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...campaign, Doug Young said that of Atlantic Canada, that he knew that people had been hurt. And now when you look at the revenue side and you see so much money coming in, do you regret some of the cuts?

CHRÉTIEN: No, we don't regret it. It's because we've done it that we have the revenue. Because the confidence came back into the nation. You look at all the indicators of the confidence of business and confidence of the consumers, and we have been... not been that high for a very long time. And it's because the people... You know, yesterday night people realized that we have collectively achieved something big. You know, this morning I just arrived home and somebody working in the house said, great, Mr. Prime Minister, we have balanced the books. He's a blue collar. He felt good about it, he congratulated me. You know, it's an achievement of the nation.

MOSCOVITZ: Prime Minister...

CHRÉTIEN: And we have cut; of course we've cut. But we've cut more out of our programs than the transfer payments.

MOSCOVITZ: Well, talking about transfer payments, and you know what the provinces are saying. And I think that Canadians just about everywhere in the country would applaud the moves you've made on the education side to help parents and students with post-secondary education. But on the health care side, so many of the provinces are saying you cut, you cut, you cut, we've closed hospitals, we're hurting. On the national news about once a week you see a hospital somewhere in the country with stretchers and gurneys in the corridors, there's no room. And the provinces are saying, post-budget, that you should give them back some of the billions you took away.

CHRÉTIEN: But we have given them back in this year $1.5 billion (inaudible)..., and it is the level that was selected by the Forum on Health that if we were to establish a floor at $12.5 billion it would be enough.

It's another element that they don't mention very often that benefits them very much, is the fact that the economy is performing very well. In the transfer payments, you have the tax points -- they never refer to that -- but the tax points are making much more revenue than expected. More for us and more for them.

Another element that they should keep in mind, but they don't (inaudible)... to that, the fact that we have reduced the interest rates so much. You know, you're saving hundreds of millions of dollars in Quebec. I know it's $500 million a year, just in the payment of the interest on their debt.

And if you combine all that, you know, the increased revenues because the economy is performing better, if you include the reduction of the payment on the debt, plus the floor that we have established, we're very close to where we were when we started in 1993-94.

But, of course, if we were to send them more money, they will use it. And...

MOSCOVITZ: But could they open hospitals with that money?

CHRÉTIEN: I don't know...

MOSCOVITZ: I mean, you would acknowledge that...

CHRÉTIEN: The problem is that there was a fundamental problem. It's changing. We're not administering the hospitals, but the way that they operate, they do their business today, there is a lot of people come to hospital and go home right away and so on. It's (inaudible)... I'm talking about. Home care and (inaudible)... and so on. Because it's changing a lot. And we have reviewed. We were the second highest of the countries of the world per capita of the money that we were spending on Medicare, you know, as part of the GDP. Only the Americans are higher than us. Now we have reduced it from 10.5 to 9.6 percent of GDP and now we are still the second. But I think France and a few other countries are coming close to us. Before we were the... there was a big margin between us in relation to GDP compared to the European countries who offer the same type of services to their citizens.

MOSCOVITZ: Can we go back to the formula, and I know that you just said that the federal government gave the provinces back $1.5 billion for health care, but it gets a little complicated because you gave back what you never cut because the cut hadn't taken effect yet. But you would acknowledge that it's basically five to one the amount of money that the federal government took away from the provinces as opposed to giving it back?

CHRÉTIEN: No, I won't acknowledge that. I don't know where you take that, because probably you don't keep in mind the money that they're making because of the tax points. We do that. We have to do that. Because when we make these arrangements, we decided that rather than transfer cash we were to let them collect the taxes. But we have... and the withdrawal is not the same, depending on the capacity of taxation of the provinces. So we have to keep that in mind in our calculations. But we have turned around the economy of Canada because we've done it. You know, if you want to invest today you have the lowest interest rate in years for investment. And this is creating jobs. And we... you know, the economic situation is very healthy relatively speaking. You know, we still have too high an unemployment level. We're below 9 and we would like to be lower. We don't have a floor there; as long as somebody wants a job, we have a responsibility to work to get him a job. But the economy has created 1.1 million jobs since four years. And the public sectors, provincial and federal, have reduced the number of employees by 100,000. You know, even (inaudible)... made a contribution towards that.

MOSCOVITZ: Prime Minister, when you see on television overcrowded hospitals, when you hear from your own family members and friends the horrors that some people have to tell about the Medicare system because it's not what it was because there's not as much money in it, and now you have these surpluses that are coming, what do you say to yourself?

CHRÉTIEN: But I say that for us, for example, you know, we have cut some transfer payments. I said that most of it has been restored, not completely but most of it. And we had to do that to restore the good finances of the nation. After that, you know, the management of it... For example, in Ontario they cut taxes. You know, if they had not cut taxes they would have had enough money. But probably they made the decision that, you know, even that long ago... you know, the minister of finance of Ontario had a statement on that where he was giving money to education, not Medicare, of the new money that he had received. It was his priority. He runs his own budget.

MOSCOVITZ: Do you tell Canadians...

CHRÉTIEN: So, you know, we don't run hospitals. You know, but we are managing the macro economy of the nation, making sure that we're in a good position. And of course they have their own priorities. You know? Take the government of Quebec. They have embassies all over the world, and that's their priority. It's not ours. You know, they collect their own taxes rather than let us collect the income tax for them free. So everybody has his own local provincial priorities, and they have to respond to the people. What we have is to create an economic situation in the land that is create a healthy economy. And we've done it.

MOSCOVITZ: Are we richer? Are Canadians rich?

CHRÉTIEN: No, relatively we're not rich because the dollar is low. But having a low dollar, you know, when you look at all these international...

MOSCOVITZ: Indicators.

CHRÉTIEN: (inaudible)..., you know, because the dollar is low. If the dollar was at $100, you know, we would be rich. But it's very good for our exports.

MOSCOVITZ: Yeah, but you used to say we were a basket case a few years ago, so (inaudible)...

CHRÉTIEN: No, no. The problem is we're... you know, we have a very good financial situation, in relative terms, because the currencies of the world in relation to the Americans are very low. You know, that way we're not as rich as we were. But in relation to the rest of the world, we're doing quite well.

MOSCOVITZ: Can we leave the budgetary matters and move on to another subject, please, Prime Minister?

CHRÉTIEN: Why not?

MOSCOVITZ: The Supreme Court hearing last week. So many people were of the view that it didn't go well for the federal government. You say that you didn't lose any sleep.

CHRÉTIEN: No, I didn't. Because I did the right thing. When you do the right thing, you do the right thing. Because why they don't want to know what is the law of the land? You know, for me it's... I don't know what will be their judgement. I don't know. I mean, I guess. But I've been a lawyer too, with some cases I went to court and instead of winning I did not, and other cases where I thought I had a lousy case (inaudible)... probably I had a lousy judge, and I won. So, you know, it's a court. But I want to know the rules of the game. And for me, I'm very comfortable with that, and the responsibility will be nine judges...

MOSCOVITZ: Were you surprised by the political nature of their questions last Thursday?

CHRÉTIEN: I don't want to comment on what the judge has to say. It's not my place. You look at it, I'm not (inaudible)... You know, the case has rested now and they'll go work on it and they will render their judgement.

MOSCOVITZ: Premier Bouchard in Quebec last weekend, he met with his party, and you know that there's a lot of election talk in Quebec. And there are those who say you've abandoned Daniel Johnson because you're sending your own people out to take on Premier Bouchard.

CHRÉTIEN: No, even Johnson agreed that when he attacks us we have to reply. That's one of the problems we have had in the past, we did not reply. And now we reply.

MOSCOVITZ: What about during an election campaign, because...

CHRÉTIEN: You know, for me I'm not campaigning.

MOSCOVITZ: But I know in the past you've always said that you don't want to get involved in anybody's election campaign.

CHRÉTIEN: No, I'm not. If there's an election in Nova Scotia at this time I'm not going. Russ is a very...