalating dramatically. In fact they are going up over four
times the rate of economic growth. This situation will only
worsen in the future. There are many reasons for this such as an
ever increasing aging population that consumes over 70 per cent
of the health care dollar; technologies of intervention and
equipment which are getting more and more expensive all the
time; and new diseases such as AIDS which are very expensive
to treat are raising their ugly heads. For all of these reasons and
many more it is clear that health care in Canada is living not just
on borrowed time but on borrowed money.
The health care crisis is a result again of dwindling funds and
escalating costs. The problem is clear. The federal government
continues to hamstring the provinces and is preventing them
from getting their health care under control by using its fiscal
contribution to the provinces as a wedge that will prevent them
from enabling us to continue with publicly funded health care.
This as one can see is an unsustainable system. We must do
something about it because it will ultimately contribute to the
demise of health care in this country and to the suffering of
Canadians. Is this a lost cause? No, it is not. There are a number
of things we can do.
We must freeze federal spending for health care at 1993
levels. We need to modify the Canada Health Act to stop
penalizing the provinces when they try to get their health care
This suggestion is in a provincial jurisdiction but I am saying
it for the record so that we can address it. We need to strike a
committee to define what essential health care services are that
will be covered across the country from coast to coast and we
should delist other ones. Delisting services would be those
services that would not be considered essential health care for
We can make consumers more accountable. The current
system encourages waste and will lead to unnecessary cost.
Some suggestions have been bantered around and it is up to the
provinces to decide on modest user fees and the use of
deductibles. Remember, if we can save publicly funded medical
care in this country, no one will go without essential health care
As a physician, one of the reasons I got into this was to
preserve the system that we have in Canada. We do not want to
get into a system like we see in the United States which I
personally think is reprehensible.
We also need to inform the public of the cost of medical
services. Perhaps we can do this with a statement of accounts at
the time of consumption or perhaps annually or bi-annually. We
also need to put a greater emphasis on health care education,
particularly at the early grade school years. This will pay off in
spades later on. I can guarantee that.
We also need to address health care professionals and we must
educate them more, myself included, as to the cost of
technologies and intervention. By and large we have not done a
good enough job of that.
I would also allow the provinces to enable health care
professionals to run privately funded services. This would serve
two purposes. It would decrease the horrible waiting lists that
we now have and ultimately it would be a win-win situation for
all people those who would go private and those who would go
public. People under that circumstance would get their health
care services a lot quicker than before which would mean less
pain and suffering. People would go back to work sooner and it
would be far more beneficial for the economy, not to mention
the insurance companies whose premiums would go down.
The current hodge-podge two-tiered system of rationing that
we have is the last futile attempt to correct a system that is
broken and will soon sink under its myopic tenets and fiscal
The second topic I would like to speak about briefly in view of
the Auditor General's report is how we administer foreign aid.
We can look at the CIDA disaster in conjunction with this.
Some fundamental changes have been considered and I would
like to suggest a few of them today.
First, no government to government aid as much of this
money lands in the Swiss bank accounts of despotic third world
rulers. As a result of that the heads of many of these states are
some of the richest people in the world.
Second, dispense aid directly to projects on the ground
administered by foreign aid workers in conjunction with local
Third, focus on helping people to help themselves.
Fourth, concentrate on small projects that incorporate and are
sensitive to local customs and practices. Expensive mega
projects are usually expensive mega failures.
Fifth, focus on projects that involve family planning and birth
control. Perhaps the greatest threat to the welfare of all peoples
on this planet is the population explosion. We are rapidly
outstripping our ability to provide for ourselves and are
straining our resources to their maximum and laying waste to
I would not encourage foreign aid as a lever in developing
nations as it only affects those most in need.
Make no mistake that what happens in other parts of the world
will one day land on our doorstep one way or another. That is
The Acting Speaker (Mr. Kilger): It being 10.10 o'clock
p.m. pursuant to order made earlier this day, this House stands
adjourned until tomorrow at two o'clock p.m. pursuant to
Standing Order 24(1).
(The House adjourned at 10.10 p.m.)