Mr. Andy Mitchell (Parry Sound-Muskoka, Lib.): Mr. Speaker, as I mentioned earlier, I will be sharing my time with the hon. member for Ottawa West.
I am pleased to have the opportunity to participate in this prebudget debate. As the finance committee outlined in its recent
report, the government has made good progress in meeting its economic and fiscal objectives. The 1997 budget is the time to stay the course and finish the job.
When the Liberal Party formed the government in 1993 it had as its agenda jobs and growth. Since that time it has made progress, although more needs to be done. Yet the record is clear. At the end of November nearly 650,000 more Canadians had jobs than when we assumed office three years ago. The last year alone saw the private sector create almost 223,000 new jobs. That is not yet good enough, but when we compare this job growth to the three years prior to our coming to power when thousands of jobs were actually lost we see that progress is being made.
Canada has also achieved economic growth. Since October 1993 the GDP has significantly expanded. In the third quarter of this year real GDP rose 3.3 per cent. Canada is expected to have the strongest growth among all G-7 nations next year.
These successes have been solid accomplishments. More important, the pace at which the economy and employment is expanding is and will likely continue to increase. They will do so because the government has a specific and well designed strategy to support growth and job creation. It is this strategy I should like to take a few minutes to speak to.
The government's plan addresses both immediate and long term job creation needs through five key components. First, it will set the appropriate macro economic conditions to keep interest rates low and to encourage investment. Second, it will get government right by ensuring that government programs and policies contribute to a more productive economy. The third part of the strategy is to ensure that we create opportunities for Canadian businesses to grow by selling in the world economy. Fourth, it will invest in growth through strategic investments in new technology, in worker skills and in capital projects such as infrastructure. Fifth, it will help Canadians to adapt by encouraging them to adjust to the new economy, helping small business grow and prosper and reducing the regulatory burden on business.
That strategy is working because the Minister of Finance and the government have understood the importance of appropriate fiscal and economic policy and have carried out these policies as well as any nation in the industrialized world.
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On our first priority of setting healthy economic fundamentals, the accomplishments are significant. Interest rates are at their lowest level in 40 years. Inflation is at its lowest sustained level in 30 years and both factors are leading to increased investment and business confidence. In the last quarter alone business investment in manufacturing equipment and machinery was up by almost 33 per cent. This increased confidence leads to increased jobs.
On the second priority, we are getting government right. When we took office the deficit was $42 billion, almost 6 per cent of GDP. In the present budgetary plan, after the two year cycle, it will drop to $9 billion, or 1 per cent of GDP. That is an 80 per cent decrease. We will have gone from having the second worst record on the deficit among the G-7 countries to having the very best. We have achieved this success not by emphasizing increased taxation rates but by getting government right and by reducing spending.
Together our last three budgets have put in place savings which will build to $29 billion annually by the fiscal year 1998-99. By that time departmental spending will be 21.5 per cent lower than in 1994 and program spending will have declined by 14 per cent from where it was in 1992-93. Most important, the Minister of Finance is expected to table a budget with a two year plan which for the first time in 30 years will not require the federal government to enter into new borrowings. This will free investment for the private sector and will lower the economic drain of interest payments to foreign debt holders.
As I mentioned earlier, these actions have led to low inflation and low interest rates. The records show that in the long run countries with sustained low inflation tend to have lower unemployment rates.
On the third point of creating opportunities through trade, the government has again made good progress. The volume of Canadian exports has increased by 28 per cent since we assumed office. It now makes up 52 per cent of the real value of total Canadian production. In September 1996 exports were $201 billion and the trade surplus was $28 billion. Most important, it is estimated that this improvement in Canada's trade balance has created about 275,000 jobs in the last two and a half years.
The fourth component of the government's job agenda has been to invest in growth and to give Canadian businesses and workers the opportunity to succeed in today's economy. This investment has taken many forms, including technology initiatives. They are initiatives such as the establishment of Technology Partnerships Canada, a $250 million fund to lever private investment in the strategic high tech sectors of the economy. There is a new investment of $50 million in the Business Development Bank of Canada. There is the community access program which allows rural communities to access the information highway. There are many other initiatives such as the industrial research assistance program and the sectoral partnership initiative. These initiatives are making Canadians more competitive and will lead to future job creation.
The fifth component of the government's plan in our jobs and growth agenda is to help Canadians adapt. Nowhere has this initiative been more strongly pursued than in our assistance to small businesses. We have helped increase access to capital by expanding the small business loans program from $4 billion to $12 billion. We have expanded the asset base of the Business Development Bank from $3 billion to $15 billion and the Minister of Industry has established a community investment plan which
allows communities to match individuals in their areas that have investments with the businesses that need that investment in order to grow in their communities and to create jobs.
We have helped business to access information through the development of Strategis, the largest business web site in Canada. It provides our businessmen and women, the entrepreneurs who go out every day and put it all on the line, with the information they need to be successful.
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With a lower tax rate on small business earnings under $200,000 and the $500,000 lifetime capital gains exemption, it will allow a small business person to continue to invest their earnings back into the business and ensure that they have some sort of wealth when it comes time for them to retire.
The government has managed the Canadian economy well. The deficit is down substantially, spending is down, social programs have been reformed to ensure their sustainability, exports are up, new investments in technology and infrastructure are taking place to secure our future.
In conclusion, the economy is growing. It is real progress. It is not enough yet and that is why the government intends to stay the course and finish the job.
Ms. Marlene Catterall (Ottawa West, Lib.): Mr. Speaker, I want to follow on the comments of my colleague for Parry Sound-Muskoka, on the economic accomplishments of our government over the last three years, and talk about how this ways and means motion before the House today represents the spirit of many of those accomplishments.
It is a bill primarily about taxation measures. It demonstrates admirably how one can tighten up the tax system, make it fairer, but also through the tax system achieve other social goals and goals for society.
I mentioned fairness. Our government has taken a number of measures to make the tax system fairer for Canadians. Many of them are contained in this bill. The motion will amend the Bankruptcy and Insolvency Act, the Canada Pension Plan, the Children's Special Allowances Act, the Customs Act, the Old Age Security Act. It makes amendments to numerous bills which are based on the principle of fairness and achieving a social objective as well.
Since the draft amendments which are represented in the bill were first released in 1995 many helpful comments and suggestions from taxpayers have been heard and these are by and large incorporated in the bill before us today.
[Translation]
First of all, millions of Canadians are putting time and money into non-profit voluntary and charitable organizations. Their efforts are indicative of the collective response to urgent human needs, particularly in a period of fiscal restraint. To encourage these efforts, the percentage of net income to which a tax break for charitable donations applies will increase from 20 to 50. It will be 100 per cent in the case of testamentary gifts.
[English]
The legislation will also provide extra support for the education of our young people by increasing the limit on the transfer of education and tuition credits. To assist parents or spouses helping to support the cost of studies, if the student is unable to take full advantage of the tax credits related to the cost of their education, the ceiling will be lifted so that additional credits can be transferred to a spouse, parent or guardian responsible for the costs of the education. That increase is 25 per cent, from $4,000 to $5,000.
We also have taken a number of measures over time to assure Canadians that the system is fair, that if they are paying their fair share of taxes, to the greatest extent so is everybody else. We have done that in a number of ways.
First, it has been a question of tightening up our taxation system, closing a number of loopholes. For instance, through a concerted effort we have increased overall general compliance with the collection of taxes to the tune of $7.7 billion extra taxes collected.
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Special compliance measures in selected areas have led to the collection of an additional $500 million in taxes. Accounts receivable have been reduced through a number of different measures. We have given Revenue Canada a greater ability to obtain the information it needs to ensure that taxes are applied fairly and that they are being collected.
Our mandate has given people some assurance that people are paying their fair share. I do not think there is one of us who has not heard repeatedly, every time we have had to cut a program or reduce spending in one area or another, that we should be closing those tax loopholes and taxing the corporations. A number of measures have been taken to address those fairness issues that bother so many of our constituents.
We have tightened the rules on the forgiveness of business debt. We have improved the rules preventing the artificial or premature recognition of tax losses. We imposed a 12 per cent capital surtax for banks and other deposit institutions. We have tightened up to
eliminate abuses in the energy sector while at the same time making it a more level playing field for renewable energy sources that can then compete with the more traditional energy sources and on a fairer basis.
We have introduced tighter rules governing the taxation of family trusts. We have addressed the whole issue of assets abroad both in individual taxation reporting and in the taxation reporting of businesses so that businesses with assets abroad will now have to disclose them. Property owners with assets of more than $100,000 will be required to disclose them. The government will then be better able to monitor the collection of taxes from wealthier taxpayers.
We are planning to stop the practice of moving assets offshore to avoid paying taxes. This is an age old abuse of the system which Canadians want to see brought to an end.
This bill also takes the necessary steps to protect the future of our Canada pension plan. Until now, when businesses were in receivership payment of the employer's CPP contributions often went delinquent once the business had finally declared bankruptcy. Remaining assets were divided among the creditors and the CPP contributions were left unpaid.
The legislation before us today will ensure that CPP and similar employer contributions owed to the government will now have priority. In this time of fiscal restraint Canadians can no longer afford to see the valuable dollars that support their social programs slip from the hands of government.
Through the taxation system we have done a number of things to improve child support and support to low income families. This is a massive piece of legislation before the House today. I have been able to touch briefly on a few of its provisions but with an emphasis on pointing out to Canadians that throughout our three budgets and the measures to implement those budgets there has been a tremendous effort to assure Canadians that all Canadians are paying their fair share, that we are closing those tax loopholes that make Canadians suspicious of one another from time to time and that we are doing our best to ensure not only that we are spending wisely but that we are collecting revenue in a wise and fair manner as well.
[Translation]
Mr. Richard Bélisle (La Prairie, BQ): Mr. Speaker, in its pre-budget report issued last week, the Liberal majority on the Standing Committee on Finance identified six areas that have been targeted for action and that were described at length by the committee's chairman this morning. These are child poverty, the disabled, literacy, students, who are facing ever-mounting costs, scientific research, and voluntary and charitable organizations.
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According to the committee chairman, the action the committee is looking at would cost the Canadian government approximately $2 billion annually. While we are not lacking in compassion for the citizen groups identified here, we can see the Liberals sliding back into their old ways: as soon as the deficit drops a bit, they talk about launching off once again into the mad spiral of public spending.
The main point here is that, by slashing provincial transfer payments, the Liberals have forced the provinces in turn to make drastic cuts to spending on health, education and social assistance.
The Liberals are offloading the disagreeable task of balancing the budget onto the provinces. And they talk about helping certain very specific groups that are already feeling the effects of provincial budget cutbacks that, in turn, came about because of federal cuts in transfer payments to these very provinces. Talk about cynicism.
Eighty-four per cent of the reduction in the deficit to date comes from cuts to provincial transfer payments, while only 16 per cent comes from leaner government administration. We would have expected the reverse. Yes, the federal government is offloading its deficit onto the backs of the provinces, who must, in turn, cut direct services to the public.
Let us take a closer look at how the Liberals are trying to lower the Canadian deficit.
If we assume that the Liberals will be going to the polls after bringing down their next budget, and that the Minister of Finance's most recent forecasts will not change in the meantime, the Liberals will have lowered the deficit by $25 billion during their term of office.
This $25 billion saving breaks down as follows: budgetary revenue will have gone up by $23.1 billion, while program spending will have gone down by $14.4 billion, for a net result of $37.5 billion. However, during this same period, the money spent to service the debt will have increased by $9.5 billion, and the plan is to set aside a $3 billion reserve in 1997-98 for contingencies, for a total of $12.5 billion, leaving us with a net amount of $25 billion.
During the four-year period between 1993-94 and 1997-98, revenues will have risen by $23.1 billion, for the following reasons: personal income taxes have increased by $15.1 billion; corporate taxes by $7.1 billion; GST revenues by $3 billion and unemployment insurance contributions by $1.3 billion. On the other hand, there will have been a drop of some $3.4 billion in other tax and non-tax revenues.
Consequently, the increased revenue comes totally from an increased tax burden on businesses and individuals, even if the Minister of Finance boasts of not having increased personal
income taxes since he has been minister. Part of this rise in revenue can be explained by the upturn in the economy, but you will agree that this is a minimal effort, considering how weak our economy is.
For example, between the third quarter of 1993 and the second quarter of 1996, revenues from personal income tax increased by $8.8 billion, or 17.1 per cent, while personal incomes rose by only 7.4 per cent over that same period. One can, therefore, conclude that the fiscal effort being demanded of Canadian taxpayers is still higher under the Liberals.
During the period from 1993-94 to 1997-98, program expenditures will have dropped by $14.4 billion for the following reasons: transfers to individuals will have decreased by $600 million; transfers to other levels of government by $6.8 billion; and grants and other transfers by $4.7 billion.
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Consequently, government expenditures account for only $2.3 billion of the $14.4 billion in total cuts, or as I said before, 16 per cent of the whole. Thus, more than 80 per cent of cuts in federal expenditures come from transfers and grants to third parties, transfers to the provinces in particular. The government has not, therefore, tidied up its own backyard; instead, the federal government has forced the provinces to tidy up theirs.
According to the government's budget plans, under the Liberal regime, unemployment insurance benefits will still lag behind contributions by approximately $5 billion. The Liberals are taxing jobs to the tune of $5 billion annually, to reduce their deficit artificially.
When the Minister of Finance claims he must build up a reserve to prepare for the next recession, we should ask him where this reserve is. Where does he keep those $10 billion, $15 billion, even $20 billion he brashly took out of the pockets of workers and employers? The Minister of Finance is using this surplus to finance his deficit. He practically admitted as much in the House on October 10, and I quote: ``-that the government return the unemployment insurance fund-to the consolidated revenue fund''.
This means that the government pockets the fund's $5 billion surplus to finance its program spending and other expenditures. The Minister of Finance did not say he was putting the money from the unemployment insurance fund in a separate reserve account but in the government's consolidated revenue fund. Consequently, the federal government's real deficit is $5 billion more annually than the minister claims in his eloquent speeches.
Today the unemployment insurance fund has a major surplus, mainly due to repeated cuts in the unemployment insurance program over the past six years. The present surplus, plus the forecast drop in future costs as a result of unemployment insurance reform, would give the government a chance to reduce premium rates substantially and thus promote job creation in this country.
The federal government has not contributed to the unemployment insurance fund since 1989, but it goes ahead and draws on the surplus as though it were some kind of income tax. It is not up to wage earners or their employers to absorb the deficit but to all Canadian taxpayers.
The annual surplus for the next few years is expected to be around $5 billion, mostly as a result of new provisions that will come into effect as of January 1, 1997 and make it even more difficult to qualify for benefits, in addition to reducing the actual amount of the benefits themselves.
The last recession cost us about $20 billion in unemployment insurance. However, the chief actuary, Mr. Bédard, told the Financial Post on October 1, 1996, that because of permanent cuts in the program, the next recession would not be as costly.
At the November 4 hearing of the Standing Committee on Finance, the Conseil du patronat du Québec requested a reduction of 45 cents in unemployment insurance premiums. The proposed reduction of 5 cents was mere window dressing, as far as the Conseil du patronat was concerned, and would have practically no impact on the economy, according to them.
As for monetary policy and its impact on unemployment, our position in the Bloc Quebecois is as follows: the Bank of Canada's objective for inflation should be a target of between 2 and 4 per cent instead of the current target of between 1 and 3 per cent approved by the government. We must realize this would be a minor adjustment to the present monetary policy and not a complete about face from the policy we have now.
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Interest rates create jobs so long as they are not always being raised at the drop of a hat to fight the inflation that usually accompanies a descending rate of unemployment. Furthermore, the lower the range of inflation selected, the greater the likelihood interest rates will rise quickly, thereby increasing the risk that the monetary policy will negate the efforts to create jobs.
Under the current monetary policy, our economy is unable to make optimum use of its resources. Zero inflation in Canada means less than optimum growth for collective wealth.
According to economist Pierre Fortin, a stable inflation rate of 3 per cent over a relatively long period of time would allow the unemployment rate to drop below 7 per cent, leading to the creation of some 460,000 jobs more than there were in October 1996. If the rate of inflation is pushed lower than 3 per cent, many workers are needlessly kept unemployed.
The Bank of Canada should not release its control over inflation, but, rather, focus on a target that permits a more tolerable interest rate, thus better fulfilling its mandate under the act.
The current monetary policy is not appropriate in the Canadian context. If the economy is overheating in Toronto, it is not necessarily overheating across the country. The Bank of Canada should remember that.
The Bloc Quebecois urges the Liberal government to act quickly to stimulate job creation. If the economy gets moving again and if the increase in employment is accompanied by a rate of inflation of more than 2 per cent, the Governor of the Bank of Canada runs the risk of plunging the Canadian economy into a recession once again by keeping the rate of inflation too low.
It is therefore vital to ensure that the monetary policy is in line with the financial job creation policies the federal government is being asked to establish and the Quebec government is currently establishing. Otherwise all efforts in this area will be for naught. This is a matter of consistency among the various macroeconomic tools at the government's disposal.
The central bank openly chose to focus on inflation at the expense of everything else. The monetary policy must reflect the mandate of the central bank and thus no longer focus exclusively on price control.
The central bank has a habit of tightening controls on the monetary situation when Toronto or Vancouver start to experience overheated economies, wreaking havoc with the economies of Montreal or the maritimes, which do not evolve at the same speed.
For example, the unemployment rate in the United States is 5.2 per cent, and inflation has held at around 3 per cent for over 2 years. A number of states, however, have virtually zero unemployment-Iowa, with 3.3 per cent; Wisconsin with 3.1 per cent; Nebraska with 2.4 per cent-and yet the federal American reserve is not resorting to particularly drastic measures.
Although the Bank of Canada likes to think it operates independently of the government, the Minister of Finance has had the power, since 1967, to set general policy on issues such as interest rates. If he so wished, the Minister of Finance could decide that the Bank of Canada should target a higher rate of inflation than what it is currently targeting.
The index used to set monetary policy could overestimate inflation, because it does not take into account new products on the market, improved quality of products, and movement of consumers towards low price centres, which Statistics Canada does not consider when calculating inflation. This means that when inflation is 1 per cent or less, we are perhaps in a period of deflation.
In conclusion, we must not forgot that the federal government is cutting back on provincial transfer payments and that cuts to Quebec will total $636 million in 1996-97 and $1.2 billion in 1997-98.
The impact of the CHST combined with the recurrent effect of earlier cuts represents a cumulative $33 billion shortfall that Quebec will have absorbed between 1982 and 2000.
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For the year 1996-97 alone, federal transfer payments were $3.3 billion less than in 1981-82. Since the deficit forecast by the Quebec Minister of Finance is $3.275 billion, Quebec would have a balanced budget today, were it not for the federal government offloading its deficit since the early 1980s. And yet the Liberals will have the nerve to go to Quebec voters with such a poor record. It is a sorry state of affairs.
[English]
Mr. John Harvard (Parliamentary Secretary to Minister of Public Works and Government Services, Lib.): Mr. Speaker, I appreciate the comments and the contribution of the hon. member to the current debate.
The member raised reasonable questions about what our inflation rate should be. There has been debate in this country and elsewhere, in fact perhaps right around the world about what is the proper level of inflation. He says that the Bank of Canada aims at an inflation rate of somewhere between 1 per cent and 3 per cent. He thinks, and I suppose he is speaking for his party, that the target for the inflation rate should be somewhere between 2 per cent and 4 per cent. I accept that as a strong and legitimate point of view because there is a legitimate debate going on among economists as to what the inflation rate should be.
The main reason I wanted to take to my feet is I cannot overlook the fact that the hon. member represents a separatist party, the Bloc from Quebec. When he talks about low interest rates producing jobs in Canada, I wonder what the inflation rate or interest rates would be in an independent Quebec. Chances are that if Quebec were to declare its sovereignty or its independence, interest rates would go through the roof.
I also noticed in his speech the absence of any comment on the provincial economy. We know that the unemployment rate in the province of Quebec is very high, far above the national rate. The hon. member might want to reflect on that fact.
I think it is a given among economists and all observers that the Quebec economy is in such bad shape because of the separatist government in Quebec City. When there is a separatist government in Quebec City it shakes the confidence of business people. The hon. member and his party should reflect upon these facts and perhaps give serious consideration to a big change in their policies.
[Translation]
Mr. Bélisle: Mr. Speaker, I want to thank the hon. member for his question and comments. I may say that the main reason why I did not speak at length about the economy of Quebec is that we happen to be in the House of Commons where, as parliamentarians, our priority should be to discuss the public finances of the federal government.
As for their impact on the finances of the Government of Quebec, I referred to this a few moments ago, but as far as Quebec's public finances as such are concerned, I think this is a subject for the Quebec National Assembly.
I would also like to say to the hon. member that when he makes allusions to political uncertainty, what keeps political and economic uncertainty alive, both among the general public and among investors is more likely to be the messages sent by federalist spokespersons like the hon. member than the situation as such.
The public and investors are not afraid of a second or a third referendum on the political future of Quebec.
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People are far more afraid of the uncertainty or the messages being spread around by people like the hon. member, who wonders what might happen in a sovereign Quebec and tries to frighten people or scare away international investors. The problem is more the kind of talk we are hearing than the fact that a third referendum is scheduled to be held in Quebec in three or four years time. I think that is the problem.
The hon. member also mentioned the governor of the Bank of Canada and monetary policy. I want to tell him that as far as I know, until Quebec becomes a sovereign state, Canada's monetary policy is still determined by the governor of the Bank of Canada.
The federal Minister of Finance also has an opinion to give, which he does every year and which does, of course, influence the governor of the Bank of Canada. What has been very hard on Quebecers so far, especially on the people of Montreal, is the tendency to keep inflation very low, as soon the economy shows the slightest sign of overheating in Toronto or Vancouver, and what we have seen in the past 15 or 20 years is that Quebec, and especially the Montreal region, is always the first to lose jobs when interest rates are raised. As soon as the economy gets up steam again and the Bank of Canada lets interest rates go down, Ontario and the Toronto region are always the first to benefit.
In the end, the Montreal region is always the first to lose jobs and always the last to recover them when interest rates are brought down again.
Actually, I think the hon. member put us on the right track. Once again we have seen why Quebec must become sovereign. It is because Quebec is not the master of its own monetary policy. As long as Quebec is a part of Canada, it will always be the governor of the Bank of Canada, supported by the Minister of Finance of Canada, who determines the cost of borrowing. Quebec and especially the Montreal region will always be at a disadvantage.
Mr. Gilbert Fillion (Chicoutimi, BQ): Mr. Speaker, I have listened to my colleague with interest. Naturally, he was not able to paint the full picture of the government's financial situation, or we would have spent the whole night here discussing it, particularly since, financially speaking, the economy of this country has a great deal wrong with it. Many changes must be made.
Moreover, the Bloc Quebecois had, via its members on the finance committee, suggested a host of ways to turn the economy around. But that is not what my question is about.
My point concerns unemployment insurance. My colleague has already touched on the question a little. I would, however, like to know his opinion, because, with the present unemployment levels, which are unacceptable regardless of what the Prime Minister and the Minister of Finance have to say, the government has not set itself any objective for job creation, despite its campaign promises. In addition, the government is presently using the unemployment insurance fund surplus, which came out of the workers' pockets, to do away with its deficit.
I would like to hear my colleague's comments on this lack of awareness of unemployment in Canada and of the unemployment insurance surplus.
Mr. Bélisle: Mr. Speaker, as my colleague from Chicoutimi put it, it is most regrettable. The Minister of Finance says that, when the Liberals came to office, a little over three years ago, the federal deficit was $42 billion and that he lowered it to slightly less than $40 billion-$39.7 billion, I think-at the end of the first year of his mandate. The objective for the fiscal year ending March 31, 1996 was $32.7 billion.
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With a supreme effort, the Minister of Finance brought it down to $28.4 billion. What we must remember is that with the $5 billion annual surplus in the unemployment insurance fund, the Government of Canada's real deficit is not $28 billion, but $33 billion. Last year, it was not $39 billion, but rather $43 billion or $44 billion.
Without the surplus from the unemployment insurance fund, which the minister appropriates to artificially reduce his deficit, the federal deficit has hardly moved since the Liberals took office. I also agree with my colleague from Chicoutimi that our unemployment rate is artificially too high and the money that should go to job creation is artificially and improperly being used to reduce the deficit, which is in fact much higher.
Therefore, I give notice that, at the next sitting of the House, pursuant to Standing Order 78(3), a minister of the crown will be moving a time allocation motion for the purpose of allotting a specified number of days or hours for the consideration and disposal of proceedings at that stage.
Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, it gives me great pleasure to discuss the fifth report of the Standing Committee on Finance. I am sharing my time with the hon. member for York-Simcoe.
I know a lot about the finance committee. I served on the finance committee. I congratulate the committee for its work and its very fine report. I know the long hours which that committee sits and the many witnesses it hears in dealing with this country's economic problems.
The report talks of a broad range of generalities. It talks about our existing trade surplus. This of course is one of the things which has driven our economy to success. Within the trade surplus is the fact that we are continuing with our historical trading patterns. A lot of it is oriented toward automobile trade and the natural resource sector.
One very important aspect the report talks about is the need for more money in research and development. That is something which interests me. It is the underpinning of our economy.
When we talk about jobs and growth, it is appropriate to think not about what is going to happen tomorrow, but rather where we would like the economy to be in the year 2010. If we thought of ourselves in the year 2010 and looked back to today, we would ask ourselves what sort of structures we would put into place to make Canada a competitive economic engine in the world marketplace.
I congratulate the finance committee for noting the very important aspect of research and development. Canada is rated in the OECD countries as about 18th in the world in the area of research and development spending. That is not good enough. Through our budgetary constraints we have cut spending in research and development over the last two or three years by $91 million. For Canada to catch up to the world we have to put more energy into our research and development budgets. We have to do that effectively and efficiently. We cannot afford to waste our valuable resources as we build a new innovative economy.
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The Asian countries are going leaps and bounds ahead of us in a lot of ways in this area. As a matter of fact, I just had the advantage of coming back from Taiwan where I was invited by the local chamber of commerce there to look at its economy. It is an amazing success story; from 1948 with a population of 5 million, the size of Vancouver Island, to today with 21 million and the eighth largest economy in the world. It did it with education, research and technology.
We have a great country here. It is a huge country full of natural resources but I do not think we are using our best natural resources, the resources between our ears. That is why I was very pleased to see that the finance committee noted the importance of increasing our commitment to research and development.
In 1993 we had an infrastructure spending program. That was very important for the economy and the mood of the people which existed back in 1993. The object of that program was to provide hope. I think that has done that. Most people in this country realize this is a different world and a different economy than we had in 1993.
That infrastructure spending program focused a lot on municipal infrastructure, roads, sewers, and so on. Everybody realized with the differences in our economic well-being that we are not going to be able to put as much money in the infrastructure spending program as possibly we once did. Having said that there is the other important aspect and that is to refocus that program.
I mentioned the infrastructure of the grey matter between our ears. I noted one of the very important points in that report was increasing funding for infrastructure through science and technology. I believe that is really where the growth in employment in this country is going to be.
Statistics Canada has told us over and over again that those companies which use science and technology in their operations expand quicker and have a higher payroll, that wages are higher in those industries.
We very much live in a time of a changing economy where the old economy is getting smaller and the newer economy, which is the knowledge based economy, is growing. We have to make sure
that we spend our resources on the right side of that equation. I believe the right side of that equation is in science and technology.
Speaking of technology, how do we physically do this? We have already established the NSERC program and also the national centres of excellence. These centres link all our university research programs together so that we do not have duplication going on in two or three institutions at the same time. They communicate with one another and they focus on how to develop new technologies.
It is through this type of system that I believe we should be underpinning our new infrastructure spending program. In my riding I have one of those schools of excellence at Durham College. I know it is looking forward to finding ways to enter and excel in the area of science and technology but it needs the resources to do that. This is where governments come in.
Some people will ask why governments are involved in research and technology and should not private industry do that. In every OECD country their governments are heavily proactive in the area of financing science and technology. Why is that? Industry invariably has short term goals, profit maximization. Indeed a lot of the people I have talked to talk about how much their profits or losses are going to be in the next three months. They do not even talk about next year anymore. Their focus is very much short term.
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This is where governments can bring in that long term planning and thought horizon which will deliver us and our country into the year 2010 with a robust and engineered society. We are underpinning the importance of science and technology.
In our high schools and post-secondary institutions we have to spend more time focusing on where we are going as a country economically. I have been surprised by the number of secondary schools I have gone to. When I talk to the students they are unaware of how our economy is changing. I think it is important for government to show leadership in this area, to tell our youth this is how the economy is changing and that they very much have to be part of that.
It is very important that we do not just have a hollow comment about the importance of this new economy but that we participate in the funding of that science and technology to increase the knowledge base that exists in this country.
Canada has a tremendous background of success in science and technology, in telecommunications sectors, bio-medical research and agriculture research and engineering. These are all areas where Canada has excelled in the past. We have a nucleus for that which exists in our country and we have that within our university environments.
One thing that is important that I believe any new spending program on research and development should underpin is a filtration system. By that I mean every project that a centre of excellence or NSERC looks at should have a filtering system where they actually filter out whether a concept is a marketable concept. It talks about the commercialization of basic research.
These are the things this budget summation is all about. It is looking toward the future, not the past, putting useful and meaningful employment in the hands of our young people, looking to the year 2010 where Canada can be the leader in the world in science and technology.
[Translation]
Mr. Gilbert Fillion (Chicoutimi, BQ): Mr. Speaker, at the beginning of his remarks, my hon. colleague congratulated the members of the Standing Committee on Finance on their work on a report he described as excellent. He failed to mention however that this was a majority report that ignored to a large extent the official opposition members' input.
I would like to draw his attention to the title of this report, which is ``Finish the Job''. Does finishing the job, as he said, mean less money for research and development, an area he seems to like and in which Canada has taken a tumble in terms of its ranking among OECD nations? Canada now ranks 18th, while it used to do much better than that.
Does finishing the job mean bleeding the Canadian public service? Does it also mean bleeding Canada Post? Does the report's title mean bleeding and taking advantage of the unemployed across Canada?
I would like my hon. colleague to tell us what he would be prepared to do to help the unemployed find a way out and live with a degree of dignity instead of being forced onto welfare in a few weeks. Will the government just keep shovelling its deficit into the provinces' backyards, as it has since taking office?
[English]
Mr. Shepherd: Mr. Speaker, I thank the hon. member for his comment. The reality is unemployment is with us and it is at exceptionally high levels.
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Let me clarify one thing. As more people find work in this country we have a labour participation rate. Over 600,000 people in the last three years have found work and more people are stepping up to the pedestal saying they want to get into the labour market as well. This is partially why the rate is at 10 per cent.
The member possibly did not understand all of what I said. I said that through research and technology and our educational institutions we have to give the people of Canada new skills. A lot of that 10 per cent figure has to do with what I would call structural unemployment.
The bottom line is the economy has not changed. It is unfortunate but true. It is no different than if we had lived at the time of the industrial revolution when we changed from the horse to the iron horse, the railway. It is the same kind of technology which exists today. We can improve that but there is no quick fix. There is no quick fix for the unemployment rate. The real long term fix will be to underpin the brain power of this nation. I am suggesting that is what the report addresses and beyond.
Perhaps the member did not see the first part of the title. The first part is: ``1997: The Budget and Beyond''. It is the beyond that is important. It is the beyond that builds on the technological excellence we have always had in this country and tries to include all those people who for various reasons are unable to find work, long term work or skilled work. We are developing a society of skilled and unskilled workers. We have to lower our pool of unskilled workers and increase our pool of skilled workers. This is what the report has recognized as the pathway to the future.
The Acting Speaker (Mr. Milliken): Order. It is my duty, pursuant to Standing Order 38, to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Frontenac, chemical product industry.
Mrs. Karen Kraft Sloan (Parliamentary Secretary to Minister of the Environment, Lib.): Mr. Speaker, last year I rose in the House to speak in a similar debate. At that time I raised concerns regarding the social deficit in this country, in particular the issue of child poverty, and urged the finance minister to do something for Canadian children in need.
I am a member of the Liberal Party child poverty committee. Last year this group of Liberal members spoke to the finance minister a number of times and also had an opportunity to meet with the Prime Minister and other members of cabinet. We asked for an increase in the working income supplement.
As a group of House of Commons backbenchers and one Liberal Senator, the child poverty group worked very hard and in the end our efforts were rewarded. The cabinet, the Prime Minister and the Minister of Finance listened and the Canadian children benefited.
In the 1996 budget the working income supplement was doubled for low income families. This change will increase assistance by $250 million a year to 700,000 Canadian families.
These are not easy times in which to govern. We must recognize the challenges facing the Minister of Finance and applaud his efforts to stabilize the Canadian economy. He has taken strong measures to correct the previous government's mismanagement of the public finances. As a result the confidence of the people in the national government has increased. We have exceeded our deficit reduction targets, interest rates are lower than they have been for 40 years and almost 700,000 new jobs have been created.
We are getting the economic fundamentals right to create an environment of opportunity for job creation. Tough decisions have been made to get our economic deficit under control and Canadians can take comfort in the fact that we are making prudent judgments in a balanced and compassionate way.
In light of calls by the Tories and the Reform Party advocating income tax cuts, it is imperative that we continue to stay the fiscal course. In fact, I conducted a recent poll in my riding and results to date show overwhelmingly that over three-quarters of the respondents do not favour the policies of the Tories and the Reform Party on income tax cuts. Until the debt and deficit are under control, income tax cuts are fiscally irresponsible and detrimental to the public good. One has to look no further than the extreme disparities between rich and poor that have resulted in Ontario from the tax cut imposed by the Progressive Conservatives under Premier Harris.
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The finance minister has spoken about the plight of poor children many times in this Chamber. I know he will continue to establish initiatives that seek to better the lives of all children in Canada. We must continue to reduce the social deficit in this country.
Today I would like to address the third deficit we face, the ecological deficit. Increased awareness of the causes of environmental degradation and the impact on human health ensure a high national concern for environmental issues.
As human beings, we often forget that we are part of nature, that we are in nature and that nature is in us. We are, in some ways, disconnected to the natural world. In the words of Edward Wilson, biological wealth is the basis of our material and cultural wealth. Too many forget this inextricable link and place short term economic gain ahead of long term ecological disaster.
Thomas Berry, an ecotheologian says in his book The Dream of Earth, that the earth community is a wilderness community that will not be bargained with, nor will it simply be studied, or examined or made an object of any kind, nor will it be domesticated or trivialized, except when other living species are violated so extensively the human itself is imperilled.
He goes on to say that if the earth does grow inhospitable toward human presence, it is primarily because we have lost our sense of courtesy toward the earth and its inhabitants, our sense of gratitude,
our willingness to recognize the sacred character of habitat, our capacity for the numinous quality of the earthly reality.
We must remember to be grateful for the biological material that we use. We must remember to be courteous to the earth community as we use its products. We must be ever mindful of the effect of the disposal of waste materials back into the earth.
Paul Hawken, author of The Ecology of Commerce, states that we currently use 40 per cent of the world's biological production. In 40 years the earth's population will double. If there is no increase the rate of consumption, we will use 80 per cent of what is produced. Major ecosystem failure happens at 60 to 70 per cent.
We pump toxins into the water, the air, the soil. Some substances act as endocrine disrupters and affect the endocrine system, especially on developing human and non-human fetuses. Scientists have yet to determine a tolerable minimum threshold. It appears that the timing of exposure has more significance than the dose. As a result, endocrine disruptions play havoc with the reproductive and neurological systems of the developing fetus.
Some forms of endocrine disruptions, like PCB molecules, are persistent and can travel with the wind currents to pristine, isolated Arctic areas where they biomagnify as they make their way up the food chain. Once absorbed in the flesh of higher order animals and mammals, they bioaccumulate. PCB ratings in the milk of Inuit mothers is significantly higher than mothers who live in the south.
I am pleased to say that we have met, and in some cases exceeded, our ozone depletion goals. However, we must work harder to achieve our climate change commitments.
Environmental problems are complex and multifaceted. They require the support of many inside and outside of government. It is not only the Minister of the Environment that should champion the environment. The Minister of Finance can also support the cause of a healthier environment. This starts by greening the budget.
I would like to congratulate the Minister of Finance on the steps he took in the last budget to begin this process. Changes were made to the Income Tax Act that allow for tax incentives for donations of ecologically sensitive land. This is an excellent model for encouraging conservation. As well, the Minister of Finance and the Minister of Natural Resources are looking at removing fiscal barriers to energy efficiency investments.
These are examples of a good start. I commend the Minister of Finance on these initiatives. We must work hard to continue to find ways to reduce our ecological deficit. Above all, we must remember to show courtesy and gratitude for the biological wealth that the earth community provides us, for this biological wealth is the basis of all our other wealth.
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Mr. Jim Silye (Calgary Centre, Ref.): Mr. Speaker, I have a comment on the speech given by the hon. member. She said that she conducted a survey in her riding or had access to a survey that talked about the impact of immediate tax cuts at this time. She indicated that was part of the Reform and Conservative platforms.
In case she is interested, our platform does not state that. If I were to answer that survey I would probably be part of the majority that says ``immediate tax cuts at this time are not the proper thing to do''. First, we have to create a surplus in the budget. At minimum we must balance the budget before across the board tax cuts. That is what we are recommending.
The only selective tax cut in our fresh start platform is that which pertains to the UIC fund. It has a huge surplus and the minister has room at this point in time-this is after all the prebudget consultation period-to listen to those who suggest that it is a payroll tax that could be reduced because of the surplus.
I want to make sure the member understands our platform. Members opposite continually say that we are in favour of immediate tax cuts. This is the second time today we have been misquoted. A member even said that in a statement today. That view is not accurate. I have already explained our policy on that issue. I hope the member will remember that in her future references to the Reform platform on tax cuts.
Mrs. Kraft Sloan: Mr. Speaker, I am absolutely delighted that the member from the third party has seen the light and understands the fiscal reality within which the country operates. I totally agree that it is terribly irresponsible for anyone to take on measures of tax reduction in the light of budgetary constraints and who this would really benefit.
If this is the Reform Party platform, the so-called fresh start-restart perhaps-then the member opposite should inform some of his colleagues. When I hear members of his caucus ask questions of the Minister of Finance during question period, it seems quite obvious that they are demanding these irresponsible tax cuts right now. It would be really helpful if the member opposite could help inform his colleagues of what their platform is.
Mr. Silye: Mr. Speaker, with reference to the questions we ask the finance minister in question period with respect to helping low income families and addressing the issue of child poverty, there is a difference of opinion here. Yes, the child supplement can be increased, as the member pointed out in her speech. That has been recommended and it will help families to the tune of another $250 million. That is nice and that is good. But that is not enough and it does not go far enough.
The Reform platform would offer more. But it is not tomorrow, not now. It would have to come when the budget is balanced and we all have to work toward that. The government could do a lot more
by making a lot of cuts, which I will talk about in my speech. The government could offer the relief, which can be offered at that time, to over 1.9 million lower income families across the board. That will truly help lower income people. That will truly help to eliminate child poverty because it will be leaving the money in the hands of those people who need it the most, those who make the least. We are still taxing people who make $12,000 a year to the tune of $1,200.
If we can target it to those families who are in need and increase it, that will help. But it does not help across the board. That is the direction we are trying to go in with that issue. That may give the impression that we are saying immediate tax cuts now. What we are saying is let us look at the fiscal policy of the government, rethink it and apply it to help the greatest majority of lower income people.
Mrs. Kraft Sloan: Mr. Speaker, once again I find myself in a position of agreement with the member opposite when he says that we have a difference of opinion. We certainly do have a difference of opinion, especially when it comes to dealing with the issue of child poverty.
On one hand, the member talks about funding to one segment of the population, but on the other hand his party would cut all transfers to the provinces for social assistance programs. If that does not hurt poor children, I am not sure what does.
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His party also advocates the cutting of all equalization payments and things like that to areas that are in tremendous need. I am really glad that we have a difference of opinion on this. As a regional, western based party, the Reform Party does not understand the need for balance and compassion and putting into prospective all parts of the country, different classes of society and making sure that everyone has a fair opportunity. That is why this Liberal government is firmly committed to creating opportunity for all people in this country, not certain regions and not certain groups.
Mr. Jim Silye (Calgary Centre, Ref.): Mr. Speaker, I will be using my full allotted time.
The debate is about the report of the government on the prebudget consultation process. I am glad to have this opportunity to make a contribution to it and to maybe make some suggestions for the finance minister's next budget. I did not sit very much this past year on the Standing Committee of Finance, but I did in the previous two years so I do understand the process and I will make some comments about that.
This is really about spending, revenues and handling the affairs of this great corporation we call Canada. The Government of Canada is empowered to do that. Annual statements come out, as do projections from the finance minister. Let us just see where we are going. Based on the information given to us by the government, let us see if we are in fact asking the right questions, setting the right agenda in these prebudget consultations and asking for input to solve the right problem.
I maintain, and I have argued this before, we are trying to solve the wrong problem. The problem we are trying to solve is just a subset of the major problem. The subset that the government is trying to resolve and in fact was elected on is setting its spending deficit at 3 per cent of GDP. That really means telling the people of Canada that this government will only spend 3 per cent more of the gross domestic product than what it brings in.
The people of Canada said: ``Boy, compared to the previous government that is a hell of an idea and we are going to let you guys go do it''. The Liberals also told us they were going to create jobs, jobs, jobs with this $6 billion infrastructure program. Those were the two big promises they made.
There is no question that the government has made progress on its deficit target. It came in here at the year ending 1994 with a deficit of 5.9 per cent of the GDP. To the year ending 1996, the deficit is at about $28 billion which comes to a little over 3 per cent of GDP. Next year it is projected to be even better and the year after, although it is in fantasy land, the government estimates that it will be right down to almost 0 per cent.
I agree that the government has done well on deficit reduction. However, the bar is so low and the target so soft it is easy to do. Anybody could do it. Anybody who was finance minister could have done what this minister did. How did he do it? When he cut program spending over the two-year period from year ending 1994 to year ending 1996, projected out even to year ending 1997, the cuts he made go from $120 billion down to $109 billion. That is $11 billion in spending cuts. It sounds great. However, $7.5 billion of that was downloaded on the provinces for health care, education and welfare. That is why I have suggested anybody could do it.
We have had members of the government giving speeches about how wonderful it is to be helping the infrastructure of the mind through the science and technology development fund and how it has already spent $9.5 billion on families with children, but because it is giving another $250 million how great and wonderful it is.
The government should take a look at itself and not be so proud of having made cuts on the backs of provinces. The excuse today given in question period, ``If you are mad at us for downloading, look at what those rotten, dirty guys in the provincial governments are doing. They are downloading on the municipalities even more than we are. If we are bad they are worse''. Both of them are trying to justify something that is dumb.
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Eliminate useless and wasteful spending and stop catering to the special interest groups. Every group that comes to the consultation process says: ``Do not touch us. Our group is very important. Look at all those other people. Cut them. Find it there''. If that was done, how would we ever cut? How would we ever balance a budget?
Start saying no to wasteful spending. The government does not have the guts to do it. It takes the easy way out. It cuts money to the provinces and says to the provinces: ``You do it''. That is what the finance minister has done. I do not compliment him for that, I criticize him for it.
The deficit is fine. It is coming down. What has the government done in terms of spending over the last three years? In the year ending 1994 the government spent $158 billion. The next year the government increased overall spending to $160.7 billion. Last year, the year ending 1996, it spent $158.9 billion. That is relatively flat in spending, yet the government is bragging about tough times and cutbacks. Why is that?
The government is adding to the big problem. It is increasing the debt. The interest cost to service the debt is increasing. Despite lower interest rates, it is still a huge megadollar expenditure for the government. What does it do about it? It keeps adding to the problem, although not as fast as the previous government. It brags about it, but it is not solving the problem. Canada is bleeding to death. Canada had a huge wound under the Conservatives but it still has a huge cut and it is still bleeding severely under the Liberal government.
The finance minister bragged a couple of months ago that he had broken the back of the deficit at $22 billion or $24 billion. That is a joke. Only a Liberal could stand and say that he has broken the back of the deficit by spending $24 billion more than the government brings in. That is not breaking its back, it is adding to the problem. It is adding to the suffering. It is adding to the hurt. That is what these financial statements show.
What should the government be doing in the consultation process? It should be asking the experts of the country, the many witnesses: What really is our problem? What will really help our economy? If we lower our deficit and spend a little bit less, if we still spend more than we bring in but not as much as the previous government, will that help? Or should we just tackle the debt?
The percentage of debt to gross domestic product is the true measurement. That is the challenge. That is the bar which the government should set. That is how it should be measured. Anybody who is in government, provincially or federally, should measure it that way. We all know in business that debt and equity are correlated items. The banks look at the debt to equity ratio. It is on that basis the banks lend money.
If the finance minister had the intestinal fortitude and truly understood economics, he would look at the debt as a percentage of GDP. What has happened in that category? What does that show us?
When we came in here the net debt was $514 billion. That was the net interest bearing debt. That has now increased to $586 billion, a $72 billion increase. The debt has gone up by $72 billion. Imagine the interest costs on that alone. The deficit has only been reduced by $13.4 billion. Half of that has come from cuts to the provinces, which have gone from $42 billion to $28 billion.
Thanks in large part to low interest rates, higher tax revenues and a $5 billion surplus in the UI fund, we have ended up with these financial statements. There has been an increase of $25 billion in revenue. I would say that $15 billion to $17 billion of that is economic growth. Not all of it is growth. About $10 billion is attributable to tax increases.
When the finance minister says, as he did today in answer to a question from a Bloc member: ``We have not increased personal income taxes since we have been here'', that is not true. I know I cannot use the word that starts with ``l'' and I will not. I will not say that he is the ``l'' word, but I will say that he is definitely misrepresenting the situation.
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There are two ways to increase income taxes. One is by raising the rate and the other is by reducing, eliminating or tinkering with the available exemptions and deductions. For instance, there is the labour sponsored venture capital funds which he has reduced. All those people who participated, their taxes just went up, thank you very much. He did a lot with the seniors benefit and seniors pensions. He has tinkered around and he has raised personal income taxes. Personal income tax revenue has gone up by over $6 billion and not all of it is just due to a growth in the economy. This points out as far as I can surmise by my analysis of these statements that the revenue of the government has increased, the spending of this government has stayed level at $158 billion to $161 billion and its spending cuts basically match its increases.
I submit to the hon. members opposite, please question me on this when I am done. Are we really solving the problem or are we just attacking a subset of the problem? It is a disease but if it grows then one will end up getting really sick and then will die. The real problem is the debt. The deficit is a subset of that. Yes, we have to eliminate the deficit but the Reform Party would do it sooner. We would get there quicker and we would offer some tax relief to the Canadian public a lot sooner than what these financial statements show.
As further proof and as my last comment on this topic, it is important for Canadians to understand that the debt as a percentage of GDP has gone up since we have been here. It has gone from 71 per cent to 74.2 per cent. It is going in the wrong direction. Our problem is increasing.
The Liberals, as wonderful as they think they are, as high as they are in the polls and who love to rub it in our faces, are not solving the problem. In the long run they are going to pay for it because they have had a window of opportunity to do something. We have been here advising them on how to do it. Even in the book Double Vision we are given credit and the finance minister gives us credit behind closed doors for encouraging and pushing because we are in tune with Canadians and we know what they want.
Just as with Canadian Airlines, the Reform Party knew that the tax fuels were too high. Our critic recommended a reduction. We knew that the flight attendants and the ticket agents wanted to vote in support of a pay cut, even though those who were making only $20,000 to $30,000 should not take a pay cut, but they were willing to because they loved their jobs. We said to let it go to a direct vote and they said no but we forced them to. Now who gets the credit? They do.
Whoever this Angus Reid is, and whatever poll is saying that the Liberals are in touch with the people, crap. They are in touch with us. They listen to us and they take our suggestions and then they take the credit, but that is okay. As long as it is good for all Canadians, I am very, very happy.
I do not like the budget consultation process if there is not a consensus and they only listen to those they want to listen to. I accuse the chairman and his committee of selective hearing. In his speech this morning the chairman mentioned that he had heard evidence that in the United States the income taxes are 30 per cent lower than here and the unemployment rate is 5 per cent. Our taxes are 30 per cent higher and our unemployment rate is 10 per cent. Does that not tell us something? Lower taxes mean more jobs. Lower taxes mean lower unemployment. It should be obvious.
Then what did the chairman of the finance committee do? He went to great lengths and I think he spent more time than he wanted to in saying that in Canada our payroll taxes are lower than in the United States and it is proof that lower taxes do not necessarily work. I do not see the connection. It does not make any sense to me at all.
It is sad for me to see the government members and especially the frontbenchers take credit for the low interest rates and low inflation rate in Canada. How sad to try to take credit for something that the Liberals criticized when they were on this side of the House. I am not saying that they criticized lower interest rates, but they criticized the monetary policy of John Crow. I can find in Hansard what the Minister of Finance said. He said it was totally wrong. He said it was totally inappropriate. Now the Liberals are reaping the benefits of it and are trying to take credit for it by saying that the government is responsible for the low interest rates. Bull. Bull. It is sad to see someone try to take credit for somebody else's hard work and effort, especially when one is hypocritical and contradicts oneself.
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It is also sad when we look at the big problem, which is the debt and the high interest costs to service that debt. There are all the areas where there is still a huge waste in government spending, the billions for business program is what I call it. The government will not do anything about that. There are regional development programs where it could save some money. There is the size and waste in the public service and what they could do to solve that. It is a shame that even on criminal justice, young offenders, and all those areas the government still continues to use nickel and dime solutions to thousand dollar problems. That is the sad part.
Eventually the economy is going to turn around. My learned friend from Capilano-Howe Sound knows and he pointed out that the economy is a cycle. We all know that. What goes around comes around. It goes up and down. We are going to hit a period of high inflation again. We are going to hit a period of high interest rates again. Sure as all of us are in this room, before we pass away we will see double digit interest rates again. Even though the rates are down at 4 and 5 per cent, they are going to come back. Now we have the opportunity to do something about it.
The Canadian public is ready for cuts, ready to go through the pain, but it has to be done quickly. We have to do the surgery and then let the patient recover. By continually operating and tinkering with all different parts of the body the poor patient feels like he will never get better. He feels like Frankenstein. Quite frankly, that is how I would analyse this financial policy of the government, Frankenstein.
Even the Organization for Economic Cooperation and Development countries in their annual report did a study of Canada. They blamed the high unemployment rate. Nobody over there can figure out why we still have double digit unemployment with this wonderful package they have offered the Canadian public over three years. The reason is high tax rates.
We have the highest tax rates going. On tax rates as a percentage of GDP, if we look at where Canada is on a chart, all taxes, corporate and individual, are about 35 per cent as a percentage of GDP. Compare that to those countries at 24 per cent or 30 per cent and we will see the unemployment rate. We will see the correlation. That is what this government will not listen to or look at.
There are also our generous unemployment and welfare benefits. How can we have a welfare program which pays somebody just as
much to stay at home, able bodied people who can work, as somebody would get by working for minimum wage? It does not make sense. Instead of doing something about that, the government ignores it.
On unionization, I believe in unions. I believe that employees of any corporation or any company should have the right to unionize and get together and collectively negotiate against an employer, public or private. At the same time both public and private employer should have the opportunity to replace those workers. But no, the government is going to put Bill C-66 through here. It is going to screw up, meddle and make it a mess so that nobody knows what a replacement worker is and whether or not they qualify. It is going to be a joke and this red tape is costing this country billions of dollars.
Across the board tax cuts are what is needed once we have a balanced budget. That will kick start the economy, not the selective cuts like five cents off per hundred dollars in UI as the finance minister is doing now.
The objective of this country's fiscal policy should be a virtuous cycle of lower debt servicing cost. Imagine what this country would be like if every year instead of our interest costs going from $40 billion when we first came here when we were paying $38 billion to where we are now paying in excess of $48 billion to $50 billion and it is going to go up even more, that they would be going down. The interest costs would be going down, not just the deficit but the interest costs. That would be solving the problem. Then I would say the finance minister deserves all these credits those backbenchers are giving him.
We need to generate a surplus. Then we can offer tax relief and then we can pay down some of the debt as well. That is how we develop, and this phrase was coined by my colleague from Capilano-Howe Sound, a virtuous cycle of lower debt service costs. That should be the objective of the finance committee. That is what I would empower it to do. Find us a way to get interest costs to go down. Give us the suggestions on how to do that and then we would be solving the problem and not tinkering around with nickel and dime solutions for thousand dollar problems.
Get the fundamentals right. The finance minister brags about how he gets the fundamentals right. He does not have them right. He will not give us a target for a balanced budget, just that we will get there someday. He does not attack the debt. He is just on the deficit. He will not reduce UI like everybody else said in the Standing Committee on Finance. I was there for a couple of meetings this year and it was the same old story: reduce the UIC. It is a killer of jobs. Reduce it not by 5 cents, reduce it by 60 cents, 20 or 30 per cent. The Reform Party is suggesting that and we are in tune with the Canadian public, but the government will not listen. Make it a true insurance policy.
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CPP is going to have to go up. People are worried about that. So CPP will be raised, but UIC will not be lowered. There is a $5 billion surplus in the fund and it is just being used to pay the deficit. That is not right. If CPP is going to be increased at all, it has to be offset with a decrease in the UIC so that psychologically employees and employers know that overall it is not going up, it is just being adjusted to account for the needs and the demands of the Canadian public.
That is was we have to do. That is how we will create jobs in this country if we get the fundamentals right. Those are some of the fundamentals and some solutions I see the country needs.
Is my time up, Mr. Speaker? Will you give me five more minutes?
The Acting Speaker (Mr. Milliken): It is not for the Speaker to give the hon. member five more minutes; it is a matter for the House. If the House wishes to give the hon. member five more minutes, the Speaker as the servant of the House will give it.
Is there consent?
Some hon. members: Agreed.
Mr. Silye: Mr. Speaker, I have a couple of things to add to the issue. I would like to finish with the CPP. It is a very big issue. Currently there is $40 billion in the fund which generates $4 billion through interest on loans to provincial governments at low prevailing interest rates.
We have to fix this. The way to fix it, unlike what the government is doing by trying to treat everything separately, is to look at the economy as a whole. This is a payroll tax just as UIC is a payroll tax and so is workers compensation. When there are high payroll taxes, it is a job killer. The government should try to look at the collective package.
One thing that could be done with CPP and has even been recommended is to start working with the fund toward a greater growth investment fund rather than just a yield of low interest rates. Try to get it into a growth fund where possibly we might luck out in a couple of years and have anywhere from 15 to 30 per cent growth in it. That is what the Reform Party is recommending with its super RRSPs. It would be something which would be run by an independent fund manager to let the money grow so that we would all be guaranteed our pension benefits down the road.
We all know who creates jobs. The government's job is to create the economic environment, the right environment for the private and public sectors to create jobs. There is room for job creation in both the public and the private sector, but the public sector thinks,
feels and acts as if it is the only engine to fuel the economy. Once we balance the budget and offer across the board tax relief, not selective cuts, the government and the country will benefit from the growth in the economy. A lower overhead and lower spending will result in lower taxes which will increase disposable incomes and thus through greater demand the private sector, along with some public sector services, will create the increase in jobs that is required.
On unemployment and employment, under the section in the report that the chairman of the Finance Committee put forward, the words were carefully chosen. However carefully they were chosen, they could not hide a dismal record of achievement. The growth in unemployment barely kept pace with the increase in population, natural and through immigration. That is a sad situation. The government pins much hope on job creation by lower interest rates. That is going to create a whole bunch of jobs. We hope these expectations will be met for the sake of the large number of Canadians who are seeking work and who are ready to enter the labour force. We will need a long and prolonged period of low interest rates and a willingness for people to borrow and spend more.
There is a lack of consumer confidence for big ticket items and that is what is keeping the domestic market restrained. There would be increased confidence if income growth lowered the relative size of the debt they carry.
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This fact makes income raising tax cuts even more important in the restoration of genuine prosperity.
In this prebudget fiscal plan and this report we see nothing encouraging in this account for the Canadian public. What we see is the government not even at a balanced budget, saying how it is going to spend anything it gets once it approaches.
Heaven forbid, if the finance minister ever gets up and tries to say this one more time and to hoist this on the Canadian public, that once the deficit in this country reaches single digits, $8 billion or $9 billion, then we have virtually a balanced budget and a zero deficit.
He has said this and that is not true. Just because the OECD countries have a different formula and by their standards-crap. If there is a $9 billion deficit and if that deficit is not borrowed abroad but is borrowed domestically from the public service pension fund, it is still a liability. It has to be paid back. Those funds have to be replaced even though they are borrowed from oneself. Therefore, let not the minister say ever, until he is at zero, that he has a balanced budget.
We need to work toward the debt, to use the debt as a percentage of gross domestic product as our solution. Lower taxes like in the States are the solution. That is how we will create jobs in this country. I appreciate the extra time.
Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, as always, I listened intently to the member for Calgary Centre. He started his speech, which really set the tone of everything he said, with saying that Canada is a corporation.
Everybody knows that Canada is not a corporation. The Government of Canada is not run like a corporation. The bottom line is that the Government of Canada is about dealing with people's problems.
He went on to talk about the so-called downloading. He used the word downloading when talking about reducing transfer payments to the provinces. As has been said in this House time and time again, we reduced those transfers far less than we reduce our own spending.
The member is inconsistent. He talks about improving the efficiencies of government. Why would we not also want the provinces to become more efficient? Should we keep the provincial government transfer payments intact while reducing our own spending? This does not make sense. Everybody knows in this country that we have to add the federal government debt plus the provincial government debt to get a total quantum of public sector debt in this country.
It is only reasonable that we reduce provincial government transfer payments. The thing is technology has taken over our society to such a great degree. What we are asking governments to do is the thing that the business sector did maybe 10 years ago. It embraced the concept of newer technology to reduce the cost of government. That is what we are asking the provinces to do and that is what we are asking the federal government to do.
I am surprised that the member from the Reform Party, who spent such a great deal of time talking about the importance of balancing budgets, has not taken that into realization. We want the province of Ontario, the province of Quebec and indeed the province of Alberta to each take part in the process of reducing government spending and making government more affordable to people.
He went on and on about the ratio of debt to GDP. I dispute some of his figures. As I understand, for the 1996-97 fiscal year he is right, it is around 75 per cent of the total debt to GDP ratio. But that is projected for the next fiscal year to go down to 74 per cent.
In spite of his great long dissertation about the importance of using debt to GDP ratio, the bottom line is that we have turned the corner on that very important figure. I agree with him, we should be focusing on how to reduce government debt.
It seems most of his discussion surrounds why we cannot do it tomorrow. We are in a big hurry. The bottom line is the ship of state takes a long time to move. I have come to that realization.
This government has done the very important things to move that ship of state, whatever it is, 10 or 15 degrees from the course it was on.
Within the first two or three years it does not look like it is much different. As the program continues to impact on government spending and debt reduction, that becomes greater and greater. That is the course that we are on.
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That is what everybody in this country says to us, stay the course, keep on that 15 degrees. They do not tell us to go 30 degrees or 40 degrees one way or 70 degrees back the other way. They tell us to stay the course. It is the Reform Party that wants to get off course. This all has to do with timing and how we put our plan into place.
The bottom line is the reduction in interest rates is related to fiscal responsibility. The international and domestic financial communities have looked at what governments are doing and said yes. What is an interest rate but a risk factor: ``I am going to loan you x dollars and you are going to pay me back 10 years from now. I think you will inflate the economy. You will print money by increasing the deficit. Therefore I want a higher risk factor''.
In reality that interest rate component has been continually reduced in Canada over the past three years. This tells us that not only the domestic financial community but also the international financial community believe that Canada has its debt and deficit situation under control. Take credit for it? Why would we not? We have lived under an administration that did just the reverse. It drove interest rates through the ceiling. It is very much a check mark, an A+ average by the international financial community.
I heard this member talk about across the board tax cuts. The same member stood in this House about a year ago and talked about the flat tax. Remember the flat tax? We were going to take money from the middle class and give it to the wealthy. Now he has a different formula. I guess by reform he means reforming his own party.
In the final analysis most federal government spending is to people. The member has not been honest. The member has not said what people spending he is going to cut to get off that course another 10 degrees or 15 degrees. He did not talk about how much he is going to cut the old age pension, et cetera.
Mr. Silye: Mr. Speaker, I have not abandoned the dream of a simplified tax system that would feature a single or a dual rate. It would generate more money than what this current government with its complicated, convoluted, complex tax system has in place and which is too stubborn to try to change. I have not abandoned that but each speech has its time and we have to stick to the topic at hand.
He does not agree with my statistics about year ending in 1996 or 1997, that the debt as a percentage of GDP will be 74 per cent or 75 per cent but that it is going down in 1998 to 74 per cent. Shame. That is unacceptable. When this government came in it was 71 per cent and it is going to brag about reducing it to 74 per cent? That is the hypocrisy and the master of myth at work at its best. We need a debt to GDP ratio of under 50 per cent, and the member knows it.
There is this business about how they have made way more cuts outside of the transfers to provinces. The figures say to me that for the year ending 1998, governments do not figure. The total cuts will be $18 billion and $7.5 of that will be on the backs of the provinces for health care, education and welfare. Shame on the Liberal government that would do that when a Reform government in those three categories would have cut only $3.5 billion.
The member asked why the government should not take credit for the decline in interest rates. Because his government is not responsible for the low interest rates in this country. It is not sound fiscal management for the government to spend $20 billion more than it brings in. The first year that we had $15 billion more than we brought in, everybody was all upset. So to brag about a $20 billion deficit is not good enough.
The interest rates are low because of the monetary policy of the Bank of Canada under John Crow which has been continued under the current governor of the Bank of Canada to keep inflation low. It is low inflation that allows for the lowering of interest rates. Inflation is low when the demand for supplies and services goes down. Then the banks have to do something. To encourage people to incur debt and borrow more money banks have to lower their interest rates because of what is happening in the economy. It is kind of a diabolical situation. Banks lower interest rates when things are not moving.
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Lower interest rates lead to increased work in housing and housing related products and services. Big ticket items should start to move now based on lower interest rates. I agree with the hon. member on that point, but to take credit for it, no. I still say the government is taking credit for something it does not deserve to take credit for. Low interest rates are not a function of the government's sound fiscal policy. It is not sound to be adding to the problem to the tune of $20 billion plus per year.
At another point in time I will elaborate on the simplified tax system featuring a dual rate, which is in the best interest of Canada and will lead to the number of jobs the government has failed to deliver.
Mr. John Bryden (Hamilton-Wentworth, Lib.): Mr. Speaker, I will be sharing my time with the member for Vancouver East.
[Translation]
Mr. Fillion: Mr. Speaker, I rise on a point of order. Are we still rotating speakers, or are we now at questions and comments?
The Acting Speaker (Mr. Milliken): Debate has resumed and we are again rotating. There was only one question during the period for questions and comments, because it was a rather long question. We have already used up the 10 minutes allocated to questions and comments.
Mr. Fillion: Mr. Speaker, is it not the Bloc Quebecois' turn in the rotation? The Liberal Party had its turn, and so did the Reform Party. I think it is now the Bloc Quebecois' turn.
The Acting Speaker (Mr. Milliken): I must inform the hon. member that the rotation was the following: the hon. member for La Prairie had 20 minutes; two members from the Liberal Party, namely the hon. member for York-Simcoe and the hon. member for Durham, had 10 minutes each; finally, the hon. member for Calgary Centre had 20 minutes. After that, it is once again the Liberals' turn, and that is why I recognized the hon. member for Hamilton-Wentworth.
[English]
Mr. Bryden: Mr. Speaker, I am pleased to take part in the prebudget debate, particularly because today the finance committee submitted its fifth annual report of the Standing Committee on Finance entitled ``The 1997 Budget and Beyond: Finish the Job''.
The finance committee went into quite a bit of detail about proposals that would increase and encourage charitable giving in Canada. This arises from some of the remarks of the finance minister during the 1996 budget debate when he suggested that government should be getting out of some services and perhaps charities should be encouraged to take up where government is leaving.
The finance committee held hearings, heard from the charitable industry and made a number of recommendations to encourage charitable giving both by individuals and corporations.
We should remember, however, that when individuals or corporations give to charity this money does not go into the tax coffers in Ottawa. In a sense every time money is given to a charity it is money that is not given in taxes to the government to spend. It is given to private corporations to spend.
In one very real sense I was disappointed by the finance committee's report because while endorsing various measures to encourage charitable giving it did not mention about encouraging the charitable sector to be more accountable.
I have an interest in that because two months ago I tabled before the finance committee a report I had prepared entitled ``Canada's Charities: A Need for Reform''. This was a result of an effort entirely on my part in which I examined the financial information returns of about 600 charities and compared them to the financial statements of individual charities when I could get them.
I discovered that for decades and perhaps forever Canada's charitable sector had been managed without any reasonable measure of government accountability.
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The most elementary things are lacking in the way charges are managed. We do not even have a definition that is more recent than 1601, the time of Shakespeare. That is the definition Revenue Canada uses to define what a charitable organization is when it comes to giving and to tax deferral.
There are no penalties; there are no measures. Even in the T-3010 form, the financial reforms I examined, I found all kinds of inconsistencies. Charitable organizations were able not to fill out the form adequately because there were no penalties in legislation other than revocation of charitable status to ensure compliance.
Something very big is at stake. It is not just a matter that the finance committee proposed encouraging people to give more to charities. It is also the fact the charitable industry is a huge sector of the economy. As of 1993 there were 73,000 charities in Canada. The revenue going in and out of charities accounts for about $86 billion.
I say to the member for Vancouver East that it is equivalent to the GDP of British Columbia. She would know the charitable industry, which is basically unmanaged by the federal government, has an enormous consequence on the economy in general. In fact 1.6 million Canadians are actually employed by charities.
I examined several areas but I will only give a few instances because time is short. Revenue Canada rules would require that charities spend 80 per cent of their tax receiptable givings on charitable activities. There is a huge loophole in this regard. Charities get revenue from a variety of other sources, mainly from government and including some other charities like the United Way. Only a very small percentage of a charity's revenues in general come from tax receiptable donations. Most of it comes from other sources. Consequently many charities spend 50 per cent of their total revenue, 40 per cent of their total revenue, or almost none of their total revenue on actual charitable activities. It is a huge loophole.
To become a charity is as simple as filling out a two-sided form, putting names on it and sending it in. The difficulty is that someone like myself, a member of the public or a member of Parliament cannot even examine that charitable application form to see who filled it out. The opportunities for abuse are legion. It is a very difficult matter.
Worst of all, I hate to suggest that Canadians suspect their charities. I am afraid they do. There is lack of guarantee that the charity one is giving to is managing its affairs competently. A difficulty is the Canadian public thinks that because a charity obtains registered status the federal government in some way is overseeing the charity and making sure it performs in a competent and responsible manner. I regret to say that is not necessarily so.
I could have wished the finance committee would have at least suggested to the Minister of Finance, in encouraging more donations to charities, that he demand at the same time increased responsibility, increased openness and increased accountability.
In the final analysis Canadians are generous. Canadians want to give. However they want to be sure that when they give they give to organizations that are accountable and that the maximum amount of the dollar they give actually gets to the worthy cause. Right now there is no such guarantee.
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I made 64 recommendations and would like to highlight the main one. In the next budget I would like to see new regulations applied to charities such that the information Revenue Canada receives from charities is good, reliable information. To make sure it is reliable the government will have to apply penalties. Penalties will have to be introduced for charities that do not supply accurate information.
Once the information is received by Revenue Canada and we know it is accurate, Revenue Canada should take advantage of the electronic age and put that information on the Internet so that any individual or corporation considering making a donation to a charity can call up the financial information on that charity and know it has been vetted by Revenue Canada and is good information. They could see for themselves if the charity is wisely spending the money it is receiving from the public.
That one move would save billions of dollars which could go toward the deficit. It would also give Canadians a sense of confidence in the charities to which they are donating and would increase spending rather than decrease it.
I saw in the report of the finance committee that Canadians give less to charities than Americans give because in the United States the requirement for openness on the part of charities is much more rigorous than it is in Canada.
Charities are not the only problem. There is also the problem of non-profit organizations that are also tax exempt. There are 66,000 non-profit organizations ranging from Canadian automobile clubs to athletic clubs. They have revenues probably in the area of $40 billion a year. These non-profit organizations are not accountable to Revenue Canada. The financial information returns they send in are secret. The public has no access to them. By law in the United States any person can walk into the office of a non-profit organization and demand to see its financial statements. That is not the case in this country.
I hope the finance minister and the revenue minister, in looking to charities to take up part of the slack left by government as it abandons certain areas of social services and health services that have traditionally been a part of government and in encouraging corporations and individuals to give to these charities, will remember that the ultimate responsibility is to ensure these organizations are as accountable as government departments.
Mrs. Anna Terrana (Vancouver East, Lib.): Mr. Speaker, I am rising to speak because of my strong concerns regarding new problems that are being created by our focused concentration on deficit reduction. The Liberal government has done extremely well in reducing the deficit, bringing confidence back to our country and ensuring at the same time low inflation and low mortgage rates. In all, our Liberal government has been the catalyst in re-creating a healthy, vibrant and competitive Canadian economy.
Low mortgage rates are putting money back into the pockets of consumers and are greatly contributing to increased housing starts in Canada. However low mortgage rates are an advantage only to those who can afford to purchase a house.
It was crucial for our Liberal government to follow the path of fiscal responsibility, for by staying this course we will have a balanced budget for the first time in over 20 years and will be able to start reducing the federal debt in the next millennium a mere three years from now.
During the 1993 federal election the Liberal Party promised that if elected as government it would put Canada's fiscal house in order. I am proud to stand in the House today as a member of the governing party caucus to say that the Liberal government has kept its word. Consequently Canada's fiscal situation is the envy of the industrialized world.
Though the course we took was necessary, it has also resulted in hurt for many Canadians across our great country. Hurt has resulted in human misery for an increase in the number of Canadians who now live in poverty. Hurt has resulted in many Canadians facing difficulties in getting out of a cycle of dependency that is both demeaning and destructive.
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Today I would like to talk about poverty. I encourage the government to start working toward improving the situation of the Canadian underclass which statistics say is increasing in our country, and the quality of life of many people who do not just need help, but also need a voice.
In January 1996 at the Fraser forum, Chris Sarlo defined the ``Basic Needs Poverty Lines'' as follows:
A person is defined as poor if they can, at best, afford only the basic physical necessities of life. These necessities include: an appetizing and nutritionally complete diet; apartment rental accommodation with the number of rooms appropriate to family size and with the full complement of essential furnishings, household supplies and telephone service; clothing which is purchased new, appropriate to the season and with replacement rates assuming normal wear and laundering; a full range of regular, preventive and emergency health care, including personal hygiene, vision, and dental care; and essential transportation linking one's shelter to other basic needs. In all cases, the standard of quality of each of the basic needs is that which is considered minimally acceptable in Canadian society.In a country as rich and prosperous as Canada, all Canadian people are entitled to at least these minimal basic needs. But if we take these needs one by one, we realize how different reality is. According to Statistics Canada, my riding of Vancouver East has within it the poorest postal code area in all of Canada. In many areas in my riding, poverty is rampant and the daily reality of life for people is often as follows.
An appetizing and nutritional complete diet. A large number of children in my riding have one meal a day and this is in school. Due to the unsafe nature of many areas of my inner city riding, some schools in my constituency have joined together to start the Kidsafe program, which exists to feed and protect local children. This community initiative, which offers children a safe place to go to during school breaks and after school, began after a young child in my riding, who had no place to go to after school hours, was physically assaulted.
A school's responsibility is not to babysit children. Children generally are better off at home where their parents are. However, in repeated cases across Canada, many children are better off at school and away from their homes. For Vancouver's schools that offer the Kidsafe program, this service is very costly and demanding. However, the schools' principals and staff are to be commended for taking such action and helping children survive in a safe environment.
Apartment rental. Decent housing is extremely important for all of us. How can you have a decent life without decent housing? The federal government is currently committed to $2 billion a year to subsidize 661,000 social housing units across the country. This program has provided a large number of people, many of whom are children, single mothers, elderly, disabled and people on social assistance with a decent and affordable place to live. Unfortunately the government is devolving to the provinces the authority for administering this program.
Before I entered politics, I was involved in social housing. I administered Casa Serena, a senior citizens home that was built by the Italian Cultural Centre Society of Vancouver with the support of the federal and provincial governments. I was responsible for interviewing the people who applied for accommodation and I was appalled to learn of the condition of certain housing facilities.
Recently I visited the inner city area of Vancouver East and I can assure the House the skid row hotels are places not fit for human beings. Over 10,000 Vancouverites live in what is said to be the most expensive housing in Canada. These rooms are only 80 square feet and have just a bed and hotplate and rent for an average of $375 a month. Vancouver East offers concrete evidence that the government should stay in the social housing field.
Clothing which is purchased new. Many of the students of the inner city schools in my riding never wear new clothing. They have to count on the charity of others and only if they are lucky will they have proper clothing to wear.
A full range of regular, preventive and emergency health care. These benefits are available for all those who are on social assistance, but the moment they start working, they lose all these benefits. That is one of the reasons the working poor remain poor. They are people who work for minimum wages and have to pay for all their benefits, including a portion of child care costs, dental and drug costs, and in B.C. medical insurance premiums. Essential transportation. The same problems encountered with benefits is also encountered with transportation. The working poor are not earning enough to meet their basic expenses.
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It is time to take these problems into serious consideration. This year the United Nations has given Canada a low ranking for its record on child poverty and suicide. In June 1996 the UNICEF program of nations report was released indicating that Canada has the second highest number of poor children among the 18 industrialized countries. This is unnecessary and I strongly believe that the government has a moral obligation to find workable solutions to resolve this grave problem.
The United States has the largest number of poor children, Finland has the fewest. Among our poor children, the majority are aboriginal who at times live in abysmal conditions. Among aboriginals, poverty is much higher than among other Canadians, suicide is seven times more common, infant mortality twice as high and
the high school dropout rate is 50 per cent higher. What a waste of human potential.
Some of my colleagues and I have been very concerned about the children of the working poor. After much work, we were relieved to learn that in the last budget the Minister of Finance partially addressed the problem by increasing the maximum annual benefit from $500 to $750 in July 1997 and to $1,000 in 1998.
When fully phased in, this working income supplement will provide an additional $250 million annually to an estimated 700,000 low income working families, one-third of which are single parent families. I was also extremely pleased to find in the 1996-97 budget a whole section devoted to increased support for children.
The coming budget must continue the trend toward helping the working poor and children living in poverty. My ideal budget would include increased assistance to those in need through tax credits; continuation of benefits for a period of time to those people who join the work force at minimum wage; assistance to make people with disabilities full participants in Canadian society.
Early prevention programs through Health Canada. It is important to help children start their life healthy and in a good environment. This can partly be accomplished through the continuation and expansion of programs like the Community Action Plan for Children and Head Start. Both of these programs have been very successful in teaching poor families about nutrition and helping them curb violence and in empowering many parents in their parental role.
Finally, a national child care program. I know that at times the federal government has to work with the provincial and territorial governments to implement programs. The negotiations which are currently taking place between governments is heartwarming. Hopefully we will be able to work together and alleviate some of the problems that touch people in need.
After all, in a 1994 Angus Reid poll, 89 per cent of Canadians agreed that child poverty was a priority for government and in 1995, prior to the federal budget, Canadians listed child poverty as one of the top three priorities of government. Let me remind the House that wherever there is a poor child there is at least a poor parent.
The recent report presented by the Standing Committee on Finance speaks to the concern I express and I would like to thank its members on behalf of my constituents.
The Deputy Speaker: I do not like to interrupt the hon. member, but her time has expired.
[Translation]
Mr. Gilbert Fillion (Chicoutimi, BQ): Mr. Speaker, I have listened carefully to my colleague's speech. I cannot let some of her remarks pass without comment. It is a pity, because I had the impression that my colleague had a heart, and could be moved from time to time by child poverty or the situation of single parent families.
It is clear from her speech that she is prepared to go to great lengths in this area in order to do something for the poorest members of society. But she has made a colossal error in her remarks about social housing. I am sorry, my dear colleague, but despite the promises made by the Prime Minister in 1993 during the election campaign, and the promises made by the Minister of Finance during the same period concerning social housing, nothing has as yet been done.
They were going to give money to housing co-operatives so they could make improvements. But, since 1993, nothing more has been heard. There has been nothing. No money has been made available. The same thing goes for construction of new social housing.
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Since 1993, this government has not come up with a red cent for building new social housing. It is therefore incorrect to tell Canadians that this government is trying to do something about the problem of social housing. It is true that the budget shows it is paying a certain amount for social housing, but this is for existing housing. It therefore has responsibilities towards those residents.
Now, this responsibility has been transferred to the provinces, but minus the tax points or the money that should go with it. The result is that now the whole social housing policy in Quebec must be reviewed because the federal government is not meeting its obligations, even though they were renewed during the election campaign. I would therefore ask my colleague across the way simply to rectify what she said about social housing.
Mrs. Terrana: I do not think I need clarify anything. In fact, my colleague is right, we are no longer building new housing. Naturally, I am not happy about this, but we have had to take decisions to get back on track with our deficit and the economic situation of the country.
The situation my colleague has criticized is very crucial, but I would also like to add that, although the government is turning responsibility for the administration of housing over to the provinces, it is also going to promise to transfer to them the funds necessary to pay for housing in which people are already living.
Mr. Gilbert Fillion (Chicoutimi, BQ): Mr. Speaker, I am pleased to speak on this motion relating to the fifth report of the Standing Committee on Finance.
I must acknowledge the honesty of my colleague across the way for rectifying the facts in response to the question I asked. She corrected herself with respect to social housing, and gave Canadians the truth: that this government has done nothing since 1993 to
build more social housing. She even gave me a scoop, by indicating that she was going to strongly debate in caucus the fact that this government is transferring to the provinces the equivalent of what the entitlement for social housing would be. I congratulate her on the aptness of this remark. I will, moreover, carefully reread today's Hansard in order to get all of the details of what she said.
This motion on the fifth report of the Standing Committee on Finance worries me a little, and the title of the report grabs the reader's attention right away.
The title of the report, ``Finish the Job'', speaks volumes on the Liberals' intentions. When one reads this report carefully, one sees that they do, indeed, wish to finish the job, the job they are doing on the unemployed, by tightening the requirements for receiving UI benefits. To me, then, this is not a reassuring title, when one knows very well how the Liberals have treated the public since their election. We need only think of the blind cuts this government has made in order to do away with its deficit, unprecedented cuts in areas as important as health, education and social assistance-areas I also care about.
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The government's sole purpose is to reduce its deficit by hitting on anything that moves, especially the middle class and the neediest in our society. Not those who take advantage of tax shelters, not the large corporations or the chartered banks. It prefers to attack this part of the population first.
Personally, I agree with deficit reduction. Of course I do. We used to have governments that could not handle their spending power. They would spend taxpayers' money as though it were going out of style, and today we have to pay the bill. So it is absolutely necessary to reduce the deficit.
However, I do not agree with the way the government is going about this. As usual, the government is coasting. It is not meeting all these problems head on. It is trying to avoid them. Its only purpose in life is to tell the public that it is reducing the deficit. This is like having a healthy bank account but not using it to feed your family. It is like going shopping for groceries but not giving these groceries to the people who need them.
The family is the Canadian public, which believed this government, which was elected because it shouted from the roof tops a single word: jobs. Instead of saying it just once, it went so far in its hypocrisy as to say it three times. Everywhere we look in the red book, it says, not once, but three times: jobs, jobs, jobs.
According to the latest forecast given by the Minister of Finance, the federal deficit will have decreased by $25 billion between 1993 and 1998. Let us take a look at how the government managed to do that. Personal taxes, in the meantime, have increased by $23.1 billion since 1993. So there is no longer much of a difference. The money comes from somewhere. We must not fool ourselves.
Obviously, if revenues increase this way, we can certainly lower the deficit. However, have this government's expenditures been reduced accordingly? They have been reduced by only $14.4 billion. So the government is misleading the public to no small extent when it says it has reduced expenditures and that the savings go directly to reduce the deficit. That is not the case.
``Finish the job'' simply means that our taxes-direct or indirect-will be increased in the next budget. We run the risk of once again paying for the government's lack of understanding, as the unemployed are already doing.
If people were at least finding work, if our young people were at least coming out of our educational facilities with the hope of finding a job, if parents could at least ensure a modicum of comfort for their children, we could say that the economy is moving and we would not have the social problems we are facing now. However, this is not what is happening.
Our young people are leaving their regions in the hope of finding work elsewhere. I say, ``in the hope'', because after a while they come back empty-handed.
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What we are also seeing is fathers and mothers who must rely on social assistance to survive. What is this government doing? It is reducing its deficit on the backs of these people.
I repeat, we are in agreement with the principle of reducing the deficit, but the way in which this government is going about it, despite its promises, is hurting the public badly.
One approach the Liberal government has taken, and which is still the most unacceptable, is to keep dipping into the unemployment insurance fund over the last three years. This is nothing but a hidden tax on employment.
Of course, they tell us that it is not, but let us ask the following question: Where does the unemployment insurance fund surplus go? We are talking about $5 billion out of the unemployment insurance fund that the government uses every year to lower its deficit.
They keep trying to make us believe in their discourse that the government wants to build up a cushion, for use in the event of a recession, for example. However, at the rate things are now going, the rate it is taking money out of the fund, the cushion it is trying to build up is more like a mattress, a great big overstuffed mattress, whose purpose is not to provide for the lean years, but to reduce the deficit.
We have only to look to our riding offices. What is going on is very revealing. We in the Bloc Quebecois regularly meet with people in employment centres. I do not know if members across
the way do the same. At the present time, employment staff in the human resources development centres are being given training to explain what the new employment insurance program is all about. We know that it will come into effect on January 1, 1997. A number of questions have been asked on that point, and the responses have been evasive enough to prompt newspaper headlines such as ``Minister of unemployment insurance-to call it what it is-not familiar with his own files''.
This is a new insurance regime, a word I choose because it describes exactly what we are going to see in 1997: the people will be put on a weight loss regime, a diet. For a number of our fellow citizens, our constituents, this may turn into a starvation diet.
What keeps being repeated in the training courses, what the employees, the public servants, are being told, is that the new ``regime'' is based on the money saved in the unemployment insurance fund. Is this not scandalous?
This means that as much money as possible must be left in the unemployment insurance fund. This fund must be fattened up as much as possible, instead of being given to those in need of it. The eligibility criteria will be raised so high that, eventually, very few will be able to benefit from it.
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When you get elected on a platform of ``jobs, jobs, jobs'', you can hardly afford to rationalize taking money out of the unemployment insurance fund or premiums. Instead of using the unemployment insurance fund surplus to absorb his deficit, the Minister of Finance should use that money to deal with the unemployment problem.
They are applying bandaid solutions right and left. Have these people on the other side of the House really weighed the pros and cons, have they really thought about the whole unemployment question?
In my region last month, we lost the dubious honour of being the unemployment champions of this country. However, on the weekend, according to the latest statistics, we won the trophy back, with a rate of 15.1 per cent. That was the worst news they got in my region last week.
According to the Labour Market Bulletin for the second and third quarters of this year, many young people are the main victims of the deteriorating situation on labour market.
Among young people in my riding, the unemployment rate is 20 per cent. What is the government doing to turn this situation around? It offers young people absolutely nothing. The exodus of young people will continue. Of course that means that our regional unemployment rate will go down, but the unemployment rate will go up in other parts of the country, in the big cities.
I can hardly ignore the disaster that struck my region and especially my riding last July. In addition to the damage and the buildings that were destroyed, the disaster had an impact on jobs as well. Businesses had to lay off 3,000 persons temporarily. Of that number, many hundreds have yet to go back to their jobs. The tourism industry was hit very hard.
At this very moment, we may be seeing an increase in jobs in certain sectors like the construction industry. And obviously, there has also been an increase in retail sales. That is not thanks to the government but as a direct result of the disaster. When a family loses everything, it has to replace everything it lost. There are hundreds of families in that situation.
With all these job losses, you would have thought the federal government would have set up a special program to provide support for these businesses and the tourism industry and for all those who lost their jobs at that time.
The government provided assistance to non-profit organizations. This assistance came almost immediately, I must admit that. In this sector, the government was indeed present, but in other areas, where jobs were affected most, the only program offered was to owners of businesses who could get federal assistance, provided they hired people to do exceptional work. Let me explain.
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Pretend you own a convenience store, a restaurant or a grocery store. You have to lay off your employees, your capital is gone because the business has been closed for six months, and there is an offer to fund a job involving unrelated activities. Try asking a convenience store owner to hire a dressmaker. Try asking a restaurateur to hire a pump operator. It is that crazy.
It is therefore this government, the people opposite, that have lost touch with reality. People do, however, want to work. They want to re-open their businesses. But it has been difficult. We have been unable to find a receptive ear. And yet, we have met these people at all levels, ministers too. The results are not there.
In his next budget, the Minister of Finance will have to recognize, for once, that the people have given enough. They pay enough income tax. Employers need support to keep creating jobs. If the minister sticks to his present course, he will absolutely have to find ways to repair the wrongs he has done.
The Bloc Quebecois has, through its members sitting on the Standing Committee on Finance, submitted a slew of measures this government could use. It is up to you first to read them, examine them, study them in depth and remedy the state of this country's finances.
As I said at the outset, this report ``Finish the Job'' should join the multitude of government reports gathering dust on the shelves. What this government has to do is not finish the job but get on with it.
[English]
Mr. Dick Harris (Prince George-Bulkley Valley, Ref.): Mr. Speaker, I listened to the member for the Bloc talking about the prebudget run-ups. I just want to get a clear understanding what the member would say to this question. If there were one thing the Government of Canada could do to help the unemployment situation in his particular riding and in the province what would that one thing be? Would it be to pour millions of dollars into the province and into his riding by way of job creation projects, or would it be to give the private sector in the province of Quebec and in his riding an incentive through the lowering of taxes and the lowering of costs of doing business so that the environment of the business community would be such that it could flourish and prosper, thus creating more jobs? I want to be clear on exactly which one he would choose.
If the province of Quebec was in fact a separate state or nation, would the member ask those running the country to do exactly the same thing?
[Translation]
Mr. Fillion: Mr. Speaker, I thank my hon. colleague for giving me the opportunity to address issues I did not have time to mention earlier. I did not have time to elaborate.
The Bloc Quebecois' approach to making changes has been known for some time. Those who have been following the Bloc's performance in this House over the past three years know that suggestions to improve the employment situation were made to the government in several reports, but that, in most cases, as usual, the government ignored our suggestions.
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In response to my hon. colleague from the Reform Party, regarding specifically the unemployment insurance fund, if, instead of using the surplus to absorb the national deficit, employer and employee premiums were substantially reduced to ensure this fund is balanced, our businesses could already make use of that money to create new jobs.
As for involving a mix of business people in privatizing public functions, different schemes could be considered. The Bloc Quebecois suggested several. We are of course in favour of making every effort to create jobs. What is happening at present with this government? They are talking about subsidies left and right, but none are actually granted in any area. Businesses go to the business development bank, but nothing happens. There are no programs specifically designed for these businesses. It is a disaster, any way you look at it.
For the time being, what is required is perhaps not so much to create jobs as it is to strike a balance. All in all, there were not that many jobs created over the past three years. Since we have been allowed to speak about Quebec, when Quebec will take over manpower training-and I think this is the key to job creation-we will be able to train people in those areas where jobs are available. All too often, it is in high technology areas where productive and well paid jobs are created that employment can be found. Quebec could easily train people under those circumstances.
Even now, if only Quebec were getting its fair share from this government, it could create jobs in almost every sector. In research and development for example, Quebec's share currently amounts to 16 or 17 per cent. This is a very productive area.
It is the same with defence. Quebec is not getting its fair share in that area either. Give us our share, what is rightly ours, then the Quebec government will be able to create productive and well-paid jobs.
[English]
Mr. Ian McClelland (Edmonton Southwest, Ref.): Mr. Speaker, I wonder if the hon. member would give us his impression of the effect of the high levels of taxation, particularly payroll taxes, on the economy in Quebec.
I am speaking specifically of the underground economy. It is the impression of many people that the underground economy is alive, well and thriving in areas of high taxation.
[Translation]
Mr. Fillion: Mr. Speaker, the question is twofold.
First, there is the Canada social transfer. To be sure, the federal government transferred responsibilities in various sectors, including health, housing, as I pointed out earlier, and education, without also transferring related budgets. There is no doubt that the federal government dumped on the provinces, thus forcing the Quebec government to review its social programs, so as to balance its budget.
As the Bloc Quebecois has been telling the government in this House, the whole issue of clandestine work must be reviewed.
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Bloc members sitting on the Standing Committee on Finance made a number of proposals on this issue. You can rest assured that, in Quebec, the same thought process is going on and the Government of Quebec has taken steps in certain areas to control this problem. I do not think any politician can oppose such measures. At some point, we must absolutely give ourselves the necessary means to control clandestine work, something which the members opposite are not doing. Yet, they have received, on
several occasions, suggestions from Bloc members sitting on the Standing Committee on Finance.
[English]
Mr. Gar Knutson (Elgin-Norfolk, Lib.): Mr. Speaker, I will be splitting my time with the member for Beaches-Woodbine.
I begin my speech by commending the government for the job it has done on getting the deficit down. Regardless of any of our views on the actual details of the budget concerning how the money should be spent, we could probably all agree that the country is in far better financial shape now than it was three years ago.
In 1995-96 the government achieved a budget of $28.6 billion. By 1996-97 it is estimated that deficit will drop to $24.3 billion and go down to $17 billion or better by 1997-98. In 1992 Canada's deficit was double the G-7 average at 7.4 per cent of gross domestic product. This was a huge burden on our country and I believe we were on the verge of financial ruin. By 1996 our deficit had fallen to below the G-7 average and by 1997 will the lowest of all G-7 countries.
While there has been a tremendous cost to achieve these results, with many people enduring serious cuts, layoffs or whatever, as a country we should feel pleased with the results to date. We are enjoying lower interest rates, which is good for the economy, good for jobs. It is good for the housing market. It is good for consumer spending as people have lower costs when they borrow money. It is good for things like purchasing cars. These are all important issues in driving the economy and helping to create jobs.
Jobs were the key issue when this government ran in 1993. Unfortunately they remain the key issue to date. Let us look at the positive aspects of our record to date. Since 1993 the country has created 670,000 net new jobs. Currently Canada and the United States have the fastest job growth of any countries in the G-7 but unfortunately we all recognize that more needs to be done.
An unemployment rate of 10 per cent is very high and we should work collectively as a nation to solve it. There are no magic answers to the problem of lowering the unemployment rate but we must all appreciate that 10 per cent is far too high. It represents a drain on our economy of lost productivity. It represents a waste of human potential, a waste of human dignity. We must all come together and try to find a solution.
I will talk specifically for a moment about two of the more minor areas in the budget which are unrelated to the broader macro issues of deficit, debt, inflation and jobs. First I will talk about expenditures in the environment portfolio.
Under the current government budget plan we are scheduled to spend roughly $480 million on the Department of the Environment by 1998-99. That is an annual figure. I would like to point out to the government, as I see there is a cabinet minister here, that the defence budget is roughly 20 times higher. I suggest we would be hard pressed to find a Canadian who felt that the defence or military threat to our country was 20 times greater than the environmental threat.
When we look at what people are worried about in terms of climate change, air pollution and toxic chemicals in their water supply, we would be hard pressed to say those are all very serious issues but the military threat is 20 times greater. Not one of us would believe for a moment that those numbers are in proper proportion. If anything, Canadians would probably want us to spend 20 times more on preventing pollution and cleaning up the environment than we currently spend on defence.
The reason we spend so much on defence is probably that concerns about the military and defence have about a 5,000 year history while concerns about the environment probably have a 50 year history. I will leave the issue of defence spending and environmental spending to talk about another important issue, child poverty.
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In his budget speech in 1996 the finance minister asked: ``Why not decide together that in 10 years hence increasing child poverty rates will be a thing of the past?'' The finance minister should do just that. He should decide that increasing child poverty rates should be a thing of the past. Each year something in this regard should be done in the budget. I know we cannot cure the problem in one year, but every year we should put forth a new program or new expenditure designed to cure the problem of child poverty.
Currently Canada's child poverty rate is only exceeded in the OECD by the rates of the United States and Australia. The consequences are well documented including poor health, rising crime and reduced educational achievement. Campaign 2000, as stated in its report card, indicates that child poverty rates in Canada have risen 46 per cent since 1989. The exact data for 1994 is not yet available but it is estimated the problem has not been alleviated with the recovery. Cuts to unemployment insurance expenditures and provincial welfare rates have likely offset any gain due to the improved employment numbers and the increase in the working income supplement.
I do not want to just criticize the government. It is also important to remind ourselves that current government programs including GST rebates, working income supplement, the child tax benefit and others prevent another 64,000 children from falling into poverty.
Let me talk for a minute about the child tax benefit which pays a maximum of $1,020 per child to families with net incomes of $25,921 or less. Benefits are gradually reduced as income rises and
eliminated for a family with a net income of approximately $67,000 annually and one or two children. Neither the benefit rate nor the income level for the benefit reduction is fully indexed to inflation.
I should like to hammer away on this point. Currently the rate for the child tax benefit only goes up, if inflation is above 3 per cent, by the amount that inflation is greater than 3 per cent. The first three percentage points of inflation represent a real cut to the child tax benefit.
Although this might not seem like a lot of money in any one given year, the accumulated inflation year after year can have a huge impact. For example, it is estimated that on a $5.2 billion program, which is what we currently spend through the child tax benefit, almost $600 million in annual expenditure have been eroded away since 1993 when the Liberals were elected. That represents a $600 million cut to poor and middle class families with children. As a starting point the government should say it will protect all programs that protect children from erosion by inflation.
Perhaps the government wants to know where to get the money from. Since tax brackets are not indexed to inflation we actually gain revenue simply by inflation. As the incomes of people go up by inflation they pay more in GST and income tax. The Minister of Finance and the government as a whole should put some of that money into protecting programs that affect children from inflation.
I appreciate that my recommendation if implemented would not solve the issue of child poverty. Issues such as the general level of unemployment, literacy and domestic violence are all part of the problem. However I firmly believe small steps are important particularly when made in combination. Furthermore, small steps will pay off politically for all of us. I ask the government to take into account what I have said and implement full inflation protection for the child tax benefit.
[Translation]
Mr. Osvaldo Nunez (Bourassa, BQ): Mr. Speaker, I listened with great interest to the hon. member's speech. I know that he cares about the issue of child poverty. I also know that he supports his government's strategy against the deficit.
I do not think he mentioned the enormous problem we currently have with the unemployment rate, which exceeds 10 per cent in Canada and 12 per cent in Quebec, with the cuts made by his government to social programs, and with the fact that over 4 million Canadians live below the poverty level.
His government has demanded tremendous sacrifices from the most vulnerable in our society, like the unemployed and welfare recipients, but not from rich Canadians.
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This is in contradiction with the traditional Liberal philosophy, which was based on compassion. A former Prime Minister coined the phrase ``just society''. Where is the compassion? Where is the traditional Liberal ideal of promoting a just society? I do not see any compassion in the government's agenda. On the contrary, the government is relentless with the unemployed and with welfare recipients, who are the poorest members of our society.
I would appreciate it if the hon. member could explain the contradiction between his stated concerns about children, and his government's policy, which in no way reflects his own concerns.
[English]
Mr. Knutson: Mr. Speaker, the question the hon. member asks is a legitimate one in an age when such significant cuts have been made. Certainly some of them have fallen on the disadvantaged in society.
He asks how we can call ourselves Liberals and how we can call ourselves caring. Unfortunately the only answer I can give him is that oftentimes the decisions we have made represent the lesser of various evils. If we had not made decisions to get the deficit down, the country would have been in virtual ruin and somebody else would have come in and made those decisions for us. The poor and the disadvantaged would have paid the highest price from rising interest rates and a country in economic ruin.
Certainly the economic system does not work well for all Canadians. There are far too many Canadians who are not participating in the recovery, far too many Canadians who do not have jobs and far too many Canadians who are suffering from the restructuring. When we take into account all the decisions the government has made and look at them as a whole package, I am not sure any other decision maker, whether the Tories or any other hypothetical government, could have done a better job on the whole.
We know many people are hurting. All I can say to Canadians is that the worst is behind us. We are now enjoying the benefits of lower interest rates. The federal government is the major borrower in the country and is enjoying the benefits of lower interest rates in the cost of borrowing. We should now push the federal government to use some of those savings to try to correct the imbalances and unfairness in the economy over the last few years.
Ms. Maria Minna (Parliamentary Secretary to Minister of Citizenship and Immigration Lib.): Mr. Speaker, for some time now some we have had some discussion with respect to the situation of our economy. Now that we have surpassed the concern of the deficit, or at least now that we have reached the targets the government has set for itself, interest rates are the lowest we have had in decades and inflation is low.
There is a great deal of discussion in all corners of the country about what should be done now with what is perceived to be extra moneys available to ease up the pressures of the deficit situation. A great deal of what we here is also about tax cuts. I have some serious concerns and recommend that the government should not take this direction.
Tax cuts are not the solution. Lower interest rates have helped to save a great deal of money across the economy. Tax cuts in themselves tend to help people with the highest incomes and not those with the lowest ones. They tend to lower revenues, which means at a time of deficit and high debt there must be another way to replenish revenues.
It has been done in the province of Ontario where user fees are being brought in for just about everything. User fees are a regressive form of taxation because they hit everybody equally, especially those who have low incomes. They hurt people who are struggling at the moment. I do not see tax cuts as a solution to the situation of today.
The government has to look at the whole issue of how to ease up funds, what do do with them and in what areas of society to invest. It has to look at how to encourage the creation of jobs, assist people in difficult situations and invest in the future and the people of the country, the best resource we have.
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I would like to look at what I call the social economy. We tend to look at social issues as having something to do with charity and social programs as opposed to something directly tied to the economy. The two are one and the same. I call it the social economic policy as opposed to one or the other.
The working income supplement was increased for poor families in the last budget. I am glad the finance committee recommended a further increase. That will put money into the hands of average families. These people do not have extra money. They do not use the money for holidays. That money is used to survive. It is used to buy products in their communities. It assists the economy at the same time as it helps families.
We need to address the issue of child care very aggressively so that affordable quality child care across Canada is accessible. A proper child care program allows people to work. Some family members are not able to go to work. Some are working and the children are being left in situations which are not healthy and nurturing. That does not assist in their development. That affects their future ability to produce and contribute to our society.
There is the whole issue of child poverty. Child poverty is very detrimental to the family. The Standing Committee on Human Resources Development recommended-and the government is now committed to dealing with it-enhanced child benefits which puts money into the hands of families that require it. Again that assists in the nurturing of the child.
It is no secret that a child who is assisted from birth to three years of age or six years of age is an investment in society. These children will have a greater opportunity to develop normally and compete with the best in the world. We need to invest in the future of our children. Otherwise we will not be able to compete with the rest of the world. That is reality. That is part of our economy. The social costs down the road will be that much less.
We must guard our health care system. We must ensure that it is protected and that it remains a wholly public system. Health care is not only an economic issue. If people are worried about whether they will be able to protect their health tomorrow it increases their stress. The health of people contributes directly to their ability to work and to their ability to contribute to society.
In addition, the Canadian health care system enhances the ability to attract business. The quality of our health care system is one of the reasons businesses come to Canada, as well as the quality of life and our safe cities. Money spent in social and physical infrastructure attracts business to Canada. That is very positive. It has to do with the economy; it is not only a social issue.
When we invest in literacy, people are able to work. It is very sad that there are jobs going begging in the country which people cannot fill. Investing in literacy is investing in people: people are able to take the jobs which are available and we are able to compete with the world. It is an economic issue.
Let me touch on the whole issue of work. We need to look at work in a different way. We cannot simply talk about employment. We have to look at the quality of work. What does that mean?
It is time to look at things such as work sharing and possibly a four-day work week. Husbands in my constituency have said they would love to be able to work four days so that they could share in child rearing responsibilities with their wives. It is social, but it is part of the economy and helps the employment situation.
Any moneys invested in assisting youth in the transition from education to employment or in youth training are very important. The recent announcements of the government in this regard are excellent. It is investing in people.
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The Donner report to the government stated that it would like to see the government implement a 40-hour week, giving people the right to refuse overtime. Overtime in this country has become enormous. People go home so stressed that it is affecting families. When stress becomes chronic, it affects health, production and the
economy. Again, it is something else that we need to look at. It is very important.
We need to find a way to bring together the skills of Canadians in a national apprenticeship program. We need to negotiate with the provinces an agreement for portability of trade. This is something that is very critical. We cannot have people who are trained in one province that cannot work in another. It is not a social program. It is an economic program.
Finally, we must begin to recognize that protecting the environment does not kill jobs. It creates jobs. We call them brain jobs sometimes.
We have tremendous ability in technology that we can sell abroad and invest in protecting our environment. At the same time it is creating jobs. Protecting the environment not only protects the future of Canadians and our planet but it also creates jobs.
I want to give a bit of an emphasis today on how to approach social infrastructure. When we talk about social infrastructure we are talking at the same time about economic infrastructure. The two are not separate. They are one and the same. They are very interlinked. I want to encourage the government to take that direction very aggressively in the next budget.
[Translation]
Mr. Stéphan Tremblay (Lac-Saint-Jean): Mr. Speaker, I listened to the remarks by my colleague opposite. She spoke of fine principles, job sharing and such things.
I am prompted to make a few remarks. Some two months ago, the government organized a national conference on young people in the new economy. With the job crisis faced by young people, the government panicked and wondered what could be done. So it invited young people from across Canada-from Vancouver to Newfoundland-in order to siphon off their ideas.
What was the outcome? Each speaker at the conference had a key role in the community. What was the outcome? A sort of consensus. I know, because I led a workshop. What appeared to come out was that employment problems, both social and economic, are regional. I know that in English Canada, when they talk of regions, they mean the Rockies and the Prairies. In Quebec, when we talk of regions, we mean the Saguenay-Lac-Saint-Jean or Abitibi regions, where economic and social realities differ.
My question therefore for my colleague opposite is as follows. Does she not think that decentralization of powers and funds would lead to more activity? My perception of this great Canadian Parliament is that we are trying to study a national problem and find a national solution. Most of the time, however, we know that problems vary from one region to the next, because the realities are different.
So, would it not be better to involve the regions more and decentralize power in order to have solutions to the real regional problems?
[English]
Ms. Minna: Mr. Speaker, the hon. member tends to generalize when he talks about decentralization. It depends on exactly what we are talking about.
If the hon. member is referring to my comments with respect to training and education as well as trades and portability, there is no question that the needs of the country, because of its vastness and regional differences, are different from region to region and sometimes within the regions of a province.
That does not negate the fact that at the same time the economy is national, that we sell ourselves around the world, that we try to export the talents that compete around the world. We have broken down trade barriers with everybody but ourselves.
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One of the strongest comments I heard continuously throughout the human resources committee hearings two years ago was that people wanted to see some semblance of principles and objectives in the area of trade as well as portability. People wanted to be able to move across this land and be able to use their skills regardless of whether they are working in Montreal or Vancouver.
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, it is a real pleasure to speak to the prebudget debate.
I begin by acknowledging the chair of the finance committee who has always been extremely fair. He was fair again and did a good job of conducting things, speaking from a logistical point of view. Again, he has always been more than fair to members of the Reform Party.
Unfortunately I cannot say very many good things about the government members' report on the prebudget hearings. Frankly, I think there are a lot of problems with it.
I just complimented the member on how he ran the hearings, but it was fairly obvious to me and my colleagues that many witnesses had the big problems with the whole process surrounding the prebudget hearings. People who travelled on either leg of the prebudget hearings will acknowledge that we had to cancel all kinds of sessions this time round simply because witnesses did not show up. Apparently there was some confusion but also people did not see the value of appearing before the finance committee once again.
In fact, there is no question in my mind, if people ever knew they no longer know why we are having prebudget hearings. My
experience has been that a lot of people came and put forward issues that had absolutely no chance of being accepted by the government. It is acknowledged in the government's report that many social groups advocated all kinds of ideas that simply were not on.
It is incumbent on the government, if it is going to invite people to come and speak before it and spend hours putting together a presentation, that it says outright that there is no chance that those types of ideas are going to be accepted. In other words, there were no clear parameters for the debate. It is even acknowledged in the document. It states:
If anything, the success of the Government's approach has intensified the debate and transformed it. Advocates of spending cuts now argue that even deeper cuts can be and should be made to create room to reduce taxes on the deficit. On the other side of the spectrum, the advocates of higher taxes on corporations and ``the rich'' to finance deficit reduction now argue more vigorously for this approach and for the restoration of spending programs.
The Committee has preferred to avoid these extremes, supporting instead the approaches that are working and which are supported by the broad mainstream of opinion as demonstrated in its hearings.There is a quote from Jordan B. Grant, chairperson, Bank of Canada for Canadians Coalition. It states: ``You have savings of about $4 billion. Our immediate suggestion is that in this budget you put the $4 billion back into the economy''.
Obviously Mr. Grant, whom I certainly do not agree with, was invited to the hearing, took some time to put forward a report and then has it dismissed out of hand. It should have been very clear early on that the government had a particular vision and then asked people to debate it. That is not what happened. People spent countless hours putting together reports and then they were completely ignored.
Meanwhile, we had all kinds of other people who should have been invited before the committee and simply were not. I speak of the C.D. Howe Institute, a well known and very reputable organization that comments on all kinds of economic matters, that was not invited. Neither was the Fraser Institute invited, one of the most prominent institutes with respect to economic matters in the country. The Atlantic Institute was not invited. It just delivered a report on the effect of the $185 billion in subsidies of various kinds to Atlantic Canada. That report had a very high profile in the media but strangely it was not invited to appear before the finance committee.
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The Canadian Taxpayers Federation attempted to appear. There was a little bit of a mix-up with respect to it appearing and its delegation said it would put it off for a little while. The people at finance said: ``That was fine, put it off until next week when we return from our trip and perhaps you can come then''. As it turned out that was the end of the hearings and its delegation never had a chance to come forward. The Canadian Taxpayers Federation, that speaks for about 83,000 people in the country, never had a chance to appear before the committee and bring forward its members' views.
Do not take my word for it. I want to quote from the Alberta Chamber of Commerce ``Policy News and Views'' dated November 25, 1996. Chamber president Cheryl Knebel states: ``We were extremely disappointed by the way this year's consultation process was organized. We came prepared to speak to budget specific issues like program spending, the deficit-debt, interprovincial trade barriers and regulatory overlap''.
Ms. Knebel continued: ``There is an expectation within the business community that when the government asks for advice on the budget process it is prepared to seriously consider views pertaining to the issue''. She paid me a personal compliment which is nice, but is it is not the point. She goes on to say: ``He pressed to refocus the debate on the need to eliminate the federal deficit and reduce the debt as a fundamental means of addressing every other issue in government but there was just no support''.
Obviously the whole thing is way off track. If you do not have goal any answer is equally good. People can say whatever they want. If there is no clear vision it does not matter what people say because the government has not laid down the parameters. It has not told the people what it wants. It is pretty difficult to get input when people do not know what the input is on.
Clearly the process is flawed. People were not coming out. The media was not very interested this time round. This should be exposed for the sham that it really has become even though initially perhaps the intentions were good.
I want to mention a couple of things about the report. I mentioned a minute ago that the government members on the committee had written in their report that the committee has preferred to avoid extremes. I am talking here on the one hand about spending reductions and tax cuts, and on the other hand about increasing spending. It supported instead the approaches that are working and which are supported by the broad mainstream of opinion as demonstrated in its hearings.
The government claims that these are working. Canadians are not working. If these approaches are working so well, why are Canadians not working? Unemployment stands at 10 per cent. We saw this in the Friday unemployment numbers. The premise rather obviously does not bear scrutiny.
If these approaches are working, why has the government's record on child poverty been so poor? It has gone to great lengths in the document to talk about the need to address child poverty. On the other hand it says its approaches are working. It is fairly clear they are not. By the government's own numbers we know that child poverty has actually become far worse under the Liberal government.
In 1989 a motion was moved in this place which said there are one million children living in poverty and that poverty should be eliminated by the year 2000. Today the number is 1.3 million. It is worse by one-third. I do not understand how the government can say that these so-called extremes, like cutting taxes, is somehow out to lunch. Looking at the empirical evidence, the government's approaches have not worked and we have to start casting around for some new ideas. That is exactly what the Reform Party has tried to do and we offered that in our minority report. I see my time is up.
The Deputy Speaker: The hon. member will have 12 minutes left if he so wishes the next time the matter comes before the House.
The Deputy Speaker: It being 6.30 p.m., the House will now proceed to the taking of the deferred division on the amendment standing in the name of Mr. Loubier at second reading of Bill C-70.
Call in the members.
(The House divided on the amendment, which was negatived on the following division:)
Mercier
Meredith
Mills (Red Deer)
Morrison
Nunez
Paré
Picard (Drummond)
Plamondon
Pomerleau
Ramsay
Ringma
Rocheleau
Schmidt
Silye
Solberg
Solomon
Speaker
St-Laurent
Stinson
Strahl
Taylor
Tremblay (Lac-Saint-Jean)
Tremblay (Rimouski-Témiscouata)
Tremblay (Rosemont)
Venne
Wayne-80
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The Deputy Speaker: I declare the amendment lost.
(Amendment negatived.)