GOVERNMENT ORDERS

FINANCE

FIFTH REPORT OF STANDING COMMITTEE

Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, it is a pleasure to speak today to the report of the Standing Committee on Finance on the prebudget hearings.

I started speaking on this matter a day or two ago and, unfortunately, I was interrupted, so I am back again. I will begin where I left off. I left off by saying that, in my judgment, the government was searching for the answer but it would not tell people what the question was. I want to advance the debate a bit beyond that now.

This whole debate will be seen in a new light today as a result of the Prime Minister's town hall meeting last night. Last night we saw a side of the Prime Minister which I have not seen before. We saw a Prime Minister who seemed almost disdainful of the people who came forward, whose lives were in disarray because they were unemployed or because they had fallen on hard times. That stands in stark contrast to the words of the committee report.

The chairman of the finance committee is sitting across from me. I am certain he believes very strongly the words that are in his report which emphasize how much he cares about people who are unemployed, the poor and people who have fallen on hard times. However, I did not see that in the Prime Minister's responses to

questions from regular Canadians last night. Those people have fallen on hard times.

I want to talk about these issues one by one. These issues are very important to Canadians.

Last night at the town hall debate there was a graph shown on television which indicated that 42 per cent of Canadians said the number one priority they saw for government was unemployment. It is a huge problem. The Prime Minister brushed the whole issue aside.

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In the finance committee report the government does speak of the unemployed, but mostly it boasts about the job the government has done in creating an environment so that the economy can create jobs. Last night I think that claim was really challenged by reporters at CBC when they pointed out that since the government came to power, only 109,000 jobs truly had been created outside of the natural growth in the workforce. Therefore it amounts to only about 30,000 jobs a year since the government came to power, which allowed the unemployment rate to come down to about 10 per cent, still a double digit.

I know I speak for Canadians when I say 10 per cent unemployment is completely unacceptable. When we look at the regional breakdowns it is even worse. In Saskatchewan there is 6 per cent unemployment; we are getting there. But in Atlantic Canada, Cape Breton, 22 per cent, as the lady claimed last night. That is unbelievable.

What did the Prime Minister say in response to that lady's queries about what can be done to help people get a job? He said ``we have ACOA, some ACOA grants''. I think we have been trying ACOA grants for 20 years and they have done nothing to fix the unemployment problem in Atlantic Canada.

He said ``perhaps you can start a business''. But as the lady correctly pointed out, when you are unemployed you do not have the money to run out and start a business. These are common sense responses. And with respect to the Prime Minister, after 33 years in this place and serving as a big city lawyer, I think has has become too far removed from the common people. I think he has forgotten what it is like to come from humble beginnings. The people who spoke last night were simply not satisfied with the Prime Minister's answers.

I think it would be irresponsible to criticize without offering some answers of our own. We have suggested there is another approach. We have suggested that the way to deal with the problem of unemployment is to create an environment, as the Prime Minister says, where the economy will produce real jobs. But the government has not done that. That is not done simply by reducing the deficit ever so slowly but not giving people any of the benefits of a balanced budget and surpluses.

We are proposing, and I think it is what a lot of Canadians want to hear, is balance the budget, shrink the size of government, get rid of the wasteful programs; and there are many of them. Give the provinces some of the responsibilities which are theirs in the Constitution and which the federal government has never done a good job with. When that is done, a surplus will be run. When that is done, people can be offered lower taxation.

The Reform plan is to download $15 billion in tax relief to Canadians across the country so that the people in Atlantic Canada, where taxes are unreasonably high and are going to get even worse under this harmonization agreement that the Prime Minister spoke of today in question period, will benefit tremendously from lower taxes. The problem with the Atlantic Canadian economy is it is so bound up by taxes that it cannot possibly create the amount of jobs necessary to help the people in Cape Breton, Newfoundland, all the regions of Atlantic Canada.

One of the saddest commentaries on the failure of the government to deal with the problems that seize the country is today's release from Stats Can that says an estimated 1.472 million children liven in ``straitened circumstances'' in 1995, in poverty, up 110,000 from the previous year. In the finance committee report government members pointed out that child poverty is a problem. It certainly is but words are not enough. During the last election campaign the words were jobs, jobs, jobs. What has happened? Virtually nothing. This time apparently it is going to be child poverty, but words do not put food on the table.

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The government report says that not too much can be done. Maybe some money can be put into a working income supplement, maybe it could be enhanced. That is not enough. The Reform plan, $15 billion in tax relief, would take 1.2 million low income Canadians completely off the tax rolls. That is how people who are struggling just to get by are helped. That is how the poor are helped. That is how children living in poverty are helped. That is how 1.2 million Canadians would be taken completely off the tax rolls. That is the Reform fresh start.

Just a couple of minutes ago, as we went through Routine Proceedings, we heard petition after petition make reference to the GST. Probably a dozen or 15 members of Parliament got up with petitions in their hands saying that the government should fulfil its promise to get rid of the GST on reading materials.

Unless I missed it, I did not see that addressed in the finance committee report. Sometimes when things are not said it speaks volumes about the approach to an issue. This was a blatant promise

that was broken. Nowhere is it addressed in the finance committee report.

It is important that this is brought to the attention not only of Canadians who voted for the government on the basis of this promise but also the government MPs.

It is incumbent on government MPs to stand up and represent their constituents. They know very well that the Prime Minister wrote to the Don't Tax Reading Coalition just before the last election and said that he would get rid of the GST on books. It is still there. Yes, the government made some minor changes but it is still there. It is another broken promise. It should have been addressed.

The GST is barely mentioned in the finance committee report but Canadians had some hard questions for the Prime Minister last night. We had the spectacle of a waitress from Montreal standing up meekly at first, trying to challenge the Prime Minister on his GST promise, and what did he do? He attempted to dress her down. He tried to corner her and suggest somehow that she did not know what she was talking about. But she knew a lot better than he did what she was talking about.

She pointed out that the Prime Minister had said many, many times that he would scrap the GST and it was the basis on which she had voted for him. What did the Prime Minister do? He did not say: ``You're right. I am sorry''. He did not do what the Deputy Prime Minister had to do. He certainly did not resign. What did he do? He tried to deny that he had said all the things that a couple of minutes later appeared on the television news.

I would think, after having gone through the debacle of the Mulroney government and the myriad broken promises and the myriad times when people completely lost faith in government, the Prime Minister, the hon. member from Shawinigan, would have learned his lesson. Instead he let pride get in his way. He denied that he had said the things that ended up on the TV news a few minutes later and again, people have a very good reason to not trust government.

I wonder how many million people watched last night. I wonder how many million people saw a side of the Prime Minister that they had never seen before. We are all amused when the Prime Minister puts on his little guy from Shawinigan act. He is very amusing. He seems like a very nice man, but last night, although sometimes the words were there, there was a curled lip, there was an arrogant attitude. I did not see any sympathy at all for what the people out there were asking about.

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After what we saw last night this whole debate has been put in a new light. I hope Canadians remember this as we approach the next election.

Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, one of our most important challenges is to work toward restoring the level of credibility and integrity of this place. The words we have just heard have not helped that cause.

I was particularly disgusted with the attack on the Prime Minister. He has been characterized as a big Bay Street lawyer who has somehow lost touch with the people. If the member would look more carefully into the Prime Minister's background he would know that the Prime Minister comes from a rural area, that he comes from a family with 19 children. I do not know how the member could possibly characterize the Prime Minister as some fat cat Bay Street lawyer. He does a disservice to this place by somehow twisting the facts.

The member has agreed with the Prime Minister that the role of government is not to create jobs but rather to promote an environment which is conducive to job creation. The member did not articulate what the elements of that environment are.

Interest rates in Canada are currently the lowest they have been in 40 years. Inflation is also at a very low, very acceptable rate. The economy has performed exceptionally well and is projected to be the highest of the G-7 countries. The government has worked on these elements to promote an environment conducive to job creation.

This member said that Reformers would not mess around with little pieces on the deficit. He said that they would use their extreme policies to balance the budget and cut all those things in order to create that environment.

I have articulated the government's position vis-à-vis an environment to promote job creation. I would like this member to tell this place exactly what elements of the environment he feels his party is shooting for.

Mr. Solberg: Mr. Speaker, the member mentioned the word extreme. An extremist is anyone who happens to be winning an argument with a Liberal.

I want to make sure the member understands and does not take too much credit where credit is not due. The reason interest rates have fallen to this point is because the economy is so soft. That is why there are tremendous unemployment problems in this country. That is why interest rates have continued to fall. Everyone would acknowledge that the economy has been extremely soft.

Exports have done well because the dollar has been low but no one will say that the domestic economy has been anything but extremely soft. I do not think the hon. member should be taking too much pleasure in that fact. The same thing applies to inflation.

I will answer the member's question very specifically by pointing to what the Government of New Brunswick has done. It has acknowledged that low interest rates alone cannot fix the problem.

That is why that Liberal government has introduced income tax cuts.

Note that it has a balanced budget. Note that it has the capacity to do that. Most people would acknowledge that Frank McKenna in New Brunswick has done a good job with that province. It should be a model for the federal government. Our approach parallels exactly what is being proposed in New Brunswick. When you give people more money for their pockets they will start to spend it. That will create jobs.

The member talked about the fresh start plan.

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The fresh start plan will provide people with $15 billion in tax relief. It gives them more money in their pockets so they can go out and spend money in the economy, save for their retirement, look after their children's education, take a holiday once in awhile. It allows small businesses to create the jobs that are so necessary for the people, certainly of Atlantic Canada, Ontario, the prairies and British Columbia.

People everywhere are suffering today under this government's policies. It is about time Canadians had the chance to take the dollars that the government uses right now and spend them on things that are their priorities, not the government's.

Mr. Szabo: Mr. Speaker, following up on that, the member stated balancing the budget and after that they would lower taxes. However, he also said that 10 per cent unemployment is unacceptable. With the program he has outlined, he is prepared to suggest that Canadians should wait until the budget is balanced and taxes are reduced. When that is done then jobs will come.

They cannot have it both ways. They cannot suck and blow at the same time. They cannot balance the budget and give tax cuts at the same time.

The member has to answer the question. What is he going to do for Canadians to create an environment that will get Canadians working again? What elements is he going to create, not in two or three years from now, but today because that is exactly what he is asking of the government?

Mr. Solberg: Mr. Speaker, in 1993 the government did promise jobs, jobs, jobs. Three years later those things have not happened.

The evidence is clear. If one brings down a plan that clearly states that there will be a balanced budget and tax relief, the stimulus effect is immediate. There is evidence from around the world to demonstrate that is the case because finally investors have the confidence to begin spending again in the economy.

We need not speculate about this. There are many examples around the world. Probably the best example is right here in Canada. When the Government of Alberta announced that it was going to balance the budget and begin running surpluses, there was an immediate influxof investment into the economy because finally someone had a plan to deal with the problem, something that this government is missing.

People are paying for it with their jobs. People are paying for it with lower standards of living. The average family has taken a $3,000 national pay cut since the government came to power according to the Fraser Institute. We have had a massive attack by the government on transfers to the provinces of $7 billion. This government has closed more hospitals than all of the provinces combined. That is unacceptable.

That is the price of delay when the government cannot get its act together and recognize the importance of balancing the budget and starting to deal with the tremendous problems that were left not only by the Conservative government but by the Liberals before them as well.

Hon. Roger Simmons (Burin-St. George's, Lib.): Mr. Speaker, I have my Christmas tie on because I am in a very Christmas mood. My friend from Medicine Hat has just had some things to say and I will be responding to some of those.

Given the tone of his speech and watching the House during the afternoon, I wanted, in the Christmas spirit, to get something on the record.

There was a party back in 1993 that was going to come here and do politics a new way, I say to my friend from Red Deer. I was excited and said: ``This is marvellous''. ``There will be no more shouting, no more screaming and no more nastiness,'' that party said. This is a light at the end of the tunnel. ``Rational debate. No talking out of both sides of your mouth,'' that party said. ``No maligning people. No character assassination''.

In the Christmas mood, let us give them credit where credit is due. They have not shouted. I have not heard them scream once. Mr. Speaker, have you heard them malign anybody? Even this afternoon in the last speech, have you heard them malign anybody? Have you, Mr. Speaker, heard any character assassination? Have you heard them speaking out of both sides of their mouth on the issue? Let us have the Christmas spirit. Let us give credit where credit is due. If anybody has brought a new kind of politics, it is the people who said they would bring a new kind of politics.

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The member for Medicine Hat made a lot of sense. He said that words do not put food on the table. He is absolutely right. My friend from Bourassa is right. Words do not put food on the table.

I will suggest something which does put food on the table, in a way. If a house mortgage is now $800 a month instead of a $1,000, I would suggest that the extra $200 could put some food on the table.

An hon. member: You would probably take it back in taxes.

Mr. Simmons: Like I said, Mr. Speaker, no shouting. We have just heard from the no shouting party again.

The extra 200 bucks could put some food on the table. Or maybe if a car payment is $250 instead of $275 or $300, thanks to low interest rates, the lowest interest rates in this country in over 40 years, maybe that would put some food on the table.

An hon. member: Every country has lower interest rates.

Mr. Simmons: What will not put food on the table is all that shouting. That will not put any food on the table.

Let me say it for them one more time slowly. All the shouting, all the screaming, all the maligning, all the character assassination, all the talking out of both sides of their mouths; none of the above would create one job in this country and none would put food on the table. Low interest rates will do it. They are doing it for people all across the country, particularly the 670,000 who have jobs because of the mandate of this government.

Of course the hon. member for Medicine Hat is right. We have not employed everybody but there are 670,000 more jobs now than there would have been.

An hon. member: What about taxes?

Mr. Simmons: Mr. Speaker, I cannot take this, all this business of attacking that party for shouting. Talk about spreading malicious lies about people. I want to come to their defence.

Mr. Harris: Mr. Speaker, I rise on a point of order. I have great respect for the hon. member who is speaking. I cannot imagine he implied that the Reform Party was spreading malicious lies. Out of respect, I would love to have him withdraw that statement.

The Deputy Speaker: The Chair did not catch that word. I wonder if the member would be kind enough to indicate what in fact he did say.

Mr. Simmons: Mr. Speaker, I was viciously attacking all the people who go around suggesting that the Reform Party has not brought new politics to this place. I said that the people who suggested that are spreading malicious lies. We all know it is the non-shouting party. We all know it is the party that never maligns anybody.

I want to talk about this marvellous report of the Standing Committee on Finance.

I say to the hon. member for Medicine Hat that it is not the government, it is a committee of which he is a member. Not one single person on that committee, including my good friend from Willowdale, the chairperson, is a member of the administration. They are all MPs from various parties.

That committee went to St. John's. When in St. John's it heard concerns from seniors and from small business. It heard concerns about youth and about job creation. It heard concerns about deficit reduction targets, social programs and the fishery. The hon. member for Medicine Hat, the hon. member for Willowdale and the other members of that committee from all parties heard those concerns. Then the committee responded to those concerns.

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On the issue of seniors, the report points out that as of the 1996 budget, thanks to the Minister of Finance, those 60 and over, along with their spouses whatever their age, are guaranteed no less than current pension payments.

On small business, the total lending ceiling under the Small Business Loans Act has been raised to $12 billion.

For youth, over the next three years the government is going to put out $1.2 billion including an additional $350 million announced in the last budget a few months ago.

On job creation, over 600,000 jobs have been created.

On deficit reduction targets, we are meeting them and we are beating them. That is performance. Let us stop right there.

Mr. Speaker, you are looking at a person who never particularly got his jollies out of deficit reduction. I had to tell you that. I have never seen deficit reduction as an end in itself. I never go to bed and say ``thank the dear Lord I have reduced the deficit some more today''. It is never in my prayers at night because it is not an end in itself. If it were an end in itself we should shut the government down and all go home.

Some hon. members: Hear, hear.

Mr. Simmons: Mr. Speaker, you have to hand it to me, I know how it feels to the Reform crowd.

Deficit reduction is not by itself an end in itself. It is just a very important, pivotal, crucial way to an end, but we should never lose sight of what the end is because the end is all about people. It is all about those 670,000 who got jobs in the last three years but it is also about those people, 10 per cent in some provinces, 25 per cent or so in parts of my province, those large numbers of people who are kind of camouflaged by near percentages, those people who are hurting every day because they do not have jobs.

For them we must see to it that not only is the deficit reduced but that the interest rates are low, that they have more access to capital if they are in small business. If they cannot start a business because they do not have the first bit of capital we have to find a way to get them to a job so that they have an income. An $800 mortgage cannot be paid if there is no job in the first place to put food on the table.

For those who suggest that somehow with a wave of a magic wand suddenly all is right with the world, it does not work that way, even a couple of weeks before Christmas.

I am sharing my time with my friend for Annapolis Valley-Hants. Before I sit down let me say I believe the committee, through its recommendations on children and poverty, people with disabilities, the old question of productivity, a better deal for the volunteer and charitable sectors, has done a marvellous job.

Mr. John Murphy (Annapolis Valley-Hants, Lib.): Mr. Speaker, I am pleased to have the opportunity to speak today on the prebudget debate, following my friend from Newfoundland who did an eloquent job. He did not need to put anybody down in doing it.

I would like to congratulate the members of the finance committee for their comprehensive report and many excellent recommendations. The committee has tabled a thoughtful report and has offered many positive and tangible actions our government can take to help improve the economy and help reaffirm our commitment to the principles of social equity and fairness.

When we look at the financial record of our government the numbers speak for themselves. Let us look at the facts. When our government took office the deficit was $42 billion, 6 per cent of our gross domestic product. In three years we have reduced that number to a figure below 3 per cent of GDP. Recently the Minister of Finance confirmed that this figure will be down to 1 per cent of GDP, or $9 billion, by the year 1998-99. This is significant because it will mean that our government will no longer have to borrow from the markets to fund the deficit. This, combined with low interest rates and a strong economic growth rate, will allow us as Canadians to have greater sovereignty over our economic affairs. As a result of our tough fiscal actions we now have broader options to set our own economic agenda rather than being at the mercy of international financial institutions.

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In the past, it would seem that the deficit targets were never met. Governments would table budgets offering rosy financial outlooks and would then proceed to miss their targets year after year.

Our government, however, has reversed that trend. We are restoring Canada's fiscal credibility. Our government has shown that when we make a commitment, we keep it.

There are two specific issues raised in the report that I would like to focus on, child poverty and the need for active job creation measures.

In a country as prosperous as ours, it is unacceptable that 20 per cent of our children still live in poverty. I sit as a member of the Standing Committee on Health and in recent months we have been conducting a study on the health of Canada's children. As part of our efforts we have heard from health groups and child advocacy organizations from across the country. These groups have raised many serious concerns and put forth many excellent recommendations.

I am pleased, and I think many children's organizations will be pleased to see that the committee has recommended an increase in the working income supplement in order to target the children of working poor.

The chair of the finance committee stated in his remarks in the House Monday that families among the working poor often have benefits of $3,000 a year less than those on social welfare. In many instances this creates a disincentive to work.

I would strongly urge the Minister of Finance to accept this recommendation as a means of working to alleviate child poverty. But I do not believe that we can stop there.

I want to take this further and recommend that our government target increased assistance toward federal programs that deal directly with the issue of child health and child poverty. One such program I am sure members are familiar with and which I believe is worthy of increased investment is the community action program for children, CAPC.

I noticed in the finance report that the future of CAPC was addressed during public consultations. I agree with the recommendation that government funding intentions for CAPC be made clear and that the support for CAPC continue.

In communities across Canada 450 community based groups are using CAPC dollars to provide families with parenting education and support and children with opportunities for early learning experiences. I have seen firsthand this program and how it strengthens families and helps children achieve their goals.

However, in April 1997 the CAPC program is scheduled to face a 51.9 per cent reduction in federal funding. This could in turn threaten the very viability of this program at the community level.

Recently I hosted a meeting where members of the Nova Scotia Association of Family Resource Projects briefed members of Parliament about the important role CAPC programs play in their communities. At this meeting members of the organization played a cassette recording of comments by parents who have benefited from the program. There was no question in our minds that this cassette left members with a firm understanding of how a government can positively affect the day to day lives of people.

I would like to read for my hon. colleagues one of the comments that I was particularly touched by. This message was left by a young mother of two. She said: ``I was trying to do the best I could

with the resources I had, but they were limited. I felt helpless not knowing where to find the skills, but I knew they were out there''.

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Once she started attending the family resource centre, a CAPC funded program, she said: ``I have learned so many new skills that I have been applying not only with our children but with other relationships in my life. Our family is much happier since I have been coming to the centre. I feel that the programming offered at the centre for our children is doing all that is necessary for our children to be prepared for school''.

We are making a difference through programs such as CAPC. I would urge our government to commit targeted resources toward this program and other similar proactive programs aimed at assisting poor children and families. By focusing on the elimination of child poverty now, we are making a direct investment in our own future as a nation.

I would now like to turn for a moment to the issue of job creation. In my riding of Annapolis Valley-Hants, job creation continues to be one of the most important concerns I am hearing. Even the finance committee's report states that Canada is faced with a situation where employment growth remains strong but unemployment continues to persist at unacceptably high rates.

It is true that during the last three years jobs have been created. At last report there were some 670,000 new jobs created in Canada. While this is no small number, unemployment numbers across the country clearly show us that more needs to be done. I believe in the position put forward by our government that our primary responsibility is to create the right economic climate for job growth.

When I say that our government must play a greater role in job creation, I am not referring to costly short term, make work projects that have little long term benefit. Instead our government must continue to focus on creating new partnerships with the private sector, research and educational institutions and other levels of government. We need to be an active partner in those areas where we can help create new jobs.

A perfect example of this type of partnership is the national infrastructure program. The first tripartite agreement was a tremendous success. In my riding of Annapolis Valley-Hants a total of $22.3 million was invested in order to address local priorities. This program showed that when governments are working to achieve common goals, our communities reap the benefits from this co-operative spirit.

I was pleased therefore to see that in the finance committee's report there is a recommendation calling for a new infrastructure program. I was also pleased that as a part of this program the committee has recommended that we refocus our infrastructure dollars toward research and development. This is a recommendation I fully support.

I would like to also add that as well as partnering with universities and health institutions, we should focus greater attention on R and D in the agriculture and natural resources sectors. These sectors are extremely important to rural communities like those in my riding of Annapolis Valley-Hants.

As well focus must be given to our transportation and communication infrastructures. This is particularly true in Atlantic Canada. By focusing more attention to these areas we can help create sustainable jobs in our rural communities.

There is a lot more I would like to say on this issue but I see that my time is running short. I will close by once again commending the work of the finance committee and the many excellent recommendations it has put forward. This document offers a thoughtful analysis of the many serious issues still facing our government and all Canadians.

Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, I want to congratulate the member for Annapolis Valley-Hants for his thoughtful comments and remarks.

It is very difficult for a member to talk about his or her own work but other members can. I would like to let the hon. member's constituents know that he has been one of the leading spokesmen in this place about family, children and has been an advocate on behalf of the CAPC initiative. He shared that experience and expertise within his riding with other members so that they could see the valuable contribution that makes to the strengthening of our families and children. I congratulate him on the excellent work he has done on behalf of this place.

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My question has to do with the infrastructure program. I concur with the member that it has been helpful. Would the member care to elaborate a little on the initial infrastructure program that the government had and the contribution it made to his area? Maybe he could give some ideas on the specific things that might be of benefit to his constituency.

Mr. Murphy Mr. Speaker, I thank my colleague for his kind remarks.

The infrastructure program in my riding was very successful. The major success was that it built some infrastructure to help draw in new companies and industry to our area. That is very important. The infrastructure program is not meant just to create short term jobs; it is to set a tone, to set an infrastructure foundation for future growth and development. It did that in our area.

We worked very closely together. The communities and the municipalities chose the direction in which they wanted to go and I was there to help them do it. I went to every one of the chambers

and talked about the infrastructure program with them. I heard what their priorities were and acted on them.

For the future, yes, we want to talk about partnering with universities and hospitals, partnering with provincial and municipal governments. But there is another aspect I would like to see us get into, which is the whole area of being in partnership with businesses. We could help businesses build their infrastructure so that they could employ more people with more sustainable jobs. That would be a really helpful endeavour for instance in my riding of Annapolis Valley-Hants.

I look forward to the government coming forward and initiating this project so that we can do what we said we would do and continue to do what we have been doing, which is creating jobs and economic development.

[Translation]

Mr. Osvaldo Nunez (Bourassa, BQ): Mr. Speaker, I am pleased to participate in this debate on the prebudget report. Naturally, I support the Bloc's dissenting opinion expressed in the report of the Standing Committee on Finance entitled ``The 1997 Budget and Beyond: Finish the Job''.

This government has made unprecedented cuts in health, social assistance and higher education, but we still have double digit unemployment. Compared to the 1989 employment situation, we are still 925,000 jobs short. The federal government is forcing the jobless onto welfare and forcing the provinces to make the most difficult choices in its place. We will recall that Liberals ran on a platform of ``jobs, jobs, jobs''.

Today, three years into the Liberal government's mandate, the unemployment rate, at more than 10 per cent, remains outrageously high, roughly double the American rate. We must recognize that, in the area of employment, this government's record is poor. I watched, last night, the Prime Minister's interview on the CBC. Several questions were about Canada's high unemployment rate. We heard accounts of the hardship individuals and families are going through across Canada today. The CBC itself just announced job cuts affecting more than 1,000 people.

It should be pointed out that the cost of high unemployment has become huge, totalling some $91 billion a year. This figure, taken from a study conducted by the Department of Human Resources Development, includes the costs of lost productivity and crime, health costs and all the social costs associated with an employment crisis.

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One of the social costs associated with the situation the jobless are in is malnutrition, which can result in chronic illness. Unemployment can also cause severe stress in some individuals, as well as mental disorders, alcoholism, suicide, accidents and heart disease.

These social and health problems associated with unemployment represent additional costs to the federal government. In the end, the taxpayers have to foot the bill for this increase in costs. We find ourselves in a situation where not only citizens are provided with fewer and fewer services by the government, but they are paying more and more taxes.

I agree with eliminating the deficit and putting the federal government's financial house in order. But I disagree with the way the government is going about it. They are penalizing the unemployed, welfare recipients, seniors, immigrants and the most disadvantaged in our society, while at the same time protecting and favouring the wealthy.

More than five million Canadians are living below the poverty line, including more than 1.5 million children. I should point out that 1996 was designated International Anti-Poverty Year by the United Nations. Yet, poverty is growing in Canada.

The government tells us that fighting poverty, particularly among children, is one of its priorities. Let us not forget, however, that the federal government's Canada social transfer cuts have increased poverty among children and adults alike. This indicates that the government's choices are not consistent with the objectives of employment and fairness that it claims to be pursuing.

I also condemn once again the decision to use accumulated surpluses in the employment insurance fund to reduce the deficit. The government is reducing its deficit by about $5 billion every year by dipping into this fund, to which only workers and employers contribute so they can have a social safety net.

By reducing the accessibility and duration of benefits, the federal government deprives a considerable number of claimants from money they have already paid into the fund. This is a disgrace.

The situation will get worse as of January 1, 1997, with the implementation of new drastic unemployment insurance measures. The unemployed and their families will have a rough winter.

The Liberal majority report mentions that the technical committee on corporate taxation will only submit its report by the end of 1997. This committee is not at all impartial. Indeed, it is made up of experts from the private sector whose role is to provide advice to major corporations on how to pay the smallest amount of tax possible. Some of these members are clearly in a conflict of interest.

The government has shown that it has a soft spot for major corporations. These are almost unaffected by cuts made to improve the state of public finances. By contrast, the federal government cuts into social programs and targets workers' rights. The only protection for wage earners is their right to collective bargaining,

particularly under the Canada Labour Code. However, this right has been violated by the government on a number of occasions.

In the dispute opposing Canadian International and the Canadian Auto Workers union, the CAW, the government once again sided with the employer. The labour minister unduly interfered in the union's internal affairs. It bypassed the action of CAW's democratically elected leaders by exerting unwarranted pressure and threatening to invoke some obscure section of the Canada Labour Code to force them to hold a vote on major wage concessions.

(1630)

A duly signed collective agreement is in effect between the parties. For political reasons, and to favour Canadian International, a western company whose head office is in Calgary, the government resorted to political interference and forced the union to hold a vote. I hope this government will have the courage to demand from Canadian International officials a restructuring plan that will protect the jobs of its 16,000 employees.

I want to salute the courage of CAW's leaders, who stood up to the company and to the government. I also condemn the unjust attacks in this House by the leader and the reform members against this union, and particularly against its president, Buzz Hargrove, who is defending the legitimate interests of those of his members employed by Canadian International. These employees have already taken several pay cuts to keep this airline afloat.

As for the overhaul of the taxation system for corporations and for individuals, the government does not seem to be in any hurry. It does, however, seem to be in quite a rush to reduce UI benefits and transfer payments to the provinces for health, higher education and social assistance.

The federal government must clean up its own act and reduce its own spending. There are still too many examples of taxpayers' money being wasted or used inefficiently. This is why, year after year, the auditor general criticizes billions in unnecessary spending, and tax loopholes.

For over three years now, the Bloc Quebecois has been condemning family trusts and tax havens. It has been calling for an overhaul of the Canadian corporate taxation system. Federal tax revenue from corporate taxation has dropped considerably in the last 30 years, going from 23 per cent in 1961 to 9 per cent in 1995.

In addition, Canada is one of the G-7 countries where corporations pay the least tax. Its taxes are also well below the average for OECD countries. The same also holds for Quebec. The tax rate on profits is lower than elsewhere. The impact of federal cutbacks on Quebec is substantial. These cuts are reflected in a major shortfall in revenue for this province, estimated at $16.3 billion for the period from 1982-83 to 1995-96.

Quebec will suffer cuts totalling $636 million in 1996-97 and $1.2 billion in 1997-98. If the federal government had not offloaded its deficit since the early 1980s, Quebec would now have a balanced budget.

These federal cuts dramatically reduce the resources available to the Quebec government to pay for the social programs its population needs. I want to take this opportunity to condemn the attitude of a government that has laid off 45,000 employees in the federal public service. And for many years, it has refused to increase the salaries of its remaining employees.

I hope that the upcoming negotiations with the Public Service Alliance of Canada will lead the government to grant reasonable salary increases. In March 1997, the Public Service Alliance of Canada's 135,000 members will start their negotiations with Treasury Board. For six years, salaries have been frozen, there have been cuts in service and a huge reduction in the number of employees. They are asking for wage increases, the introduction of wage equity, reinstatement of the guidelines on workforce adjustment, employee training, and so forth.

I would also like to say a few words about the incredible salaries of business leaders, salaries we can only dream of.

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The president of a large company earns more than the President of the United States and the Prime Minister of Canada. They make at least $300,000 or $400,000 a year, in addition to all their other advantages. And these advantages are often considerable: stock options, production bonuses and premiums, social benefits, and so forth.

I would like to give a few examples of well-heeled executives, and that is an understatement. The president of the National Bank, Mr. Bérard, takes home an annual salary of $1.4 million, while his counterpart at the CIBC had a salary of $1.83 million in 1995. Laurent Beaudoin, the president of Bombardier, earned a total of $19.1 million, one of the highest compensation packages in the country. This $19.1 million includes a salary of $900,000, a bonus of $525,000 and $17.5 million in profits on options. The former president of Bombardier, Raymond Boyer, received an annual salary of $7 million, including $5.9 million in profits on options.

Frank Stronach, founding president of Magna International, made $47.2 million in 1995, including option profits worth $32.3 million. Gérald Pencer of Cott Corporation received $13 million, including option profits worth $12.5 million. David Walsh of Bre-X Minerals Ltd. got $10 million, all in stock options.

There are more heads of companies who earned very attractive salaries, often more than $1 million per year. These include William Doyle and Charles Childers of Potash Sales Ltd.; Pudy Crawford at Imasco; George Petty, Repap Enterprises Inc.; James Dougham of Stone Consolidated Corporation; Larry Solari of Domtar, and so forth.

According to a study of 268 corporations whose shares are traded on the Toronto Stock Exchange, the presidents and CEOs received an average salary of $776,000 last year. This is an increase of 32 per cent over 1993 and 12.6 per cent over 1994.

These incredible salaries are huge, compared with the earnings of those who work for the minimum wage, which varies between $5 and $7 per hour, depending on the province. These differences are out of all proportion.

The extremely high salaries of heads of companies are also a strange contrast with the social conditions of the unemployed and welfare recipients. While the first group lives in luxury, the second is working very hard just trying to find ways to survive each day.

This government's first priority should be to shrink the huge abyss separating the richest and the poorest. This concern must always be taken into account when difficult choices are made about reducing the deficit. The government must have the courage to ask the upper strata of society to make a little effort to help reduce the debt. This in turn would mean that fewer Canadians and Quebecers would be living in abject poverty.

On December 1, I held a brunch with the theme of social solidarity in my riding of Bourassa. More than 300 persons attended. They came from very poor backgrounds, community organizations, the Montreal North AQDR, business and unions. The subject was sharing the wealth and protecting workers and social benefits.

We had distinguished speakers. Clément Godbout, the president of the FTQ, spoke of workers' rights, as did Monique Simard, and Jean Campeau, a former Quebec minister of finance. I discussed the issue of social solidarity and the solidarity of the people of Quebec.

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I invited the federal government to use this solidarity to revive the economy and especially to create jobs. The speakers also criticized the huge profits of Canadian banks: over $6 billion for the six main banks.

On the other hand, cuts are being made to welfare, unemployment insurance, the system of subsidies, and so on. Things are tough. On the eve of Christmas, many people will be unable to buy gifts and to partake in the festivities.

In closing, I would first like to wish Merry Christmas to all my constituents in Montreal North and to the people, immigrants, seniors, young people and those hardest hit especially.

[English]

Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, when my colleague across the way began his speech he said he endorses the dissenting report of the Bloc Quebecois in the report of the finance committee. In looking at this report, while the Bloc Quebecois endorses the move to eliminate the deficit and to rationalize the federal government's public finances, it disapproves of the government's way of reaching the ends.

I looked at the report to see how the Bloc would eliminate the deficit. One of the recommendations is to increase the transfers to the provinces, which actually increases the deficit. The Bloc wants to reduce individual taxes which would increase the deficit. It is to stop using the notional surplus in the UI fund, some $5 billion, to apply against the deficit. This again is an increase in the deficit. Finally, there was a recommendation to start fighting child poverty which is to spend money through various programs. All of those increase the deficit.

On the other side, there were two items. The first one was to increase corporate taxes by some $3 billion, but it goes on to state that the $3 billion should be spent on job creation initiatives. The final item is basically cutting government spending.

If the corporate tax increase is not available to reduce the deficit and all the other items in fact increase the deficit, I wonder if the member would care to outline for the House exactly what he is going to cut to cover the $15 billion-plus increase in the deficit that his party is proposing.

[Translation]

Mr. Nunez: Mr. Speaker, as I said, I support the minority report tabled by the Bloc Quebecois and every measure contained in it. The hon. member wants to know where the money required to finance federal spending will come from. I am telling you where to cut: in tax shelters. We have condemned such shelters. Family trusts are a disgrace and should be eliminated as soon as possible.

Also, all the unnecessary expenditures identified by the auditor general in his report must be cut. More cuts are required in defence. The cold war has been over for quite some time. A more equitable tax system must be developed and we do not think the government should use the $5 billion UI fund surplus to finance its deficit. That money is not theirs to begin with. It belongs to those who have contributed to the unemployment insurance fund, that is to say employers and employees, and only to them.

For these reasons, once again, I commend our finance critic for presenting such a fine report.

(1645)

[English]

Mr. Andy Scott (Fredericton-York-Sunbury, Lib.): Mr. Speaker, I will be sharing my time with the member for St. Boniface.

I appreciate the opportunity to participate in this prebudget debate. The government has done a good job of getting our finances back on track. The deficit has been reduced from $42 billion to $24 billion in 1996-97, and it is a projected $17 billion in 1997-98. These numbers are as a result of a concerted effort implemented over a gradual period but it must be acknowledged that many Canadians have sacrificed to get there. Before I get into just who they are, I would like to also point out that there are parties present in the House today who would have moved faster and cut deeper, given the chance.

I look at the campaign that we all waged some three years ago and both the Progressive Conservative Party and the Reform Party pledged to eliminate the deficit inside the first term. I recall during a budget debate more recently when the leader of the Progressive Conservative Party specifically demanded that we cut deeper and faster, again repeating the expressed position that we should eliminate the deficit inside our first term in office. This course of action would have left devastation throughout the regions most affected by the reduction of government services such as the Atlantic region.

Now that we have made some progress, real progress in the area of deficit reduction, we need to start focusing on the future instead of focusing on the problems of the past. We also have to recognize that some problems have been neglected as we have pursued deficit reduction. We have to start working for those people, poor children and Canadians with disabilities to name just two groups.

I recently hosted a public policy forum in my riding of Fredericton-York-Sunbury to deal specifically with the budget. The discussion included questions around the deficit, the role of the private and public sectors with respect to economic growth and the harmonized sales tax.

The majority of individuals at the forum expressed the view that the country's social safety net cannot stand another round of cuts, that the government has cut those kinds of expenditures as much as it can. They proposed that we must now look at high end tax reform as there is a sense that many large corporations and Canadians at higher income levels are not paying their fair share.

Discussions around the role of the public and private sectors in the economy focused on whose role it is to create jobs and how to do it. Forum members suggested that the government does have a role to play in intervening in the economy to protect disadvantaged Canadians and disadvantaged regions, to show leadership in dealing with global adjustment, school to work transition and lifelong learning.

Since the traditional safety net perhaps is not as comprehensive as it once was, we need to create an environment that will produce equality of opportunity. We have to start dealing with the problems of child poverty. We need to address the unique obstacles faced by persons with disabilities on a daily basis.

The government needs to make sure that the country is working for everybody. In other words, the role of the state is an active one. It is to mitigate the inequity of the market for underprivileged children, seniors, middle aged persons with disabilities. We have an obligation to intervene on behalf of those less likely to succeed in a market driven, survival of the fittest world.

This flies in the face of the ideologies of both the Reform Party and the Progressive Conservative Party which have said that the government should get out of the face of Canadians, that the market will correct itself. That will undoubtedly succeed for some, those who are active participants in and beneficiaries of a purely market driven system, but I ask: Is the government's job to work for those individuals or for the individuals for whom the market does not work? This is a fundamental question, one that these two opposition parties should stop and ask themselves.

When many of us on this side of the House were agonizing over the impact of the deficit reduction imperative, lobbying internally and fighting the good fight, the right wing parties insisted that we were not cutting quickly or deeply enough. Now that the economy is getting back on track, they have the unmitigated gall to complain that we are not spending enough, a position that pushes hypocrisy to a new level.

I want to reiterate that I believe there is a time for deficit reduction. After the last election our debt was at an all-time high. We were spending far more than we were taking in. This needed to be dealt with so that we could reclaim our sovereignty and stop looking over our shoulder at those threatening to take over our finances.

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As we reclaim our fiscal sovereignty, we can now institute the programs that help those most in need without having to spend all our energy focused on interest rates. In other words, we see light at the end of the tunnel. We must restore the faith that Canadians have in us that we are going to be dealing with those social imperatives.

Mr. Speaker, I would like to bring to your attention an issue which I know is very important to you, Canadians with disabilities. I had the good fortune of recently chairing a task force that looked at the issue of how the Government of Canada should intervene in

our society to make life fairer and more equal for Canadians with disabilities.

The government task force produced a report which calls on the government to consider 52 recommendations which included dealing with the cost of disability, allowing Canadians with disabilities to have more access to the workplace, and tax measures that would underwrite the cost of disabilities to a large extent by the government. Basically, it was to see to it that Canadians with disabilities have the same shot at the quality of life Canada is prosperous enough to offer to all.

I welcome the opportunity to speak to an issue I know is important to all of us. I urge the government to take very seriously the recommendations of our task force report. I also suggest that we take every opportunity to use whatever capacity has been generated by our good management to see that Canadians who have suffered during this fiscal imperative have their needs attended to.

[Translation]

The Deputy Speaker: It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Saint-Jean-retired Singer employees; the hon. member for Bourassa-immigration.

Mr. Ronald J. Duhamel (St. Boniface, Lib.): Mr. Speaker, I am very pleased to take part in this important pre-budget debate.

[English]

As a member of the Standing Committee on Finance I was very closely involved in the prebudget consultations. I am proud to be a member of the government which opened up the budgetary process to Canadians in an unprecedented fashion. The Minister of Finance is to be commended for having undertaken this innovative initiative which has been done since 1993. It was exceptionally well done again this year.

The finance committee was split into two groups. The western wing which covered the western provinces was headed by the able parliamentarian from Essex-Windsor, the vice chair of the committee. The eastern wing was headed by the chair of the committee, the member for Willowdale.

We heard from over 300 associations and individuals and received numerous representations from people from all walks of life. Therein lies the strength. We heard from people not only from every geographical region but virtually from every single segment of society. They told us what they thought ought to be in the next budget.

Hearings were held in Ottawa and across the country. By holding hearings locally we were able to make the consultative process that much more accessible. In addition, the finance committee agreed to split in two, as I indicated. This was extremely useful because we were able to spend a full week on the road to hear Canadians, quite apart from the many meetings that we had here in Ottawa.

One consistent theme to the testimony was the support of Canadians for the government to finish the job that had been started. Canadians know we must continue to meet and surpass our deficit targets then move forward to begin to pay down the debt.

[Translation]

The committee is in favour of adopting the objective proposed by the Minister of Finance to bring the deficit back to $9 billion, or 1 per cent of GDP by 1998-99.

[English]

To date as we all know, the government has successfully met and exceeded its deficit targets.

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We recognize that these have been difficult times for all Canadians. However it is imperative that we work toward a more affordable and efficient government and an era of sustainable government programs. It is critical that our deficit targets be met so that we can start working on the debt.

During the consultations Canadians gave us guidance, a framework from which to work and to build for the future. Canadians made their priorities clear. They want us to begin addressing problems that have been neglected in the past in order to build on our future.

I will focus my discussion on a number of areas of priority that were mentioned by Canadians. I would suggest that the opposition parties would do well to listen to what is being said because they might glean some valuable insights that could help them make some constructive suggestions to the government as opposed to continually whining, berating and denigrating the excellent work of the Minister of Finance and the government in this area.

Priority areas of concern are those issues which came up time and time again during the consultative process. Those are the areas that we need to build upon for the future. The committee believes that action needs to be taken in future budgets. However, actions taken must be within the context of our ongoing commitment to meeting and surpassing our deficit targets, dealing with the issue of our enormous debt, the restoration of our fiscal health and I reiterate, finishing the job we started.

[Translation]

The committee recommends that Revenue Canada determine the changes to be made to the earned income supplement, to make it easier to adjust to changes in the employment situation of parents, and to provide assistance when needed.

[English]

In 1989 the House of Commons unanimously approved a motion seeking to eliminate poverty among Canadian children by the year 2000. The committee very strongly believes that assisting children in poverty must be the main priority of government. We need to find a way to speed up the way in which resources get to those that need them.

A good example is the working income supplement. Currently this benefit is based on the previous year's income. As a result it is not responsive to changing circumstances, not as much as they ought to be, and we need to rectify this situation.

[Translation]

The committee congratulates the federal task force on people with disabilities for its excellent work and recommends the inclusion, in the next budget, of measures that will take into account the additional costs incurred by people with disabilities.

[English]

I had an opportunity to meet with my hon. colleague the member for Fredericton-York-Sunbury concerning the task force report. I must commend him and his colleagues for their excellent thorough report. What I took away from that meeting above all else is that Canadians living with a disability almost always have additional costs. Within federal jurisdiction we should take action in the area of tax policy to deal with this situation. In addition, any actions in the area of tax policy should be in support of the social policy objectives of inclusion, independence and productivity.

[Translation]

The committee recommends a significant increase in the support provided to literacy organizations under the National Literacy Secretariat, which currently stands at $22.3 million per year.

[English]

During the consultations we heard from witnesses that the changing economy is demanding ever higher levels of literacy from all working Canadians. Our future will require workers, managers and executives with higher skills that are required today and constant upgrading I might add. Literacy is an essential tool in such a knowledge based economy and more so than ever before. Our challenge is to provide literacy and learning for all because without these tools workers and employers will fall behind their competitors. We believe that this problem can be addressed through partnerships with every sector of society, co-ordinated through the efforts of the National Literacy Secretariat.

Subsequent to the release of the prebudget report, I have received a congratulatory letter concerning literacy from Frontier College which reads in part: ``This is great news. This is the knowledge and information age and every Canadian must be able to read and write well in order to be part of it-.The finance committee gave us the assurance that we will have the resources to continue this fight''.

There are a number of other such letters from members of other communities who felt that this prebudget report was of first quality and addressed the needs of Canadians. I would be delighted to share those with all of my colleagues.

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[Translation]

Tuition fees are increasing everywhere in the country. The committee made three recommendations.

[English]

These recommendations dealt with carrying forward tuition fees as deductions against future income, doubling the $500 exemption for scholarship, fellowship and bursary income, and special opportunity grants being provided for students with parental responsibilities. These recommendations recognize that an investment in education is an investment in our future. Research and development was recognized as key to Canada's ability to compete in the global economy.

[Translation]

The committee recommends that priority be given to increasing the funding of granting councils such as the Natural Sciences and Engineering Research Council, the Social Sciences and Humanities Research Council, and the Medical Research Council.

[English]

The committee recognized the important work and the unique opportunities provided by the Networks of Centres of Excellence program. It recommended the renewal of the program for a third term.

Recommendations were made on the implementation of a second, more modest national infrastructure program. The committee recognized the great success of the first infrastructure program. Support was given for the second program which is well directed and available to traditional infrastructure projects such as waste treatment, water supply, transportation, et cetera, as well as to health care and educational institutions. Support for health care and educational institutions represents a long term contribution to Canada's overall level of productivity and our long term prospects for high level, high knowledge jobs.

We recognize the importance of charities and the voluntary sector. The committee had a number of recommendations concerning endowments, bequests, corporate donations, stretch proposals, withholding taxes, community economic development, program related investment and taxpayer awareness.

[Translation]

To conclude on this issue, the committee believes that its proposals to increase tax incentives for charitable donations will help correct the imbalance resulting from the reduction of direct subsidies, and it recommends that these proposals be implemented.

[English]

We recognize the important role played by charities in our communities. We recognize the need to help them find sources of additional resources in a fiscally responsible manner and the role the government can play. I received a letter from an organization called Heritage Canada. It congratulates the committee for its recommendations in the area of charities: ``Recommendations in the area of charitable giving are similarly welcome. Greater incentives to encourage more in the way of personal and corporate giving could clearly have a beneficial impact on the heritage field''.

At a town hall meeting in my riding I had the opportunity to meet with members of my community, my advisory committee. Their recommendations were not unlike others. Constituents are supportive of our fiscal goals and deficit reduction targets. They want us to invest strategically in the future, in our young people and in certain research that could be value added. They want to make sure that universities and community colleges are not neglected. They want increased R and D funding that will create better jobs and a better quality of life for all Canadians. They urged us not to forget small and medium size business and they wanted to be sure that we considered another modest infrastructure program.

Mr. Preston Manning (Calgary Southwest, Ref.): Mr. Speaker, I rise to participate in this prebudget debate with two objects in mind, first to outline an alternative federal budget which would give Canada a fresh start for the 21st century, and second to define two distinctively different approaches which members of this House can take to the prebudget debate and the budget debate next spring. One approach is essentially negative and reactionary. The other approach is positive and constructive.

The people of Canada long for a federal budget that delivers high growth rates, many more jobs, higher incomes and increased personal security. Canadians want a federal budget that vastly accelerates job creation. Under this government we have 1.5 million unemployed, a youth unemployment rate of over 17 per cent, two million to three million underemployed people and one out of four workers afraid for the future of their jobs.

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Canadians want a federal budget that strengthens social security because under both Liberal and Tory administrations, federal support of health, education and old age security has deteriorated in absolute terms.

Under the current administration, for example, federal health care spending has been reduced by over $3 billion and reform of the Canada pension plan languished while government members preoccupied themselves with revamping the MP pension plan.

Canadians want a federal budget that reduces federal debt and increases personal incomes. Why? Under Liberal and Tory administration the federal debt has risen to over $600 billion while the disposable income of the average Canadian family has declined by $3,000 over the last three years.

High taxes kill jobs. Tax relief for consumers and private sector job creators creates jobs. Thus, Canada needs a federal budget that clearly establishes the link between job creation and tax relief and that makes tax relief, not further tax increases, a national priority.

Canadians need a federal budget that aims at federal surpluses, not further deficits. Why? Surpluses make possible reinvestment in those social programs like health care that have been cripples by cuts, and only with federal surpluses can one start making progress on debt retirement.

Because the federal budget that the Canadian people need is so much different from the budgets that have been produced thus far by the government, Reformers produced an alternative budget plan in our fresh start platform.

That fresh start budget calls for five actions. Number one, balance the federal budget by 1999, a faster timetable than that pursued by the government.

Number two, aim for surpluses after 1999, with the size of those surpluses increasing each year.

Number three, from those surpluses use $5 billion to $10 billion as initial down payment on the federal debt, with some fixed proportion of future surpluses being devoted to debt retirement.

Number four, increase federal transfers to the provinces for health and education by $4 billion per year.

Number five, provide up to $15 billion in broad based tax relief through seven specific tax relief measures, all targeted to increase consumer spending, raise the disposable income of families and stimulate job creation by private sector job creators.

That is the kind of federal budget Canada needs. It is the budget described not in the government's prebudget document but in Reform's fresh start platform.

This prebudget debate and the budget debate next spring will be a prelude to the 1997 federal election debate. There are two distinctively different approaches which members on both sides of the House can take.

On the one hand, there is the negative and reactionary approach to ideas for improving Canada's budgetary situation, an approach which has unfortunately been taken so far by the Minister of Finance.

For example, on page 18 of our fresh start platform Reform presented a proposal for increasing, not decreasing, federal funding for health care and education by $4 billion a year and presented a budgetary strategy for doing that.

How has the government reacted to this proposal? The finance minister stood in this House and charged the Reform Party with wanting to eliminate health care. In other words, the response of the government and the finance minister to one of our principle budgetary proposals was reactionary, 100 per cent negative, and in this case 100 per cent false.

On page 19 of our fresh start platform the Reform Party drew the attention of Canadians to the critical state of the Canada pension plan and put forward a four point plan to rescue the Canada pension plan from 30 years of Liberal and Tory mismanagement.

That rescue plan for CPP calls for guaranteeing that every citizen who is a senior receives every penny he or she is entitled to under CPP.

(1710 )

It proposes to extend the principle of RRSPs, personalized tax sheltered retirement income savings accounts, to lower income workers. It proposes to reduce poverty among elderly widows and widowers by allowing funds from a deceased person's RRSP to be transferred to the surviving spouse tax free.

Yet on November 18 the finance minister replied to a question from the hon. member for Beaver River, a member who has public credibility on the subject of pension reform because she opted out of the obscene MP pension plan. In his reply the minister made the astounding statement that Reform stood for abolishing the Canada pension plan. Again, that is a reactionary statement which is completely negative and 100 per cent false.

On pages 7 to 11 of our fresh start program Reform puts forward a budgetary plan containing the most comprehensive proposals for tax relief and job creation through tax relief ever presented in this Chamber. Six of our seven specific tax relief measures, over 90 per cent of the $15 billion in tax relief offered by Reform's program, are aimed directly at lower income and middle income Canadians.

Reform's proposals to raise the personal and spousal income tax exemptions provide tax relief to every Canadian, especially lower and middle income Canadians. More than 1.2 million low income Canadians would be removed from the tax rolls altogether.

Under Reform's tax relief measures an average family earning $30,000 per year would have its federal taxes cut by 89 per cent. Under Reform's plan a single mother with one child and an allowable child care expense of $4,000 per year would have her federal taxes cut by 100 per cent.

Yet what is the reaction of the Prime Minister, the finance minister, the Liberal government to these proposals? In Toronto the Prime Minister declared that there would be no national tax relief for Canadians under his administration. The Liberal government completely opposes faster deficit reduction so that tax relief and debt retirement can come about more quickly. The government is against increasing the personal exemption for every federal income taxpayer, as Reform proposes. The government is against increasing the spousal exemption and changing the child care tax deduction, as Reform proposes. In other words, it is against providing broad based tax relief to families and against making the tax system neutral with respect to the form of child care chosen.

The government is opposed to substantive cuts to payroll taxes and capital gains taxes, as Reform proposes, tax cuts designed to put more dollars into the hands of private sector job creators.

The government wants to retain the Tory 3 per cent and 5 per cent surtaxes, so bitterly criticized by Liberal MPs when they were in opposition, rather than remove them, as Reform proposes.

On November 18 in the House the finance minister even went so far as to describe the Reform Party's tax relief package as a tax cut for the rich. That can be found on page 6366 of Hansard. Again, a reactionary and negative statement, and one that is 100 per cent at variance with the facts.

What we have here is an approach to budgetary proposals from the government which is completely reactionary and negative. I frankly fear where this approach is going to lead. It is my experience that once a debate on any subject becomes completely negative and reactionary, and particularly when that approach is taken by people in positions of responsibility and authority, it simply breeds more of the same.

I do not know why the Prime Minister and the finance minister especially are so adamantly opposed to the consideration of a budgetary plan to deliver tax relief to Canadians. I do not care to speculate on their personal motivation, but what I can report on is what an increasing number of Canadian taxpayers are saying. It is their deep suspicion that well to do, tax sheltered, prime ministers and finance ministers simply cannot personally identify with the tax burden now carried by the hard pressed Canadian taxpayers.

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If all they see from the Prime Minister and the finance minister is negative reactions to tax relief, particularly negative reaction to tax relief for low and middle income Canadians, they will react in kind.

Therefore, it would not surprise me at all if those taxpayers, through their various associations and interest groups which are mushrooming all over the country, were to in their anger and frustration, produce a pamphlet, a newspaper ad or a TV commercial with the following headline: ``Well-to-do, tax sheltered Liberal leaders indifferent to tax burden of working Canadians''. If and when that happens, the Prime Minister and the finance minister will react in anger and frustration, as the finance minister has already in this House, and the whole subject of tax relief and alternative budgetary plans to deliver tax relief will be lost in a welter of negative reactionary recriminations.

Is there an alternative approach to the prebudget and budget debate which is more positive and constructive, one which would inspire public interest and hope for the future rather than anger and recriminations? I believe there is. That approach is for each major party to this debate, in particular the Liberal government and the Reform Party, to put forward their alternatives plans and proposals in as positive and constructive a light as possible, and let the public decide which course of action represents the best budgetary plan for Canadian citizens and taxpayers.

This is the approach that Reformers prefer to take to the prebudget debate, to the budget debate and to the federal election campaign itself.

In taking this approach, Reform will propose that this country aim for a trim $94 billion a year federal government, one that balances its budget sooner rather than later, one that focuses on 10 major areas of national and international responsibility and decentralizes virtually everything else to provincial and local governments.

We would propose a $94 billion a year federal government which focuses its social spending on three major areas: federal support of health, education and old age security, and which reduces its spending on virtually everything else in order to sustain and guarantee its commitments in those three areas.

In contrast, working off the prebudget documents provided by the government, the government is on course to present Canadians with a $109 billion a year federal government. Under the government's plan, which is really an extension of the status quo, the federal government would attempt to continue to provide certain programs and services from regional development grants to the continuation of the CBC as a public corporation, to a plethora of social expenditures which Reform would either eliminate, privatize or delegate to lower levels of government.

The big difference between these two alternative budgetary approaches is about $15 billion a year. The question for the Canadian people is which course of action is best for them and their children. Will that $15 billion per year be more productive in terms of job creation and social security if it is collected by the Liberal tax man and spent by Ottawa or would that $15 billion be more productive in the hands of Canadian consumers and private sector job creators through tax relief?

This is the great issue ultimately to be decided in the prebudget debate, the budget debate next spring and to be conclusively decided in the next federal election.

I want to conclude by appealing to members on both sides of the House. The prebudget debate, the budget debate and the federal election debate can be negative and reactionary. We are already seeing examples of where that can lead and all it does is divert media and public attention from the real issues and the decisions that have to be made.

On the other hand, we can approach this debate positively and constructively. Let the Liberals put forward their budgetary plans for a $109 billion a year federal government with no tax relief and defend that as best it can. Let Reformers put forward its plans for a $94 billion a year federal government plus $15 billion in tax relief and argue as strenuously as we can for the benefits of that approach.

Let us take these alternative proposals before the great tribunal of the Canadian people and then, appealing to the good judgment and better instincts of our fellow citizens, let Canadians make the decision as to which approach will provide a fresh start for the Canada of the 21st century.

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Mr. Jim Peterson (Willowdale, Lib.): Mr. Speaker, I think all members of the House are pleased that the leader of the third party has joined in the debate, a debate which is very important. As he has quite correctly pointed out, it involves an incredible number of choices that as legislators, as representatives of the people, we have to make on behalf of Canadians from every region of the country.

It is constructive that Reform members have made the effort to put before Canadians an alternative budget, an alternative strategy, that they have thought it out, that they have put numbers to it, that they are offering that type of alternative. Just as our debate on the prebudget report is the subject of extensive debate throughout the country, I welcome that he has put forward their alternative budget as a serious element of debate.

I commend the third party for doing this. It is a departure from the traditional role that opposition parties have played. Traditionally opposition parties have simply criticized. They have nit-picked, they have gone after the chinks that they saw or thought that Canadians might perceive to exist in the other party's platform. The Reform Party has dared to be creative. I commend it for the

approach that it has taken. I know it has done that with a great deal of sincerity and a great deal of thought.

We have had on the finance committee through the excellent leadership of the Reform Party and its members very constructive debates from coast to coast throughout this country on many of the very important issues we face. I think members from all parties have been influenced by this exchange of philosophies and exchange of means of getting to a new end. All of us realize that we have to go beyond where we are today.

The Reform Party did a marvellous job over the past three years in pointing out the incredible problems that we face in Canada because for the 20 previous years governments of both stripes spent way beyond the means of Canadians and put us behind the eight ball. We are so far in the hole that our biggest expenditure today is $50 billion on interest, which is two and a half times what we spend on our next biggest expenditure, seniors' pensions.

I do not denigrate the approach which Reformers have taken but I do put forward with a certain amount of enthusiasm the approach taken by the Minister of Finance under the leadership of the Prime Minister. There are not too many people who five years ago would have thought that it was going to be the Liberal Party that had to come to grips with the deficit and the debt.

We took an approach which has reduced the deficit from 6 per cent of GDP when we took office down to 5 per cent, 4 per cent, 3 per cent and it will be below 3 per cent of our gross domestic product and heading for zero, be it in the year 1998-99 or the year that the leader of the third party would like to see it hit zero, 1999-2000.

We are not going to be far off from what the leader wants in terms of that objective if we continue to surpass the deficit objectives the way we have. We agree probably with the Reform Party that government does not have a role of intervening in every aspect of Canadian life even though we might like to or feel that we have an obligation to help. We can no longer afford this. This has been demonstrated by the fact that incredible cuts have had to be made in budgets. There is a difference between our parties and the approach that we have taken.

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First, our cuts have been gradual, not the draconian cuts that were called for by the other party. This has allowed provincial and municipal governments to adjust. It has enabled Canadians to adjust over a period of time to the tough, harsh realities. This is not a disagreement on what had to be done, but it is the timing and giving Canadians the opportunity to adapt.

Second, I think our vision of what the country is about is slightly different, perhaps vastly different. For example, none of our budgets cut equalization payments which we feel are so critical to maintaining that confederation, that community of provinces, that community of neighbours, a country which is sharing and cares about every region.

This has been built on our history. It has been built on the fact that at the time of Confederation, Nova Scotia was the richest province. Before the big oil discoveries in the 1940s, Alberta was really a have not province.

Mr. Frazer: Mr. Speaker, a point of order. The comments are very apropos, I guess, but they are really not giving the member for Calgary Southwest time to respond.

The Acting Speaker (Mr. Milliken): I was watching the time. I was going to warn the hon. member for Willowdale in another minute or so that he was going to perhaps put himself in that position and I am sure that he did not want to do so. I expect he will conclude his remarks shortly.

Mr. Peterson: Mr. Speaker, I am certainly in your hands. Please, just tell me when my time has expired.

The very fundamental difference between the Liberal Party and the Reform Party is that we believe equalization is fundamental to the maintenance of the partnership that exists among all provinces, the federal government and Canadians no matter where they live.

We also have a fundamental disagreement on how we should treat health care. Part of the Reform platform is that it will allow provinces to opt out of the Canada Health Act, that private billing can be done and a two-tier medical system. Now, all of a sudden it said that it is going to pour $4 billion a year more into medical care. This will be done through increasing transfers to the provinces. However, there will be no strings attached. How does Reform intend to do it?

We have fundamental differences and but we are fighting toward a lot of the common goals.

Mr. Manning: Mr. Speaker, I thank the hon. member, the chairman of the finance committee, for his generous comments. Perhaps the Christmas spirit has permeated this place, and we reciprocate.

However, let me respond to three of the points he made. He mentioned that one difference between the government and Reform is the pace at which we would balance the budget. The government has proposed to take the gradual approach. What he did not mention was the price that is paid for going too slow. Part of the price has been that the government has accumulated over $100 billion in debt because it has gone slow on deficit reduction. That is the other side of the story.

The interest charges on that debt have resulted in the government having less money to spend on social services. That is another part of the price. And the biggest part of the price of going slow on deficit reduction is not being able to get quickly to a surplus position. Therefore, the government cannot offer substantive debt retirement, it cannot offer substantive social reinvestment and it cannot offer tax relief. We say the price the government paid for gradualism is too high. It would have been better to have gone

faster, to follow the timetable followed by the majority of the provinces.

With respect to equalization, let me say that we support equalization, but we support a true and focused equalization. Right now under equalization, three provinces are carrying seven. We believe we ought to strive more to a situation where there will be four or five carrying six and five rather than the current situation, and target equalization even more steeply to the most disadvantaged provinces.

The third point is on health care. The Reform position, as I argued earlier, is to increase the funding for health care. We are able to do that because we have a plan that gets to surpluses faster than what the government is doing. We would argue that is a more sound approach to preserving health care than the approach that the government is taking. It is the government itself, not Reform, that has reduced federal transfers for social and health programs by over $7 billion.

My last point would be to respond to the member's question. He asked how we can hold the provinces to spending transfers that the federal government may say are targeted to health care, education or something else when there are no strings attached to those transfers. There is one simple answer to that.

If both levels of government listen to the public they will find the public has a set of social spending priorities. If both levels of government listen to the public that is where they will get their direction as to how social dollars ought to be spent and they will both hear the same message because they are talking to the same taxpayers.

The Acting Speaker (Mr. Milliken): It being 5.30 p.m., the House will now proceed to consideration of Private Members' Business as listed on today's Order Paper.

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