Debates of the House of Commons of Canada (Hansard) - Thursday, February 24, 1994 - Government Orders

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Debates of the House of Commons of Canada (Hansard) - Thursday, February 24, 1994 - Government Orders  (1994) 

GOVERNMENT ORDERS[edit]

THE BUDGET[edit]

FINANCIAL STATEMENT OF MINISTER OF FINANCE[edit]

The House resumed from February 23 consideration of the motion that this House approves in general the budgetary policy of the government; the amendment; and the amendment to the amendment.

Mr. Jack Frazer (Saanich-Gulf Islands): Madam Speaker, subsequent Reform Party speakers will be splitting their time, to 10 minutes and five minutes for questions and comments.

This morning I would like to address the budget from the point of view of the defence department and first of all to congratulate the government on some good measures it has taken. I have noted it is looking at reducing the rank structure in the Canadian forces and thinning out the level of middle management. Both these items are long overdue and will provide more people at the pointed end and fewer in the administrative support tail.

It is looking to amend its management practices, to delegate and lower the responsibility level to base commanders and other unit commanders, to do away with bureaucracy. This will make the process much more efficient and more cost effective.

It is looking at off the shelf purchases. For far too long Canadians have tended to put in special frills and things that required additional engineering which wound up costing more and taking much longer to implement. I think the off the shelf purchases are a very good idea.

We are looking at contracting out some of the things that Canadian forces personnel currently do. This as well is a step in the right direction.

(1040 )

I understand from the defence document that we are going to look at contracting out flight training at Moose Jaw. I know this has worked very well at Portage la Prairie in basic training and I must admit I have some personal misgivings about putting the training of our air crews into other than military hands. However, certainly it has worked at Portage la Prairie and we should definitely investigate it at Moose Jaw.

I also note that group headquarters has been combined for efficiency and moved air combat, which used to be fighter group headquarters, from North Bay to Trenton. The same will be done


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with 10 tactical air group headquarters from St. Hubert to combine with air transport group at Trenton. Again, this is a refining and efficiency measure which will pay dividends.

The government also mentioned some infrastructure reductions, some $850 million over five years by the 1997-98 timeframe. By that time savings will be $350 million a year. I will be speaking to this from the other point of view in a few moments. However, I think all people who have looked at the defence department have been aware that there has been an overabundance of infrastructure in that force and it was time to reduce it.

However, I do think that defence has become an easy target. All parties in the last election, with the exception of the Reform Party, were aiming very strongly at large cuts in defence. I think this may be premature and that people do not appreciate the current state of the defence force.

Basically it has been underfunded since 1972 when Mr. Trudeau made dramatic cuts. He was reminded of the inter-relationship between defence and trade when he tried to make the cuts in NATO and very shortly found out that it would impact dramatically on Canadian trade. He reversed his decision on the cuts he was proposing.

The world situation has changed, without question. The relationship between the two superpowers has evaporated. However, rather than providing us with a more stable world, this has provided a much more volatile world, one which is must less predictable and, I would say, more dangerous.

Currently Canada has more troops deployed on operational missions than at any time since the Korean war. The current strength of the Canadian forces is 75,000 in round numbers. The government is suggesting that this should be reduced to 67,000 in round numbers by 1998. I question the wisdom of these cuts, particularly before we have completed a defence review to establish what we want the Canadian forces to accomplish.

I am not certain at the moment that 75,000 is a sufficient number to do the jobs Canadians will be asking their forces to do. I believe it really is premature to suggest that we should be cutting this number even further.

I am glad to see the reserve force staying constant at 30,000, although I believe there may be some need to expand its uses if we go to the total force concept and it is found to be workable.

Regarding budget cuts, over the period from 1989-97 the previous government had programmed in $14 billion in defence budget reductions. This government has now implemented an additional $7 billion deduction in the defence budget between 1994 and 1999. This is a total of $21 billion over 10 years, a substantial reduction in a budget of only $12 billion. This again has been done before we know what we are going to be asking the defence forces to do. I think this is premature.

These defence cuts have reduced the operations and maintenance budget so that operational and training activities have had to be reduced by 25 per cent. In plain words, this means that the navy has and will continue to sail less. The air force has and will continue to fly less and the army has and will continue to train less. This means less well trained and less capable sailors, soldiers and airmen, and that means a reduced operational capability. There is no question that the training required by the forces increases its ability to do the job we ask it to do. Reducing its training reduces its operational capability.

The government has said that one half of the $7 billion reduction over the five years in the defence budget will come from the cancellation of the EH-101 helicopter project. I remind hon. members that the EH-101 was a 13-year program extending to the year 2002 with the heaviest spending occurring in the years 1998 and 1999. The $5.8 billion to which the government is referring is based on 2002 dollars rather than the original cost for the EH-101 which in 1991-92 dollars was $4.3 billion. I suspect its number is not accurate, its $3.5 billion saving.

(1045)

Also missing from the figures totally is the cost of the cancellation of the EH-101 program, payments to contractors who had already invested substantial sums in the program. This is estimated to be anywhere between $500 million but more likely close to $1 billion. This appears nowhere in the budget.

The Minister of National Defence said yesterday that this would not be coming from the defence budget, but if it is going to be paid it is paid out of our own budget. Since it is not identified that means it is in addition to the $39.7 billion the government has already estimated.

In addition, the minister points out on page 2 of the budget impact document:

The Department will still have to find the money for replacement helicopters should the requirement be confirmed in the defence policy review.

He said also, and I agree with him, that the likelihood was that the need for these helicopters would be confirmed in that defence review.

Depending on the helicopters that are chosen to be bought, we can spend as much or even exceed the cost of the original EH-101 program. The Canadian environment provides an atmosphere that is perhaps among the most challenging for flying operations the world knows.

Canada is a beautiful country. It is one I have chosen over a many other countries, having visited them. It has many advantages but we have long and rather severe winters. When we have winter weather we have icing conditions. When we have icing


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conditions we have problems for flying machines, particularly helicopters.

Whatever airplane we buy it should have the ability to fly in icing conditions. I point out that when the Ocean Ranger went down off the coast of Newfoundland it took 36 human lives with it. Both the Sea King and Labrador helicopters were grounded in Halifax at that time. They were unable to fly because of a combination of icing conditions and fog.

The EH-101 helicopter could have operated in those conditions and may very well have saved those lives on the Ocean Ranger. Any helicopter we buy to operate in Canada whether it be from ships or in search and rescue should be able to have the range, the speed, the capacity and the ability to fly in icing conditions.

Let me move on to another cost saving measure, the reduction of infrastructure. The government has announced that it will close four bases: the base at Cornwallis, the base at Chatham, the base at Ottawa, and the base at Toronto. A total of $185 million is identified in the defence document as the cost of those closures. I do not think they are going to include termination training, allowances for civilians or transfer costs for military personnel.

The gift of the station at Downsview to the city of Toronto as a gift in perpetuity, a park, is a super thing. Is my time up, Madam Speaker?

The Acting Speaker (Mrs. Maheu): The member's time has expired. Could he conclude please.

Mr. Frazer: Basically there are some good things in the budget, but there are many things which are incomplete and have not been thought through. Budget day in 1994 was not only a disappointing day for Canada; it was not a good day for Canada's defence force.

Mr. John Richardson (Perth-Wellington-Waterloo): Madam Speaker, I listened with great interest to the hon. member for Saanich-Gulf Islands. He made some very good points in his speech.

I know from his experience the infrastructure was like an albatross around the neck of the forces in terms of budgets for the past 10 to 12 years. The move was seen by all professional officers as an excellent one, as a way to free up money for the needed things he mentioned in his speech. The government should be applauded for taking the stand to depoliticize the nature of bases. I certainly go along with that.

(1050)

I agree with him that we should not be tailoring the future of the forces based on the budget. A lot of thought has to go into that matter. I hope the committee that is put together will come up with a forward thinking program and task the armed forces appropriately. I look forward to working with him on that future project.

There are other points I would like to make. The British announced today a very serious cut in defence expenditures. As the member just noted, they have gone to a ratio of total force. They call it a one army concept, a one navy and one air force concept. Here we call it total force. They are putting more resources into upgrading the quality of the reserves as a method of rapid expansion in case of need.

As the member appropriately indicated, we may probably have to look at it in the future as a way to bring the people of Canada into the armed forces by having the reserve component enlarged and increased in competence to take on the roles they do in the German air force, the American air force and the reserve programs, as well as in the army and navy components.

Overall he made some very good points. I want to make clear that the cut in infrastructure was applauded throughout the forces because it was a drain on both financial and human resources. It will release that hopefully for the future growth of the forces.

Mr. Frazer: Madam Speaker, I would like to address the problem of infrastructure. I agree with the hon. member that obviously there was a military hand in the cuts that were made. These were not done for political reasons. I appreciate that. I think it is a step in the right direction.

I would question the wisdom of closing either of the two defence colleges, Collège militaire royal in Saint-Jean or Royal Roads Military College in Victoria. The total capacity of the production of the defence colleges has not been sufficient to provide the Canadian forces officer corps with sufficient graduates.

I can speak for Victoria. The University of Victoria does not have the capacity to absorb additional students. By taking this productivity from Royal Roads the number of qualified graduates that will be available has been cut. If these are supplanted by armed forces training prospects it will cut other people out of the program. It is my understanding the university training given at Royal Roads is very slightly more expensive than that given at any civilian university. I suggest the government was premature in shutting down these two universities.

[Translation]

Mr. Robichaud: Madam Speaker, it has been agreed that hon. members on this side of the House, in other words, the Liberal members, will share their 20-minute speaking time, which means two periods of 10 minutes, with the exception of the ministers who will use the full 20 minutes.

[English]

Mr. Herb Grubel (Capilano-Howe Sound): Madam Speaker, the Government of Canada is like a person who has a weight problem. Overspending is like overeating. The deficit is like the fat that stores the excess calories consumed. The dangers for Canada are the same as for the overweight person.


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Ultimately the fat will clog the arteries and some vital functions will fail.

Like those with weight problems our government always makes resolutions to do something about the problem: just enough calories today to sustain the fat and a more serious diet next week.

The excuses for procrastination are always the same. We need the calories to sustain the living tissue otherwise there will be pain: unemployment. Another excuse is that we are about to discover a method for losing weight without pain: an infrastructure spending program, some grand redesign of social programs, more efficient government operations or the closing of tax loopholes.

(1055 )

This budget has put the patient on a diet which slows the rate of growth of the debt. It does nothing to stop the debt from growing. Certainly there is no indication that we can ever expect a slimming of the debt. Promises for a more restrictive diet following the redesign of social programs are no longer believable. There are no painless ways of losing weight. No studies will uncover them.

More important, it makes no sense to keep on saying that all slimming procedures are health threatening. Canada had full employment and rapid economic growth when budgets were balanced. The restoration of balanced budgets really restore these favourable conditions, just like people feel healthier and more vigorous who have dieted successfully and have returned to their normal weight.

The cure for Canada's disease is known. It needs to be applied soon or the patient will be seriously ill. All it takes is to say no to additional helpings of food. We need to cut spending drastically. During the election campaign the bulk of people I had contact with were concerned about the size of the deficit and debt and wanted dramatic action to reduce it. They believed that the overweight person, the Government of Canada, must be made to slim down to where there is no more fat. They believed that a crash diet was worth the pain in the knowledge that health would be restored.

My constituents put one important condition on their willingness to make sacrifices for the sake of the country's fiscal health: the pain must be shared by all Canadians. Our basic system of public health care and pensions must be preserved. Social spending programs must be restructured to serve only those in need. The budget does not share the burden.

The people in the defence industries, civil servants, elderly taxpayers, business, entrepreneurs with capital gains and the recipients of UIC have been singled out. Worse, these Canadians are asked to make sacrifices while excess spending is maintained. There are 18 new spending programs which in the aggregate match the cuts. These new programs are motivated by the desire to pursue ideological goals stemming from the liberal world view about the ability of government to solve all problems of society.

There is the promise to increase the number of day care spaces once economic growth has reached 3 per cent. The forecast is for such a growth rate during the next two years. What will this promise cost? The budget is silent on this potentially very expensive program.

There is much known fat in current government spending programs. No studies are needed to identify it. It could have been cut to reduce the deficit significantly while resulting in much more equitable sharing of the burden.

First, there is the unemployment insurance system. The proposed changes in eligibility requirements are a step in the right direction but they are not enough. By most international and our own historic standards the benefit rate of 55 per cent for single persons is too high. Lowering it by two percentage points is symbolic rather than economically effective, especially when at the same time the benefits to others are raised to 60 per cent.

Second, old age security benefit payments are slated to rise 7.5 per cent from the current $20 billion in two years, primarily because there are more eligible Canadians and because of the indexing of the benefits. Yet, it is well known that a very substantial part of OAS payments are going to families with high incomes. It was never the intent of the program for families in the top decile and earning $100,000 to receive annually over $2.5 billion under this program while they are retired, without family obligations and fully insured against health care expenditures.

Third, the most rapidly growing expenditure category is grants to Indians and Inuit. It is slated to rise a full 17 per cent in two years. Many people who have been asked to make sacrifices are wondering why spending in this program is slated to increase $300 million every year for the next two years.

More generally this budget claims to make savings of $8 billion in two years. It should be noted that these savings are relative to spending levels slated to increase according to the budgets made a number of years ago. Half of them are due to what is called securing savings from previous budgets which requires no measure of political courage. In effect all the so-called savings amount to nothing more than the reduction of previously announced spending increases.

The bottom line for Canadians is that the level of program spending is slated to remain unchanged at $122 billion during the next two years. This is not the kind of diet the overweight patient needs.

(1100)

There is legitimate reason to be sceptical about the realism of the projected size of the public debt charges. They are slated to rise only $3 billion over the next three years. The expected deficits of this period are about $100 billion. The interest on this additional debt alone is $6 billion. Therefore the government must expect to enjoy large savings of $3 billion on debt service charges on the already existing debt of $504 billion.


1766

This is a very risky forecast. Economic growth is predicted to be 3 per cent and 3.8 per cent in the next two years. This will create inflationary pressures which will be compounded by the delayed effects of the depreciation of the Canadian dollar during the last year.

The forecast of the inflation rate of 1.3 per cent for 1995 is very low and so is the related forecast for interest rates of only 6.1 per cent on long term bonds in 1995. Adding to my scepticism about interest rates is that the U.S. economy is booming and rates there have already begun to rise. Canada cannot afford to have a significant gap in favour of U.S. interest rates.

I also have my doubts about the forecast for economic growth in the next couple of years, doubts which are not shared by the majority of economists. I believe the main reason consumers are reluctant to spend and therefore are extending the recession is that they are worried about the country's deficits and debt. They worry whether they will experience the collapse of government services and entitlements suffered by the people of New Zealand.

Until they are sure that our government has taken courageous steps to reduce the deficit, they will continue to spend cautiously. As a result, economic growth may well remain more sluggish than has been forecast in the budget.

Let me close by noting that the international capital markets are giving the government breathing space for this budget, however disappointing are the figures on the level of spending cuts. Several people in close contact with the financial community have told me that we may expect serious capital flight and a financial crisis unless the announced redesign of the social programs this fall produce significant savings.

I therefore urge the government to make the redesign of the social services a serious effort. If there are no tough decisions made and credible savings generated, Canada may find itself in the same position as did the country's largest real estate empire.

Rumours and predictions about a financial crisis were denied and banks kept on extending credit until suddenly and upon one extra slight provocation the crisis started and the entire empire began to collapse. The diet was too late and too little.

Let us hope that Canada will not face the same problems. The decision is in the hands of the government.

Mr. Andy Scott (Fredericton-York-Sunbury): Madam Speaker, I am delighted at the opportunity to beat all of my colleagues to the floor. I was certain that the speech would provoke an immediate reaction. Certainly it reminds me why I am here.

I would suggest to the member for Capilano-Howe Sound that the objective of social programs is not to save money. The objective of social programs is to help people. To set out with an immediate objective that is based on the need to save money is incorrect in the spirit of those programs.

The 18 new programs that the budget is financing were presented to the population of this country last fall and accepted and supported in big numbers. I think to do anything but to support those programs is to ignore the democratic wishes of the people in this country.

The idea that the UI reductions did not go far enough I find mind boggling, that the way we would try to save money is to take it from the hands of people who are just getting by so that people who are getting by more comfortably will be more comfortable in their support for these programs.

Finally I would say, in keeping with the member's analogy in terms of diet, there is a big difference between dieting and starving people to death.

Mr. Grubel: I thank my hon. colleague for his comments. They are clearly partisan. This is what divides people. I look forward to seeing how many letters he will get from the people who have been singled out to make sacrifices so that other people can get benefits. I find that the kinds of programs initiated by his government are not popular with my constituents.

(1105)

Mr. Eugène Bellemare (Carleton-Gloucester): I would like to comment on the remarks of the tough-talking, self-proclaimed crash diet expert from Capilano-Howe Sound. He says we are not going through enough pain in dieting and that we should be on some kind of crash diet. I am not too sure if he confuses the word diet with what my friend just mentioned to me, starvation.

The hon. member said that the Liberal Party is now going into excessive new spending. Then he attacked the system for day care we want to introduce. He talked about overweight Canadians. I react to that with a smile.

He says that the UI changes are not enough, that we should have been more courageous and we should have cut, cut, cut further. I wonder if the member for Capilano-Howe Sound would have further cut the UI.

He talks about letter writing from Canadian citizens. I wonder if he would care to write an open letter to the newspapers in the Atlantic provinces on the UI changes which he would propose. I am waiting with bated breath to hear what his proposals would be.


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On old age security he says that we are giving out too much money. I wonder if he has read the budget and if he has had reactions from people who are now seniors and will be paying much more in taxes due to the thousand dollars they will be losing from now on.

He talked about the 17 per cent increase to natives, $300 million a year. I wonder if he could expand on his views regarding the treatment of natives.

I will stop at this point because I believe the member for Capilano-Howe Sound, the tough talking, self appointed crash diet person, probably has a lot on his plate right now.

Mr. Grubel: Madam Speaker, I will be very brief in commenting on the wonderful reiteration of the ways in which this government is preserving this wonderful country which is going down the drain because we are facing a financial crisis. One hundred billion dollars more added to the debt in three years. It alone will add $6 billion to the current deficit. I do not understand how this can continue.

Mr. Barry Campbell (St. Paul's): In this, my first speech in the House of Commons, I would like to congratulate the Speaker on his election and you, Madam Speaker, on your appointment.

I would also like to express my sincere thanks to the people of St. Paul's riding in Toronto who have entrusted me with the honour of representing them in this Parliament. I accept this responsibility in all humility.

St. Paul's riding is in many ways a microcosm of Canada. It defies easy characterization. It is a place of contrast. It is a riding of tenants and home owners, business executives and building contractors, new Canadians and people who have been here for generations. Successive waves of immigrants have called the southwest part of my riding home and supplanted one another in this neighbourhood as each group has prospered and moved on, the Canadian way.

Among the residents of St. Paul's are many of our best known business, cultural, political, labour, educational and community leaders, and many thousands of hard-working people who through their efforts keep Toronto and Canada growing.

(1110 )

As I went door to door during the last election, I was continually moved by the diversity of Canada and how it is reflected in my riding. In representing St. Paul's, I have wonderful role models to look to: John Roberts, Mitchell Sharp and Walter Gordon who represented voters in this riding in the past. These people of great vision and deep commitment to Canada shared a fundamental belief in the virtue of public service.

In carrying out my responsibilities I shall very much have in mind their example, people who served, and in the case of Mitchell Sharp continues to serve, with integrity and devotion to their country.

I must pause to say thank you to my family, the unsung heroes in any politician's life. I am grateful to my wife Debra, who holds things together in Toronto while I am here, and to my two sons, Matthew and Jeremy.

My parents taught me that we each have a responsibility to give back to our community. Whatever our personal circumstances we have the same responsibility to roll up our sleeves, get involved and try to make a difference. I shall always be grateful for that lesson and their support.

Over the last year I have had the privilege of meeting thousands of people in my riding. They voiced concerns about jobs and the economy. Many are deeply troubled about the future and perplexed about the role of government in our time.

St. Paul's has not been spared the ravages of the recession. For many, optimism has given way to frustration and despair. Economic stagnation has taken its toll. However, our spirit is strong. The people in my riding are not apathetic. They have channelled their frustration and anger into action and involvement within their community, their city and their country.

Politics is serious business in my riding. St. Paul's is the site of Montgomery's Tavern where William Lyon Mackenzie planned his rebellion of 1837. One cannot help but notice parallels between those days and our own. The rebellion resulted from widespread public anger directed at a government which was disinterested, self-absorbed and out of touch. The bold actions of 1837 paved the way for responsible government.

One hundred and fifty-seven years later the Canadian people, angry with a disinterested and out of touch government, again rebelled the way we do in modern society: at the ballot box. The message they sent was loud and clear. Canadians want responsive and responsible government.

The people of my riding are unforgiving of politicians. They do not forget if we fail to keep our promises. That is why I am proud to be part of a government which is proceeding with this budget to do exactly what it said it would do. We are funding every major commitment in the red book. When we keep our promises we go a long way to restoring the confidence Canadians must have in their government.

Among the many noteworthy budget initiatives are the infrastructure program, the youth service corps, prenatal nutrition programs, the restoration of the court challenges program, the technology network and the residential rehabilitation assistance program.

There are two different visions for Canada. Some believe, and we have heard it today, in a Canada of winners and losers, of we and they, of us and them. They believe government is the problem, that government has no role to play except to stand


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aside and let the chips fall. Their theory is that the economy will adjust, that we will all be better off in the long run if government simply gets out of the way.

In the meantime, and it is a mean time, slash and burn economic policies have a terrible impact on the social fabric of society.

[Translation]

I learned a few things when I was working for the monetary fund in Washington.

[English]

One of the things I learned is that slashing expenditures alone, what we call shock therapy, leads inevitably to serious costs to society and fails to restore fiscal health. We must control expenditures and foster growth. That is the course we have set. We should beware of those who would prescribe quack diets.

[Translation]

Our vision is different. We cannot define Canada in terms of winners and losers. What matters to us is improving the quality of life of all Canadians so that they can all be winners.

The government has a role to play in revitalizing the economy and in preserving the social fabric. Canada has always been a land of prosperity and Canadians have always prospered under a government which could play that role, even in times of fiscal restraint. As the budget indicates, our government must take an active part in the economic, social and cultural life of this country.

[English]

This budget demonstrates that this government understands its responsibilities to the people of Canada. For Canada and for Canadians to prosper, government must neither stand aside nor stand in the way. Government must stand alongside Canadians.

(1115 )

I know the government cannot do everything. There are worthy things we simply cannot afford to support. We have made tough choices in this budget but I believe we have made the right choices. We were listening to Canadians in the pre-budget consultations.

[Translation]

As a member of the Standing Committee on Finance, I look forward to listening to the views of Canadians on the thrust of the economic policy.

[English]

The government understands the reality we are faced with today and is prepared to do that which is necessary to be fiscally responsible. Controlling spending is a priority for this government. This budget begins the long and difficult task of reversing the debt and deficit spiral. The budget incorporates a more ambitious deficit reduction plan on the expenditure side than any budget in the last decade.

We will not blame the previous government for the sorry state of Canada's financial affairs. We are prepared to be judged by how we deal with the hand we have been dealt by the world we find. This budget is a first step in a longer process which began on October 25 to restore fiscal health and preserve the social justice which defines Canada.

The government will not solve Canada's problems by creating a permanent underclass in this country. Those who need help most will always have the assistance they require. I will work with the government to identify and support the role that government can and should be playing.

Government can and should bring people together, set goals, provide leadership, make sure the job gets done fairly and effectively. That is what this budget is all about. The government understands it has a role to play in helping people find decent work, in helping restore their confidence. Even in difficult economic times government must respond to the needs of Canadians and Canadians need jobs.

The budget accomplishes this in two ways. The infrastructure program is putting people to work now. In looking to tomorrow, to tomorrow's workers and the jobs they must have, the budget establishes a national literacy program, a youth service corps, internship and apprenticeship programs, and innovative programs for small business.

I am confident that together with the people of Canada we can solve the riddle of the 1990s. We will be able to have a caring society, a vital cultural life, and a viable economy. We are up to the challenge.

[Translation]

We, as members of Parliament, must do our job, but Canadians too must do their share and keep on believing in what we can accomplish together. All citizens of our great country must recognize and accept their responsibilities towards this society and do their share. We must regain confidence in our common future.

Mr. Paul Crête (Kamouraska-Rivière-du-Loup): Madam Speaker, I was rather surprised by the speech of my colleague, because my vision of the budget is entirely different from his.

How can he say that we are going to improve the quality of life in Canada, when the qualifying period for unemployment insurance has been raised from 10 to 12 weeks at a time when people are experiencing a very difficult economic situation in the regions of Quebec and Canada? How can he say that reducing the number of weeks of insurable employment for an individual to be eligible to UI benefits will improve the quality of life of Canadians? I believe that Liberals will have to admit, at the very least, that their budget is a conservative one.


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What should we think about this budget, when the government is reaching into the wallets of senior citizens. They have paid their share all their lives and now that they are retired, all they deserve is to see their income cut back. I think the media were very clear on this. I would be pleased to hear the hon. member explain to me how this is going to improve the quality of life of Canadians.

Also, how can he say the deficit is under control, when it is the highest that any government dared make public? I am willing to make a bet with the hon. member that, next year, when we get the figures for the fiscal year, the deficit will be $45 billion rather than $39 as forecast, because the Liberals were not willing to take their responsibilities and reduce the duplications.

(1120)

[English]

Mr. Campbell: Madam Speaker, I want to thank the hon. member for his question.

The budget is very much about the quality of life. It contains numerous programs, many of which I have focused on, that are all about the quality of life: our youth, the jobs they must have, the retraining that must take place and the preservation of the social programs that he referred to in a sensible way which contributes to getting people back into the workforce.

Mr. Art Hanger (Calgary Northeast): Madam Speaker, I appreciate some of the comments the member made in reference to the response of people to a government that does not listen. I keep wondering how things are changing right now when we are faced with that very situation. Government is not listening to the people.

Many have expressed concerns about the massive debt that keeps building up. The budget has just been released and it amounts to a situation now where in the next three years we will have an additional $100 billion in debt. That certainly does not reflect what the people are demanding. A threat hangs over the head of every taxpayer in the country. There is now going to be a service charge to be paid, again on the backs of the taxpayer.

What is going to happen? Are we going to have additional tax burdens again affecting the quality of life? How caring will the government be when forced by lenders to curtail its spending? If we do not get a handle on it now, what is going to happen in the next three years when the lenders say that enough is enough?

I would appreciate the member responding to how caring the government will be after failing to take immediate action. It will be a much greater crisis in the future.

Mr. Campbell: Madam Speaker, I want to thank the hon. member for his question.

There are no tax increases in the budget and I have every confidence, unlike the hon. member and some of his colleagues, that we are up to the challenge. I am not sitting on the edge of my seat waiting for the total collapse of this country. I am shouldering my burden along with my colleagues on this side of the House and the few who are over there in getting on and in getting the job done.

Mr. Benoît Serré (Timiskaming-French River): Madam Speaker, I want to thank you for giving me the opportunity to address the House this morning on this important matter of my government's first budget.

For the past few weeks, I have sat in the House, listening to the many statements, questions and speeches made by my colleagues on both sides of the House. I was struck by one fact. No matter how different our approaches and methods and no matter which region of Canada we originate from, we all share something in common: a strong sense of duty to our constituents.

For me my riding will always come first. I want to thank the people of Timiskaming-French River for putting their faith in me. I want to tell each and every one of them how proud and honoured I feel to be their voice here in Ottawa.

Many of my colleagues on both sides of the House have addressed specific issues in relation to the budget speech today. I would like to restrict my comments to two areas which I feel have more direct consequences to my riding: mining and agriculture.

My riding of Timiskaming-French River is largely a rural riding. It is vast in size and stretches from Matheson and Kirkland Lake in the north to the French River of Alban and Noelville in the south. It is a riding that has been developed by the forestry, mining and agricultural sectors. Although tourism offers great potential it remains relatively undeveloped.

Unfortunately as a result of the poor mining policy of the previous government and the cancellation of mining incentives by the Conservatives in 1987, for the first time in its history Cobalt has no operating mine. The Adams mine in Kirkland Lake and the Sherman mines in Temagami, two iron ore pellet producing mines, closed in 1990. Dofasco through very questionable circumstances now buys its iron ore pellets in the former Prime Minister's riding.

(1125 )

Permit me to state a few facts and statistics on the mining industry in Canada. The first big myth is that mining is only important to a few remote areas of the country. This could not be further from the truth. The mining industry is the cornerstone of our economy, accounting for approximately 16 per cent of total exports, 4.6 per cent of gross domestic product and 100,000 high paying, skilled jobs. More jobs are created in urban centres from services and supply to the mining industry than in the actual mining communities.


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Mining is a mainstay of employment and industrial activity in more than 150 communities across the country with a total population of about one million people. Urban areas also benefit as they are home to international mining head offices, support industries including banks, stock markets, insurance companies, suppliers, legal services and consultants.

This is why I am so pleased with our initiative to establish a reclamation fund mechanism for the mining sector. I intend to continue my consultation with the Minister of Finance and cabinet to ensure that other initiatives, as set out in our mining policy, such as a single window environmental process and an incentive program for exploration, be implemented as soon as possible.

The second big myth is that mining is environmentally damaging and irresponsible. Well-intentioned environmentalists have virtually declared war on our resource based industries like mining, forestry and trapping. Yet the total mined acreage in the country is smaller than metropolitan Toronto.

Although I recognize that forestry and mining practices of the past cannot be repeated, we must guard against extremes which would result in the death of our resource based communities and thus do great harm to the Canadian economy as a whole. We must do more to educate the general public, especially from the urban areas, on the importance of mining in the Canadian economy.

In the last five or six years our ore bodies inventories in this country have been reduced to dangerously low levels. The lack of consistency and the duplication in environmental processes, the lack of incentives and a reclamation fund mechanism, land accessibility because of native land claims and parks are but a few of the problems facing the mining industry.

The Liberal Party in the last election was the only party which developed a comprehensive mining policy. These policies received tremendous support from the mayors and reeves of the mining communities across the country, most of which are single industry towns. These policies were also endorsed by all major mining associations in Canada. I praise the finance minister for acting expeditiously to implement some of those policies.

[Translation]

Agriculture remains an economic sector which is essential for the security, the prosperity and the sovereignty of our nation. On December 15, Canada signed the GATT Agreement in Geneva. I want to congratulate the Minister of Agriculture, the Minister for International Trade as well as the 60 members of the Liberal caucus who worked hard to defend the interests of the Canadian farmers in Geneva.

Together we have succeeded, under those very difficult circumstances and in spite of though time constraints, in maintaining our marketing system and an effective control over import quotas through an appropriate pricing method. Those measures will allow our family farms to survive in the short and the long run.

We still have a very thorny problem to settle with the Americans, the cream and yoghurt issue. I am confident that the Minister of Agriculture will be quite capable of negotiating with them a bilateral agreement which will satisfy our Canadian dairy producers.

(1130)

However, we will have to be very careful not to give in to the constant pressures of the Americans who are asking us to lower those import tariffs. We will have to maintain the viability of our family farms at any rate.

A country that cannot feed its own people is not a sovereign nation. Therefore, I am very proud that the Minister of Finance maintained the major safety nets for farmers, including the Gross Revenue Insurance Plan and the Net Income Stabilization Account.

I would like to make a few comments to my colleagues from the Official Opposition, in particular to their leader. First, I wish to say a few words about my background. My ancestors arrived in the beautiful city of Quebec around 1658. I am very proud to be a descendant of one of the greatest Canadians, Sir Wilfrid Laurier. My family moved to Ontario around 1889 to work in the logging industry and clear rocky lands. I am extremely proud that we were able to preserve not only our language but also our French culture, despite all the challenges and fights we had to face in Ontario.

Last year, my family was designated the Francophone Family of the Year by the ACFO Nipissing.

My riding is made up of about 30 per cent of francophones, as well as Canadians of Ukrainian, Polish, Italian and other origins, and 45 per cent of anglophones who came to work on the land, sometimes a very difficult land to develop. I intend to defend the rights of all these minorities equally.

I am doubly proud to be the first francophone elected in the Timiskaming-French River riding, with the biggest majority ever seen there, since the riding includes six municipalities which declared themselves unilingual anglophone, even before Sault Ste. Marie went that way.

That is why I listened to the opposition leader's speech with great concern and apprehension. I had the impression that, during the election campaign, he promised Quebecers that he would concentrate first and foremost on job creation and economic renewal. I think it is the reason why many Quebecers voted for his party. However, nearly all his speeches have been very negative and mostly devoted to his separatist agenda. Quebec constituents are not any different from those in Timiskaming-French River. They want to be able to earn a decent living and put food on their table.


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Consequently, I would like to warn the opposition members that if they do not set aside their separatist option and start working with this government to put Canada back to work, as a party, they will end up paying a huge political price.

Moreover, for the Leader of the Opposition to consistently refer to the rest of Canada as English Canada is an insult to the millions of francophones outside Quebec, as well as the millions of Canadians of other origins.

I had the opportunity and the pleasure to visit beautiful Quebec City and other areas in Quebec where I felt at home. They are as much part of my heritage as of any Quebecer's. Thus, I would like to invite my colleagues from the Bloc Quebecois, especially those who come from Northwest Quebec, to work with us to implement our mining, forest and farm policies, extend the Ottawa seaway, and jointly develop our tourist industry, so that we can stimulate the economy and create jobs.

Let us look for what unites us rather than what divides us and together, let us put our country back on its feet.

(1135)

Mr. Yvan Bernier (Gaspé): Madam Speaker, I want to congratulate my hon. colleague from Timiskaming-French River. I must say, however, that I do not agree fully with his comments. He speaks of sovereigntists. Well, I am proud to be a sovereigntist, but I am even more proud of the fact that our leader addressed the sovereignty issue during the election campaign. Another distinguishing feature of Bloc Quebecois members is that they are realists.

The budget brought down this week is an assault on existing social benefits. We have proof of this. We have listened to our constituents and seen the impact of cuts, of lower unemployment insurance premiums, of the increase in the number of weeks of work for UI eligibility and of other reform measures which have either been announced or are being planned for them by the Minister of Human Resources Development. We are confused and worried. And we are rightly proud that we are sovereigntists and realists.

We are not trying to be divisive, to start any arguments or to score political points at the expense of Quebecers and Canadians. We have before us a budget about which my colleague spoke at greater length. I fail to see why one would seek out divisive issues. But, since we are talking about this, I would like to reiterate that the second distinguishing feature of sovereigntist Bloc members is their realistic approach in saying to Canadians: Be careful, you voted for the Liberals, the ones responsible for this budget. We have always maintained that there is very little difference between the Liberals and the Conservatives. During the election campaign, we used the expression ``six of one, half a dozen of the other''.

If we had to start another campaign tomorrow morning, in referring to the difference between the Conservatives and the Liberals, I would say that the Liberals are just Tories wearing red ear muffs. That is all I wanted to say.

Mr. Serré: Madam Speaker, on one side we have the Reform Party claiming that we did not cut deep enough, while on the other side, we have the Bloc Quebecois that says we were too ruthless. They want us to reduce the deficit, but they do not want us to make any cuts or increase taxes, as we did on corporations and wealthier Canadians.

A well-known Quebec comedian and philosopher by the name of Yvon Deschamps summed it up quite well when he said that what these people want is an independent Quebec within a united Canada.

[English]

I must say that one cannot have it both ways. One cannot have one's cake and eat it too.

[Translation]

Hon. Lucien Bouchard (Leader of the Opposition): Madam Speaker, governments come and go, but nothing changes. At least, that is the distinct impression one gets from the February 22 budget, once the veil of pretence has been lifted and the many statistical pirouettes have been figured out.

Yet, the members opposite claimed they had understood a few things: first, the urgent necessity to drastically reduce the federal budget to reverse the debt spiral which is spinning out of control; second, the price to pay in terms of credibility for padding forecasts for future economic progress; and third, the need for openness and transparency to win people over, as they are the ones who pay and do not appreciate being mistaken for something they are not.

There was also a fourth thing, which the government seemed to distance itself from more and more as the fateful moment to table the budget drew near. The federal government is unquestionably responsible for creating the debt spiral, and therefore the budget crisis that Canada is currently facing. Logically, it should make some sacrifices and clean up its own act.

Given that the federal government had recognized in December, at the premiers conference, that overlapping jurisdictions and policies were a problem, some were nevertheless hopeful.

(1140)

Alas, on all four fronts, the budget is a surprising disappointment, especially since the government has, at the very beginning of its mandate, a wide-open window of opportunity, both politically and economically. Any recovery, however slight, still gives more leeway than a recession. This golden opportunity was missed.


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Let us look at the substance. The billions in cuts announced left and right combined with the spectacular increase in federal revenues would have led any person unfamiliar with the vocabulary used by successive finance ministers to believe that the trend in the federal deficit would finally be reversed as early as next year. Nothing could be further from the truth.

We will go from a deliberately inflated $45.7 billion deficit in 1993-94 to an almost $40 billion deficit for the coming year. The government's budget plan tells us that the 1993-94 basic deficit, excluding non-recurring factors, will amount to $42.1 billion and that, without any political change, next year's deficit will go down to $41.2 billion.

Let us compare this $41.2 billion figure with the $39.7 billion deficit announced by the Minister of Finance. We must conclude that all this figure shuffling by the government results in a very modest deficit reduction of $1.5 billion. The Minister of Finance wants to convince us that he deserves a gold medal in deficit reduction. In fact, he deserves a paper medal.

Why paper? Because a paper medal has two sides, one for recording revenues and the other for recording expenditures. When we look at it more closely, we see that the finance minister's alleged achievement is entirely based on a revenue increase so large that we are taken aback, especially since his economic forecasts for 1994 are both realistic and modest. But it is pretty useless if we do not arrive at the right conclusions. Even if we exclude non-recurring factors, revenues only went up by 1.2 per cent between 1992-93 and 1993-94, while the GDP grew by 3.3 per cent in nominal terms.

With a wave of the finance minister's magic wand, revenues, excluding increases due to a broader tax base, will suddenly jump by 4.6 per cent with a GDP nominal growth of 3.9 per cent.

We must ask the question that the Minister of Finance has been avoiding: What would be the impact of a more realistic tax revenue increase of, say, 3 per cent? The deficit would amount not to $39.7 billion but to $42.9 billion. The basic deficit for 1994-95 would stay the same as that for the fiscal year ending in one month. At first sight, this outcome would seem the most likely.

The government backed down after the general outcry caused by the trial balloons on RRSPs and employer-financed health insurance plans. But it will still take $1 billion from the pockets of the middle class over the next three years, while some tax shelters reserved for the wealthiest stay in place. They told us about making taxes more equitable, but that will have to wait.

If the government wants its revenue forecasts to materialize, it must allocate additional resources to create jobs by making further cuts in less sensitive federal expenditures. There would then be a real deficit reduction with, as a bonus, a beneficial effect on long-term interest rates and, in turn, on consumption and investments.

The government is acting as though Canada was not facing a structural economic crisis. The year 1994 did not start well on the employment front as 38,000 jobs were lost last month so that, nearly two years after the recession ended, 47 per cent of the jobs lost during the recession in Canada have still not reappeared. The 143,000 jobs created in 1993 were not even enough to absorb new arrivals in the workforce. Quebec still has to recover 60 per cent of the lost jobs. The Canadian economy is still performing well below its potential. The Minister of Finance himself predicts that 173,000 jobs will be created in 1994, which is barely enough for the new arrivals and is not enough to continue making up lost ground.

(1145)

One of the obstacles to a real recovery of the Canadian economy is the level of longer-term interest rates, which are still high, especially because of this huge debt hanging over Canadians like a sword of Damocles. Historically, long-term interest rates did not exceed 4 per cent in real terms. Today, they are still 6 per cent and, even worse, have started to rise again in the last few weeks under pressure from the U.S. economy.

[English]

The only way of bringing back the momentum of lower long-term interest rates is by substantially reducing the federal deficit. When we have a debt of $511 billion, a one point decline in rates represents more than $5 billion less in interest payments. Half the federal debt is of a short-term nature and half is of a longer term nature of is more than one year. This momentum can feed on itself but it has to be sustained and propelled by a government that knows where it wants to go. This does not seem to be the case.

As things stand now the prediction of the Minister of Finance on long-term interest rates seems too optimistic. In a few months the federal deficit will appear to be still out of control and significant economic growth will again be postponed. Job creation was supposed to be the rallying cry of the Liberals. The Minister of Finance predicts a real boost in job creation but unfortunately not this year. It will be next year only.

I am reminded of the metallic plaques in a few French cafés and brasseries bearing the inscription: ``Tomorrow free beer''. It is tomorrow only and we read it today.

In the meantime what are we supposed to make of a budget that acknowledges one of the first measures of the new government enacted last December was and is a job killer. It is written in black and white on page 2 of the backgrounder on the proposed changes to the unemployment insurance program.


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Referring to the rollback in the premium rate from $3.07 to $3 next January it says:

-will provide significant financial relief to businesses. By the end of 1996 there will be 40,000 more jobs in the economy that could be expected if premiums were allowed to rise.

Certainly 40,000 jobs are not something to be looked down upon in these uncertain times. It represents maybe $1 billion in wages.

The government is going to roll back its own increase in the premium rate this year but only in 10 months. In the meantime this increase is killing thousands of jobs. It is strange indeed.

[Translation]

But how do you explain that the announced cuts of several billion dollars do not have any real impact on the deficit? This is because there are two kinds of cuts: real cuts and artificial cuts. For several years, finance ministers have become real specialists in making false cuts.

What is an artificial cut? It is an announced reduction of planned future spending. What was usually foreseen before, of course, was an increase. Reducing or eliminating this increase, in the jargon of technocrats at the Department of Finance, becomes a cut. An employee whose salary raise goes from 5 to 3 per cent has his pay cut 2 per cent, from this point of view, although in fact it is a 3 per cent increase, which will be accounted for as such in the budget of the company or the department.

Such an approach obviously has several advantages for the government. For one thing, it is a good show for the media, since the billions pile up fast in this game, especially since there is no time limit. They will talk about cuts spread over the next three or even five years. And since they are in the habit of adding the cuts over several years, even if it only makes the debate more confusing, they quickly come up with impressive amounts that they can boast about.

(1150)

What this approach does, in reality, is keep the public guessing as to the government's determination to take the bull by the horns. These budget papers, like all those that came before, do not include the expenditure forecasts of the previous budget. This makes it easier for the government to pull the wool over people's eyes and to more or less distort the facts.

Before I give you a few examples of this sleight of hand, Madam Speaker, I want to say that not only are we not impressed with all of these special effects, we also deeply deplore the lack of transparency in the budget process. The nice words spoken by the Minister of Finance at the University of Montreal last November were quickly forgotten, along with all of the other good intentions. However, the government will not resolve the serious debt crisis by playing hide-and-seek with the opposition parties and with the taxpayers.

At this point, I would like to highlight a discrepancy which, considering the sums of money involved, is perhaps only a minor one, but one that is nonetheless symptomatic of a dangerous attitude. The government appears to be saying that since no one will bother to check the figures, it can take the liberty of concealing the truth. Here is one example of this type of attitude which we are not used to seeing, given the traditional accuracy of Finance Department budgets. On page 32 of the Budget Plan, we note the following: ``International assistance funding is, therefore, being reduced by 2 per cent for 1994-95 from the 1993-94 level''. However, on page 34, the figure quoted for 1994-95 is $91 million. This represents a reduction of 3.4 per cent compared to this year's international assistance budget, which was pegged at $2.7 billion. Therefore, this is not a 2 per cent reduction. Does this mean that we have to check every single percentage in the Budget Plan? Is there a catch here? Is the government trying to conceal something? We want an answer.

The budget announces new cuts in business subsidies. On page 33, the following is stated and I quote: ``These reductions are over-and-above the reductions in grants and contributions announced in the April 1993 budget. By 1996-97, grants to business will be on the order of $3.1 billion, down by just under 10 per cent from $3.4 billion in 1993-94''. While this last sentence is accurate, it completely contradicts the first one. Expenditures for this item already exceed the forecasts contained in the April 1993 budget. It was projected that expenditures would decrease from $3.3 billion in 1993-94 to $2.5 billion in 1997-98.

All of this is quite complicated and difficult for anyone to understand. However, this approach generally allows the Finance Department and the Minister of Finance to hide behind distorted facts that have been introduced into the debate. In this instance, the lack of transparency is accompanied by a lack of consistency.

This is doubly worrisome. Not only are facts being distorted, but the total accuracy of table 8 on page 34 can be viewed as questionable. This particular table is very important as it details reductions in expenditures associated with the restructuring of federal programs. Consequently, the formula used to calculate the deficit can also be viewed as questionable. In fact, in some cases the figures listed under such items as international assistance and defence relate to the April 1993 budget, while in other cases, they do not. They do not even represent new artificial reductions. The references are complex and confusing. We are dealing with apples and oranges and the average person has trouble sorting the whole mess out.

The situation with respect to business subsidies is also true of federal government operating expenses, at least for 1994-95. It should be noted-and this is far from reassuring-that the federal government is having a lot of trouble controlling its operating expenses. Over the last two fiscal years, these expenses have clearly exceeded budgetary projections. The Budget Plan announces that the new reductions for 1994-95 will be over-and-above those announced in the April 1993 budget. At the time, reductions of $468 million were projected for


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1994-95. Yet, in Tuesday's budget, we see that the operating expenses for the new fiscal year are identical to the forecasts in the April 1993 budget. It is in the defence sector, Mr. Speaker-I just went from the feminine to the masculine and the people reading Hansard will realize that our female Speaker has just been replaced by a male Speaker-so it is in the defence sector that we hit the jackpot of false cuts. Seven billion over five years compared with the April 1993 budget. In this case, it seems to be somewhat consistent. But the real cut is much smaller, since the defence budget will decrease from $11.3 billion in 1993-94 to $10.5 billion in 1995-96.

(1155)

As there will be no real reduction in federal operating expenditures and in business subsidies, and as the overlap problem will remain unresolved, the Minister of Finance had to do something to at least give an impression of movement. So what was left? Social spending. So they went full speed ahead.

Make no mistake. We would dearly like to see the unemployment insurance budget reduced to zero for lack of unemployed people, except for those in between jobs. But the minister is cutting the budget without reducing unemployment. He will eventually carry out a global reform combining, we are told, training and re-training programs. But, in the meantime, he is striking with full force. He himself estimates that 85 per cent of unemployed workers will receive reduced benefits while only 15 per cent will see an increase in theirs.

Disadvantaged regions will be hit the hardest. Let us not forget that the minister's own forecasts for 1994 are not the greatest. Social assistance, mainly funded by the provinces, will see an increase in the number of claims.

At the same time, the Minister of Finance is reducing his cash transfers to the provinces by $800 million. I am referring to Table 17 on page 56 of the Budget Plan, a $800 million reduction in cash transfers. The value of tax point transfers will increase by more than that, but cash transfers, the only transfers that the federal government can regulate, are the only ones that matter in terms of the federal government's policy in this regard. So the federal government's heavy responsibility in the budget crisis, the practice of shifting the deficit burden to the provinces remains popular. That is a heavy price to pay and we will come back to that later.

Again, an accurate assessment of the unemployment insurance shortfall will have to wait. The Minister of Finance talks about savings of $725 million in 1994-95, but compared to what? It is not clear. What is surprising is the total cost of unemployment insurance benefits, which stays at practically the same level between 1993-94 and 1994-95, despite the new rules and the stable unemployment figures. Given other estimates of budgetary expenditures, we are entitled to see the finance department's detailed simulation.

Is there, Mr. Speaker, more significant evidence of this government's lack of moral fibre than the avowed intention to achieve the most drastic cuts, $5.5 billion over three years in this particular sector? During the election campaign, the Liberals were rending their clothes over the protection of social programs. They are now trying to mend them but their stitchwork leaves much to be desired.

The copy tabled by the Minister of Finance deserves a single annotation: ``This Budget is all smoke and mirrors''. This is not what Canada and Quebec were hoping for.

[English]

The Speaker: As I am sure all hon. members understand, there will not be a question and comment period. The hon. Leader of the Opposition has unlimited time and it is only after 20-minute speeches that there are questions and comments.

Mr. Harper (Calgary West): Mr. Speaker, I wonder if there would be unanimous consent to have a 10-minute question and answer period.

Daily we have the opportunity in the Chamber to question cabinet ministers and any other member who makes a speech, including the leader of the Reform Party. The government in particular is always saying that the Leader of the Opposition is somehow responsible for every policy that occurs around here.

Maybe there would be unanimous consent to allow a 10-minute question and answer period.

The Speaker: Is there unanimous consent?

Some hon. members: Agreed.

Some hon. members: No.

(1200)

[Translation]

Mr. Duceppe: Mr. Speaker, this process is a privilege of the Official Opposition and we do not want to call into question the role of the Official Opposition, as the Prime Minister did when he was leader of the opposition. So, we fully respect the normal operations of this House, while also following the example of the present Prime Minister when he was sitting on this side of the House.

[English]

Hon. John Manley (Minister of Industry): Mr. Speaker, I would like to remind the Bloc that the current Prime Minister did accept questions in the question period after speeches when he was Leader of the Opposition, not necessarily on every occasion, but he certainly did it. Perhaps the current Leader of the Opposition does not like to be reminded of his past as a member of the previous government.


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I have participated in a lot of budget debates and a lot of borrowing authority debates over the last five years, always of course from the other side of the House. The task of criticizing the budget when I was in opposition was always made easier by the fact that the previous government always failed to meet the budget targets it set. Every year it gave us more and more rhetoric about the deficit. It proposed more cuts and tax increases every year. Yet it seemed to auger deeper into the ground, so much so that this year we face a deficit of $45 billion.

The fundamental problem which the previous government failed to address was the need to take seriously its responsibility for the transformation of the Canadian economy into one premised on the need for growth based on knowledge, skills, innovation and the use of technology.

[Translation]

We live in a new global market. Rapid structural changes are taking place in our traditional industries and these changes, combined with globalization, have generated confusion and uncertainty among Canadians.

[English]

We have reason to be hopeful. The new economy offers boundless opportunity for the innovative, the inventive and the courageous. This budget is about seizing the opportunities of the new economy. It is an agenda for economic growth. It is an agenda to put Canada back to work. It builds on our strengths, faces our weaknesses head on and points us to new horizons.

A basic vision for the Canadian economy was at the core of our red book in the election campaign and survives intact in the budget. The vision is one of a Canada successful in making adjustments to the new economy, a Canada in which our traditional sources of wealth creation are enhanced by the application of new technology and by adherence to the principles of sustainable development, a Canada in which small business is able to prosper in an environment in which governments believe that to succeed is good and to succeed requires the co-operation and support of public policy.

The fundamental problem that faces Canadians today is that we as a society cannot finance our consumption at current levels. Measures in the budget reduced the amount that the federal public sector is consuming by a significant degree. However, we still face the reality that the only way our standard of living can be maintained and our expectations of government services can be realized is if we move forward with a plan to revitalize the wealth creation capacity of our economy.

The notion that government does not have a role to play in enabling a nation's economy to succeed is a view that I believe was held by our predecessors, including the current Leader of the Official Opposition. This view has been widely discredited by the successful new economies that are emerging rapidly as our chief competitors in the international marketplace.

The world is moving from a commodity and assembly line economy to a knowledge based economy in which innovations in products and processes are the result of scientific research and development.

(1205)

[Translation]

Knowledge and skills, rather than location and natural resources, are now the basis for the competitive edge in agriculture and mining, as well in electronic data processing.

Public policies can have a bearing on knowledge and skills. The government can promote the creation and improvement of those.

[English]

At the same time as barriers to trade are falling, new roles for government in determining a nation's economic success are being defined. Governments too have to be innovative and strategic in the use of their own limited resources and strategic as well in the direction sought for the economy of the nation.

Our strategy recognizes the rapid change occurring in the world today. Our strategy recognizes that for Canadian firms the key competitors are not across the street. They are on the other side of the world. Our strategy recognizes that our most important resource is people: their skills, their knowledge, their desire to succeed.

In this strategy individuals need to prepare themselves for a future that will likely include career changes and the acquisition of new skills and knowledge throughout their working lives. In this strategy companies must recognize the importance of continual upgrading of their products and the need to develop new markets in Canada and abroad. To do so they need to continually invest in their people and they must not delay in acquiring and using new technology, new processes, new ways of solving old problems. In this strategy governments must create the supportive environment that encourages individuals and companies to innovate, to upgrade, to expand and to create jobs. What will this require of government? First, we have to get the economic framework right. The Minister of Finance has set out a tough but realistic plan for reducing the deficit to 3 per cent of GDP over three years.


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[Translation]

We put in place a clear and stable monetary policy until the end of the decade. We signed two major trade agreements, NAFTA and GATT, which increase and ensure access to world markets for Canada. We are also negotiating a comprehensive agreement to eliminate internal obstacles to domestic trade in a key sector by June 30 of this year.

[English]

Second we have to get Canada's business framework right. By that I mean we need a regulatory and tax environment that enables Canadian firms to succeed rather than hindering their success. We need competition and consumer protection laws that enhance the proper functioning of the marketplace while enabling Canadian businesses to achieve the critical mass necessary to take on the world.

[Translation]

We must try to attain excellence in education and training, and also eliminate barriers and obstacles to personal initiative.

[English]

Third, we must change the culture and attitudes of employers and employees alike to the adoption of new technologies.

Advances in science and technology are driving productivity improvements everywhere in the world. In the 1990s no country can insulate itself from new developments. We must organize ourselves to keep up with cutting edge technology and where possible move ahead. This is the essence of creating well paying jobs and growth in this decade.

The opening of markets around the world creates new opportunities for Canadian business. In Latin America and southeast Asia national economies are growing at a double digit pace. Yet almost 80 per cent of the Canada's trade continues to be with one nation, the United States. Despite the abundant opportunities abroad, as recently as 1990 only 100 firms accounted for 60 per cent of our exports. Only 7.6 per cent of Canadian firms are engaged in export trade. This is simply not good enough for a country as dependent on trade as we are to sustain our standard of living.

(1210)

In a knowledge based world economy, technology and people define the difference between a firm in Singapore and one in Montreal. Yet less than one-half of 1 per cent of Canadian companies do research and development on their own. Not enough of our R and D winds up in products and services to create jobs at home. Canadian companies, particularly small businesses, have not integrated leading technologies as rapidly as their competitors abroad.

[Translation]

The message is clear. The number of businesses doing research and development and investing in state of the art technologies must increase dramatically.

[English]

The questions we have to answer are these: How are we going to make more than one in ten Canadian companies into exporters? How are we going to dramatically improve the number of Canadian companies that perform research and development? How are we going to match our global competitors in the use of new manufacturing and processing technologies?

[Translation]

To succeed, we must have an economy based on innovation. We must rely on the strengths of small businesses which offer the best opportunities for growth and job creation. We must help small businesses where needed, that is with training, exports, high technology and financing.

[English]

As part of the budget the Minister of Finance and I have tabled an action agenda to help small businesses grow and to continue to generate jobs for Canadians. It is a small business agenda that is willing to help firms to take risks and to innovate. It is the small business that has the greatest potential for dynamic growth and job creation.

At the top of our growth agenda is the vital consultative process that has been launched with the small business discussion paper. This consultation demonstrates that we are ready to listen and ready to act. The need to review our approach to science and technology to better support a knowledge based economy is also at the top of our growth agenda.

As part of the budget, we announced a comprehensive re-evaluation of science and technology policy that will begin with the release of a discussion paper this spring. This process will build on budget initiatives to set a long-term course for science and technology policy focused on our greatest opportunity, the transfusion of R and D and technology into high value added products and services.

A key feature of the knowledge based economy is the speed with which information is transferred. Economic success comes from freer, easier flows and exchanges of information. In this rapidly changing environment, the prospect of linking Canadians to a high speed interactive multimedia network, a virtual information highway becomes critical to building our new economy.


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[Translation]

Canada is a leader in telecommunications and we can rely on that strength. Investments, mostly from the private sector, are enormous. I will work in co-operation with industry and the users of the information highway to ensure that governments play an active and creative role.

[English]

An economic growth strategy is not a one budget issue. It is at the heart of the government's mission. I have reviewed today how we will elaborate on our growth agenda in coming months, particularly in the areas of small business, science and technology and the information highway. However this debate is also about what the government is doing to fulfil the immediate promises of the red book.

(1215 )

The answer is simple. We mean what we said. Capital is the catalyst that turns ideas into new products and services. The Canada investment fund will help provide that patient capital. We will contribute $100 million to the fund over four years and we will seek additional funds in the private sector. The fund will be operating before the start of the next fiscal year.

We are working with the Canadian Bankers' Association on projects to improve financing for small business. These include the development of a banking code of conduct to clarify the relationship between borrower and lender and the search for new and better ways of providing regular and trade financing to knowledge based businesses.

[Translation]

We will work with the industrial sector to create networks that will help small businesses to form groups to do together what they cannot do alone.

[English]

Our competitors, particularly in Europe, recognize that networks are essential if small businesses are to compete internationally and gain competitive advantages of scale, scope and speed.

Networks are particularly effective in innovation. They help small businesses develop new products and services, to put new and emerging technologies to work for them and to focus on marketing and exporting.

We will improve the diffusion of innovation and the building of an innovation culture in business by committing $15 million this year for the creation of the Canadian technology network. The network will provide small businesses with the latest information on new technology, new management techniques and new market developments.

[Translation]

We want to set up an engineering and science program to help small businesses hire engineers, scientists, technicians or industrial designers. We will co-operate with the provinces and industry to develop this program and co-ordinate its implementation by 1995.

[English]

To help turn research excellence into new products, growing industries and jobs, we are committing to start-up funding this year of $10 million for a national technology partnerships program. This program will promote the growth of technology partnerships and help small businesses turn research into new products, new services and new jobs.

There is a great domestic and export growth potential for the environmental technology sector, particularly for small businesses. This sector is poised for growth and Canadians can benefit immeasurably from the jobs and exports created by environmental technologies.

The Minister of the Environment and I are reviewing Canada's approach to the environmental technology sectors. When that review is complete we will table detailed plans for this strategic sector.

The budget allocation of $800 million over 10 years for a new long-term space plan is proof of the government's commitment to Canada's continued role as a space-faring nation. The new space plan will be within our financial means and will build on our strengths in earth observation, remote sensing and satellite communications.

A stable base for our research infrastructure is a vital part of improving our innovation capability. The National Research Council of Canada plays a key role in giving effect to the federal government's science and technology policies. This year we will provide the National Research Council with new resources to carry out its mandate.

[Translation]

It is important that we be able to promote and preserve our skills in the university research sector. University research and development are high priorities. This is why we continue this year to ensure the financing of the various granting agencies. Starting in 1995-96, we will give them an annual increase of about 1.5 per cent.

(1220)

[English]

A significant part of Canada's academic research capability is the networks of centres of excellence program.

We are making sure that there is enough funding to support the second phase of the program. In this second phase we will give greater weight to the economic and commercial potential of the networks to support our growth agenda based on innovation.


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As Canadians we have been through a lot in this last decade. Many of our fellow citizens approach the future with more anxiety than hope. Our mission as a government is to offer hope. But if hope is to be meaningful, it must be realistic. So we have put forth in this budget a plan for the revitalization of the Canadian economy, a plan which I believe addresses the challenges and recognizes the opportunities that await Canada.

This House was once told, and I quote: ``The times in which we are living call for initiative and resourcefulness on the part of industry. We must be constantly alive to the changes taking place in the world today and quick to seize every opportunity that will build up our economy. It cannot be done overnight but I am confident that with the co-operation of industry and of government we can build toward a better Canada and a better world''.

Canadians heeded my predecessor, C. D. Howe, when he spoke those words in this place in 1948. Canadians showed initiative and resourcefulness. They worked together, they seized opportunity, and they launched Canada into a period of unparalleled vigorous growth and helped build a better world.

We still have that initiative, that resourcefulness, that sense of shared opportunity. I am confident that we can harness it again to create a period of growth as we move into the next century that will match our great post-war expansion.

I look forward to the co-operation of all Canadians and all members of this House in working toward that goal.

Mr. John Williams (St. Albert): First I have to say how much I enjoyed my colleague's speech about how enthusiastic he is about how bright the future of Canada perhaps will be. He talked about the electronic highway, and that of course is vitally important to the ability of this country to remain competitive in the years ahead.

He talked about putting new technology to work. He talked about a $50 million program to provide assistance in the new technology. He talked about a program to hire scientists and engineers to ensure that we can move forward and develop new products. He talked about a $10 million program for new product partnerships. I thought this was just great and wonderful.

If all these things are so important to Canada moving ahead and being competitive in the world, why are we spending $6 billion to fix the roads and sewers when these things that he has outlined are so vitally important for the country to move ahead from this point forward?

Mr. Manley: I thank the member for his question because I think it is important for us to understand how economic growth is generated in the country. I think what is fundamental in the favourable comments that he made on the subject of some of the investments that we want to make with respect to the electronic highway, with respect to diffusion of technology, technology partnerships which get new inventions out into the marketplace, and what is very important about spending in some of those areas is that it is seen as an investment in growth for the future.

An analysis came out a week or so ago, produced by Statistics Canada, analysing what has made for success, made for growing small and medium sized firms in Canada. One point is that they have been prepared to invest in research. They are also good at applying new technologies.

We have to understand when we spend whether we are consuming or whether we are investing.

With respect to the infrastructure program, there are really two things that I would like to say in response to the member's question. First of all it was made an important point of the design of criteria for the program that the definition be broad enough to include expenditures that related to, for example, electronic highways, to things that would improve innovation that would allow investment in technology.

(1225)

I am absolutely delighted that the Regional Municipality of Ottawa-Carleton, part of which I represent, has chosen to use some of its funds under the national infrastructure program to expand the communications network by investing in electronic highway capability for this region. I think that is exceptionally far-sighted on the part of local government and I applaud them for it.

It must also be understood that the traditional infrastructure programs are also investments in economic growth in the future. True, they do provide short-term jobs, but just as at one time in our history it was the canals and at another time it was the railroads, currently in many areas it is the highways that are generating economic growth, highways, airports, means of transportation and communication. These are vital to economic growth in many parts of the country.

Every government at every level needs to look at, and these issues are difficult because of the financial limitations on government, its expenditures very carefully to ensure that its expenditures represent investments in productivity gains for the future, not simply spending for current consumption. The emphasis has to be on building for the future so that we can afford our current level of consumption.

[Translation]

Mr. Gérard Asselin (Charlevoix): Madam Speaker, in response to the minister's speech, where he talked about sending a clear message, I would like to tell him that since the tabling in the House of this budget, which will be in effect until March 31, 1995, Canadians and Quebecers do indeed find the message very clear.

It is clear because, regardless of whether Conservatives or Liberals are at the helm, people no longer have any confidence at all in the present federal system. Let me explain: Canada is operating increasingly in the red. Both the budget and the deficit reflect this fact. Liberals, for a second time, have set a record. The first one was when they created the deficit, under former Prime Minister Pierre Elliott Trudeau. This week, they set a second record, when they brought down a budget forecasting the largest deficit ever, $39.7 billion; never before has a budget projected this large a deficit.


1779

How does the minister intend to reduce the deficit when he has tabled a budget forecasting a $39.7 billion deficit? I await his answer.

Mr. Manley: Madam Speaker, in my speech, I tried to explain what is not so hard to understand. I think that the key to deficit reduction is economic growth. Throughout the years under the previous government, we have learned that the Conservatives always thought that, by cutting expenditures and increasing taxes they could lower the deficit. It did not work.

This year, we have a dreadful $40 billion deficit. If we want to tackle this problem, we will have to reduce government spending. That we have already acknowledged. But we must also limit tax increases. That is why the Minister of Finance stated that the deficit reduction measures announced in the budget will result in a cut of $5 in government expenditures for every one dollar raised in revenues. That is totally unlike the old tactics used by the Conservatives. We have also implemented an economic growth policy. We are prepared to invest in the new economy. We are prepared to help Canadian small businesses have access to international markets for their goods and services. That is the key to the problem.

(1230)

[English]

I would just like to say a couple of words in English. If we are going to solve the problem of the deficit over the long term there is only one realistic solution and that is to achieve substantial, sustainable economic growth. That is the plan of this budget.

That is a diversion from the budgets of the previous government which relied entirely on a false hope that getting some of the macroeconomic fundamentals right was going to allow for economic growth as the grass grows in springtime. It simply did not work. We are going out into the fields, we are ploughing them, fertilizing them, we are trying to encourage economic growth. That is going to be the key to reducing the deficit in the future.

Mr. Jim Jordan (Leeds-Grenville): Madam Speaker, I just want to congratulate the minister on his fine speech. I am very sorry that we did not have the opportunity to question the Leader of the Opposition. I think that is a mistake because unless we have that exchange and dialogue we are not quite sure where the opposition stands in reference to the budget.

If I understood correctly it was saying that the cuts did not go deep enough. I will never know for sure. I do know for sure that the Reform Party is saying that the cuts did not go nearly deep enough. It would have cut further and I guess would have been prepared to substantiate and defend the fallout.

I want to ask the hon. minister if he saw any further area of substantial cuts that this budget could have imposed on the Canadian people, forgetting that there is a fallout; that innocent, hardworking, perhaps unemployed Canadian people will bear the negative effect of any further cuts we would have imposed on the Canadian people. That would have to be realized.

I wonder where the Reform Party and the Bloc will be a year from today when we come in with a new budget. They will say further cuts, further cuts.

I just wonder if the minister would care to pass judgment on that. If we consider that people are still the bottom line, will there still be that position a year from today when they think we should have made deeper cuts than we did?

Mr. Manley: Madam Speaker, I appreciate that question as well. I must say that what I find confusing about the position that the Official Opposition, the Bloc Quebecois, has been taking, and I heard part of its leader's speech, seemed to be that it was very dissatisfied with the fact that the deficit was too high.

Yesterday in the House of Commons we heard its members raising question after question about the changes to the unemployment insurance regime which is effecting a reduction in the deficit and a reduction in payroll taxes. They send us very contradictory messages and it is impossible to understand how their ultimate political objectives which they proclaim on a regular basis of separatism are going to do anything but add to the burden of costs on the people of Canada and the people of Quebec.

With respect to the Reform Party, the comment is correct. The view has been consistently presented. I do not agree with some of the views that have been put forward by the Reform Party, particularly with respect to what it has said about eliminating all assistance to business.

For example, in the areas of concern to me, science and technology, it is the scientific research and development tax credit which gives about a $1 billion a year assistance to advanced technology companies in Canada which has made Canada a desired location for much of the R and D facilities that are here now.

In my speech I talked about how we do not have enough. If I had time I could list examples of companies that have chosen to locate facilities in Canada, high paying, high value added jobs, because of that assistance. It is provided by other countries. That kind of work is footloose. It can be here, it can be in the U.S., it can be in Europe, or it can be in Asia.


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(1235 )

If we are going to secure those kinds of jobs, unfortunately or fortunately, depending on how one looks at it, we have to be prepared to create a tax and economic environment which is as favourable to those efforts as is offered by our competitors.

Further, I would like to say that there are ways we can make more progress on reducing the deficit. Let me give one example. The elimination of internal trade barriers within Canada could generate as much as a 1 per cent increase in our GDP, a product of $6 billion to $7 billion a year. Why is it that so many provinces are still not willing to come to the table and say they will do it by June 30?

We have signals of goodwill. We signed an agreement last month but there is a lot of work to do. I hope that we will see all of the provinces and the federal government sign such an agreement.

We have to come to grips with areas of duplication between levels of government. That effort is being spearheaded by the Prime Minister and the Minister of Intergovernmental Affairs. That will enable us to deliver government services more efficiently and help us make more progress on the deficit in years to come.

Mr. John Williams (St. Albert): Madam Speaker, February 22, 1994 will go down in Canadian history as the day that the Minister of Finance failed to rise to the challenge of coming to grips with the fiscal problems facing this nation.

This government has a debt in excess of $500 billion and an annual deficit of $45 billion. The Minister of Finance has brought down an uninspiring and tepid budget with nothing but a little more taxes and a little less spending that barely addresses the issue of deficit reduction and elimination. By his own admission, the actions that the minister announced in this House on Tuesday will only reduce next year's deficit by $1.5 billion, from $41.2 billion to $39.7 billion.

The Minister of Finance had led us to believe that he was launching a major attack on the debt and deficit of this country. This was to be a tough budget, he said. He was going to break the back of the deficit and we all expected that the Minister of Finance was going to be decisive. His budget reduces the size of the expected debt in this country next year by less than .3 of 1 per cent. Is that what he calls an attack on the debt and deficit? Is that being decisive?

I have challenged the Minister of Finance on several occasions. I will say it again. Will the Minister of Finance dare to be great and balance the budget by the end of this Parliament? I have stated that he could choose mediocrity or he could choose to rise above mediocrity and reach beyond himself and lead this nation out of the dark tunnel of deficits and debt and into the sunshine of renewed prosperity. History has always given the accolades to the leaders who rise to the challenge while those who have failed to rise to the challenge have been buried in the ignominy of their failure along with their mediocrity.

It would appear to me that we may find the name of the Minister of Finance and his red book, or perhaps red ink book, buried in the footnotes of history along with his indecisive and inadequate policies.

The Minister of Finance broke new ground on January 31 by holding the first ever parliamentary pre-budget debate in this House. At that time he was demonstrating his leadership. He had no shortage of innovative ideas presented to him. If he had listened to Canadians he would have heard that they were disgusted with budgets that profess to address our fiscal problems through a little more taxes and a little less spending while waiting for the panacea to fall out of the sky.

This budget, in my opinion, has failed the test of financial leadership since the deficit and the debt tunnel has just been extended again. There is no sign of that ray of sunshine of renewed prosperity. According to my calculations, the light at the end of the tunnel may have been turned off as a result of lack of leadership and lack of vision.

In his report, the Auditor General stated that hard choices lie ahead. This government continues to pay millions of dollars of old age security to high income families.

(1240 )

These taxes are paid by working people, many of them just scraping by. To continue paying old age security to high income families means that he, the Minister of Finance, has dodged the hard choices which still lie ahead.

What about unemployment insurance? The Minister of Finance proposes to narrow the gap between employment income and unemployment insurance payments for people with modest income and dependants, thereby further reducing the incentive to work.

If there is one thing this country needs it is more jobs. This budget has presented easy choices but no jobs. The bad news is that the hard choices still lie ahead.

A previous Liberal government, back in the seventies, promised us a just society but delivered to us a debt society. If we examine the track record of the seventies we will see that the previous Liberal government spent beyond its means and the net result was a plethora of social programs and a mountain of debt.


1781

In the eighties the Tory governments promised to reverse this alarming trend. Every budget in the last 10 years has professed to address the annual deficits as they continue to consume our economy like a cancerous growth. What was sold to us, sold to Canadians as a just society by the Liberal governments in the seventies, turned us into a debt society in the eighties. The Minister of Finance's budget by this new Liberal government gives us every indication that, in turn, this will turn us into a bankrupt society in the nineties.

I have spoken in this House of the difficult choices and how we have surmounted them in the past. I have drawn parallels between our current situation and the period at the end of World War II when the federal debt was 108 per cent of our gross domestic product. We had back then what we would call today a peace dividend as we wound down the war effort.

That was not a time without problems, however. Soldiers were returning from the war with no jobs; industry was in transition. The leaders of our nation at that time were able to open the door to a period of unprecedented growth and prosperity through leadership and vision.

Members will note that I said leadership and vision opened the door by using the peace dividend to buy the prosperity. We did not use it to buy more social programs.

We can do the same today by creating our own deficit elimination dividend. This country needs a dramatic realignment of our resources toward the opportunities available in this rapidly changing technological world. We have talents and resources that are in high demand around the world.

If we start exploiting these opportunities and teach our citizens to build on our advantages rather than holding each other's hand through social programs, it will be then that this country will have a bright future. The sunshine of renewed prosperity will once again be realized so that we can pass that prosperity on to our children.

Unfortunately, the Minister of Finance has put that reality on hold for yet another year, if not indefinitely. The deficit elimination dividend, obtained through a dramatic reorganization of our priorities that will balance the budget by the end of this Parliament, is the only hope that I can see for the return to economic prosperity in this country.

The Minister of Finance has failed to secure the economic future of this country. He did not rise to the challenge. He did not dare to be great and he passed up on an opportunity to balance the budget in this Parliament.

The day of fiscal reckoning cannot be postponed. We must face it and we will face it. Based on the budget tabled yesterday, Canadians will have to face that day of reckoning on their own without the leadership of this government.

Mr. Bill Graham (Rosedale): Madam Speaker, I congratulate the hon. member on his remarks.

I would like to ask him a couple of questions that arose out of his remarks. The first is a specific one and the second is more general.

(1245 )

The member made specific reference to the fact that in his view old age security to high income families was still being paid as a result of the budget. Exactly what level does the member and his party set as high income? Where does the member set the line? Where would he cut the line and say that thereafter no one would get supplementary payments?

As the member knows the budget referred to a possible cap at $49,000. Where does the hon. member drop it to? Would it be $30,000 or $35,000? What is the member's definition of a high income family? The member heard the minister specifically say that the budget was trying to deal with the problem of people trying to survive in complex urban societies who need money to live. The top cap is $49,000. Where would the member draw that line?

It is easy to criticize, but we were here when the Minister of Industry explained what was in the budget for precisely, it seems to me, the types of items the member has been talking about: the need to get the economy going and the need for small businesses to have government services that would enable them to participate fully in the economy.

Is the member suggesting that all those should be cut as well? Where is the member going to cut in three years to bring us down to a flat no debt position?

Mr. Williams: Madam Speaker, in response to the member's question, during the last election we stated quite specifically that we would cut back the old age security from families making more than $54,000.

During the election campaign when I told seniors that our policy was to cut off the old age security for families making more than $54,000, their response was generally that they wished they could have earned $54,000 a year as a family. Why should hard working Canadians, many of whom are just scraping by, pay their taxes for retired people to be in Florida, Hawaii or California courtesy of the taxpayers of the country?

I will address the second question. I listened to the excellent speech of the Minister of Industry earlier this morning. I raised the point then and I will repeat it again: Why are we spending $6 billion in infrastructure programs based on sewers, roads and low tech jobs when there is such a great need to ensure that the country is competitive around the world in the area of high priced jobs where education is required, where it is important that we can compete? I have always said that the differences between $20 an hour jobs in Canada and $1 an hour jobs in Mexico are motivation and education. That is where we should be taking the $6 billion and putting it into high tech jobs.


1782

We cancelled a helicopter program that was to create all kinds of research and development in the country in order to pave a road from here to there. That is where this government's priorities are wrong. It does not have a philosophy and a real plan of what it is trying to do. It is trying to appease various different projects with short-term solutions.

If we finally got our act together we could accomplish what the minister was trying to say. At the same time we could balance the budget and ensure that the country has a future for our children.

Mr. Randy White (Fraser Valley West): Madam Speaker, this is the defining moment for the new government because the first budget sets the tone for the next four years of Liberal policy. I want to talk today about a definition of my own. It defines my view of the substance of the budget. There are some good things in the budget I could spend a good deal of time talking about, but I will talk about those things that are most disappointing.

Here we are in a most critical period of our economic history and the government has gone soft. Instead of clenching its fists and getting tough with the deficit and debt at a time when world markets are watching our every move, the government has opted for a limp-wristed approach. At this defining moment for the new government the word I use to define this disappointing budget is flaccid. The dictionary defines flaccid as limp, flabby, less rigid, lacking vigour and feeble. How appropriate.

(1250)

The budget is more important for what it does not address than what it does. I want to ask why the budget has not done more or, to paraphrase an American statesman, instead of looking at things the way they are and asking why, I am here today to look at the way they could be and ask why not.

My focus today is on what was not cut and why. There are no details of significant cuts to spending on things like foreign aid, wasteful aspects of bilingualism programs, ineffective multiculturalism programs, subsidies to crown corporations, and grants and subsidies to special interest lobby groups. Quite frankly the reason the government avoided these areas is that they are politically dangerous.

The time for safe, non-contentious decision making is past. It astounds me that members across the floor still refuse to acknowledge the seriousness of the country's financial situation. If we want to gain the confidence of business and the general public we have to make tough decisions now; not two years from now after more studies, but right now.

Let me illustrate some needless cuts. I will start with the b word, bilingualism. The media like to jump on anyone who mentions this issue and brand him or her anti-Quebec. It makes good ink and is guaranteed a predictable response from Quebec members. There is a difference between talking about the theory of bilingualism and the outrageous waste of money that sometimes accompanies the application of that theory.

I am talking about the needless waste of money. When it comes to official bilingualism, the act itself, we have absolutely no idea of how bad the problem of wasteful spending is. I would like to quote from a letter of a government official:

The true costs of official languages activities from the Department of National Defence are higher than those given. Unfortunately, Treasury Board reporting guidelines do not permit us to report, among other things, salaries of military personnel attending continuous language training-and the bilingualism bonus for civilian employees.

Millions of dollars were spent on translating manuals for frigates, but that figure is buried in the budget for the frigates, sunk so deep below the sea of numbers no one could ever dredge up the real true costs. While the commissioner may report the cost of official languages as about $654 million as he did in 1992, the number means nothing. A report released last year puts it somewhere between $2 billion and $4 billion. What is the truth? No one knows.

Since 1969, according to a report released last year, language policy added $49 billion to the federal debt. The effect on provincial debt and the compliance cost of private industry are left to our imagination. Where does it end?

The government has also gone weak in the knees in the area of foreign aid. Flaccid is the word. The Auditor General's report cites a litany of mismanagement, especially in the area of foreign aid. The Canadian International Development Agency, CIDA, has become a cash cow. The Auditor General reports that CIDA is trying to please too many interest groups and meet too many conflicting objectives. The result is an agency with a budget of over $1 billion a year that is characterized by confusion and ineffectiveness.

What is really confusing is the government's refusal to look to this area for major cuts. It cannot even use the excuse that it is a politically contentious area since criticism of the effectiveness of foreign aid spending is coming from all directions. What is the government waiting for? In 1993 the federal government spent just under $2.7 billion on international assistance with little or no tangible proof of any kind of results.

The horror story continues into the area of-dare I say it-the m word, the department of multiculturalism.

'


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(1255 )

I am disturbed by some of the commentary in the Chamber this week. I firmly and deeply believe we are all equal regardless of race, colour or creed. Every single Canadian should be proud to stand and proclaim his heritage, but he should not expect every other Canadian to finance his group's cultural activities. These groups must be self-supporting.

In 1992-93 federal government spending on multiculturalism was nearly $120 million. What is frightening is the response I got from a researcher when I tried to get the figure. He told us he was having trouble getting a response from government departments that incur costs as a result of multiculturalism programs. In other words again we have no idea what is the true cost of multiculturalism.

A short time ago the deficit was supposed to be $33 billion. That was around the time when the election campaign started. During the election the government would not even tell us what it was. The new government took over and the number suspiciously grew. It went to $42 billion and all of a sudden we are told it could reach $46 billion. Now we are supposed to feel happy with a figure of $39.7 billion. It has to stop.

In closing I leave the House with my definition of flaccid. I will redefine the term. For the purposes of this discussion I will use the acronym, FLACCID. The previous Progressive Conservative government promised tough measures, but when it came to making the politically tough decisions it withered under the pressure. The present government was elected on the promise it would tackle this critical problem too, but its feeble attempt to come to grips with our financial woes suggests another definition of flaccid applies. The acronym stands for federal Liberals are cunning Conservatives in disguise.

[Translation]

Mr. Yvan Bernier (Gaspé): Mr. Speaker, I want to congratulate my colleague on his speech. That is not to say that I agree with everything he said. There are things I would like him to go over again. I did not understand everything he said about multiculturalism. He spoke too fast and I do not understand English all that well yet. I am trying very hard to learn but it takes a lot of time.

I would like to give the hon. member the opportunity to reiterate his thoughts on the reduction of the multiculturalism budget. I want to be sure that as long as Canada exists, English and French will be spoken in this country, and that the cuts regarding multiculturalism will not change that. I would like an answer from the hon. member.

[English]

Mr. White (Fraser Valley West): Mr. Speaker, the cutting back of multiculturalism I was talking about is about $21.5 million relating to grants to cultural groups. That is not the only cut that has to come about. I listed only a few.

I am surprised government members would really believe Canadians would re-elect them in view of where they have already started to go. Their deficit is higher than anyone expected. We can look at what happened last week in the House.

We asked a question of the Prime Minister about why they gave away a patronage payment of $4.5 million to his riding to build a museum. They spent $172,000 on one minister to take one flight to make a speech. They gave $27 million to Quebec City for a conference centre. They blew away $120 million by misfinancing CBC. They took over a deficit of $33 billion. They said it was going to be $45 billion and now they say we should be happy at $40 billion.

(1300 )

There is a saying that goes: If you forget the past, you are condemned to repeat it. The past is the Conservative government. The government is condemned to repeat it if it keeps on the same road.

Mr. Nelson Riis (Kamloops): Mr. Speaker, I listened with interest to my friend's commentary. What caught my attention was his reference to the fact that he thought the Liberal government looked very much like past Conservative governments.

What gave my hon. friend the clue? Was it the fact that the Conservatives promoted NAFTA? Of course the Liberals opposed NAFTA and then after they became the government they signed it. The Conservatives supported cruise missile testing and the Liberals opposed it, but when they got into government they too approved cruise missile testing. In opposition, my hon. friend opposite often spoke against payroll taxes, and one of the first things the government did was, of course, increase payroll taxes.

An hon. member: They rolled it back.

Mr. Riis: Well, indeed, introduced it and a few days later rolled it back.

But are these items some of the reasons that my hon. friend thought that the present government looks an awful lot like the Conservative government?

Mr. White (Fraser Valley West): Mr. Speaker, I like the way the hon. member got his speech in by asking the questions. He made some very good points. Yes, we learn fast, we new members. I suppose I could use those too.

I guess what reminds me most of the Conservative government over here is the acceptance of deficit financing and the very acceptance by virtue of their budget that the debt will increase by $100 billion in three years. It was not a problem with the Conservatives and it is not a problem with the Liberals.


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[Translation]

Hon. Audrey McLaughlin (Yukon): Madam Speaker, on February 1, the Minister of Finance stated in this House, and I quote:

There is a profound sense that the status quo simply will not do and that if we continue on our current path then that would be a road to nowhere.

Having read the latest budget, I realize that, unfortunately, it will lead us nowhere. Why? Because it does not deviate in any significant way from the course taken by the Conservatives over the last nine years.

The Liberals were elected because they promised jobs. Yet, there are 29,000 fewer jobs in Canada today than there were when the present government took office. Voters clearly showed the previous government how they felt about the unacceptable unemployment level. With this budget, the present government did not keep its word.

Page 9 of the budget makes the point clearly: ``The unemployment rate will continue to exceed 10 per cent in the foreseeable future''. There is no hope for unemployed Canadians. One in five workers in Canada is unemployed or has a part-time job because full-time jobs are impossible to find.

The budget simply abandons these people to pave the way for a jobless recovery.

[English]

Canadians have had enough of what the former government used to call the jobless recovery. I ask the government why are there no targets in the budget for reducing unemployment? There are deficit reduction targets, as there should be, but also accompanying those should be targets on reducing unemployment.

What is the government's expectation other than, as we see by the budget, that we will have double digit unemployment in the next few years? Instead of choosing to attack unemployment the government in this budget chose to attack, once again, as its predecessor did, the unemployed.

The Minister of Finance told us early on through the whole pre-budget consultations that everyone would share equally in the pain of this budget. I ask people to consider the facts and whether Canadians have shared equally in the pain of this budget.

(1305)

Fact one, fully 50 per cent of the spending reductions in the budget are on the backs of the unemployed.

Fact two, the poor who rely on the social safety net lose $2 billion. The social policy review has been given its final mandate before it even begins.

Fact three, the provinces face cuts in transfers, increased welfare costs when unemployment runs out and there are no jobs to be found. The budget is a very elaborate offloading to the provinces and territories and to unemployed Canadians.

Fact four, the Atlantic provinces get more than their fair share of the pain. With unemployment levels as high as 20 per cent in the Atlantic provinces, facing base closures, reductions in income, reduced fisheries compensation and no jobs, no one can look at the budget and say that the pain has been shared equally.

These last few months since the election of the government we have witnessed a range of consultation initiatives. Let us look at what the budget really says about what those initiatives will mean. Prebudget consultations were held when it is clear that the budget is just going to be a continuation of previous governments. When the Minister of Finance looked in the mirror he saw his predecessor, Don Mazankowski.

Defence reviews are being held when the government has already moved on the issue of defence. Social policy reviews are promised to be held when the budget in fact sets the parameters for that very debate. Negotiations on transfers to the provinces are also to be negotiated or reviewed, we are told. However, the finance department has already determined what the outcome will be with this budget. Lip service is being given to collective bargaining in this budget, but the budget precludes it.

On February 2, 1994 there were 29,000 fewer jobs in Canada than on October 25, 1993. The government was elected with the hope that it would make good on its promises to create jobs and to get Canadians back to work. What does this budget show? It shows 25,000 fewer jobs in the public service, 16,500 jobs from defence. We did not know that the government's job plan was going to work in reverse after it got elected. This budget shows that is exactly what is going to happen.

The minister said we would all share the pain equally. I ask Canadians if they feel it is fair that $6 billion was cut from the unemployed while the rich still get to deduct 50 per cent from the cost of their cruises and hunting trips. The unemployed will be getting more trips too, but those trips will just be to the food banks.

The wealthy certainly did not need to fear the budget. They will still get to hide their money in private trusts, untouched. The 63,000 profitable corporations will still go untaxed, untouched. Offshore profits are untouched by the government.

[Translation]

That is why, on behalf of Canadian workers and also on behalf of about six million Canadians who want to work, I ask the Minister of Finance to send back his work boots. The last thing we need is to be kicked while we are down.


1785

[English]

The budget clearly shows that the Minister of Finance should send back his work boots. We do not need to be kicked while we are down.

Elements of the budget have not given hope to Canadians as it should have done. It has not restored consumer confidence that needed to get our economy on the rise.

(1310 )

The government has failed on all counts but most seriously it has failed the faith of Canadians, the faith that Canadians elected it to provide jobs to get them back to work. In fact more people are out of work.

Later in this session I will be presenting a private member's bill on full employment. It will ask the government and require the government to set employment targets, to put before the House on a regular basis through the Minister of Labour a report on how those targets have been achieved and to give a full report to every member about the objectives of the government in terms of job creation. The time is long past when empty rhetoric and promises will do. Canadians want to see a pay cheque, not a promise.

Mr. Dennis J. Mills (Parliamentary Secretary to Minister of Industry): Madam Speaker, I want to say to the member for Yukon that whenever a budget is put forward there will always be people, through change and transition, who will go through some pain.

I want to say to the member that we feel the pain that a lot of those people-we do not feel all of the pain, but we feel a little bit of the pain-are going through, especially on those bases in Atlantic Canada.

The member knows we inherited a fiscal framework that was dramatically different from all of the forecasts to which we had access. We have been caught in a very tough bind. It is our collective responsibility to try to get some kind of confidence going in this country.

There is an area in the budget that the member refused to talk about or forgot to talk about and that is the area around small business. The member for Yukon has made tremendous speeches on the importance of small business. Small business represents our greatest hope for putting Canadians back to work. It represents our greatest hope for liquidating the unemployment problem. I think she has to be fair and recognize that there are many good things related to small business in the budget.

I have heard from small business people and already just the mere fact that the Minister of Finance announced we would be having a comprehensive study on access to capital for small business has caused a positive response in the community. Banks right now are beginning to trip over themselves in providing a more aggressive lending practice toward small business. That is a good feature of the budget and I do not think we should forget it.

The other thing related to small business in the budget is the continuation of that good idea about new home ownership from the RRSP pool for first time buyers. In my community there are many people in the trades; carpenters, plumbers, home builders who are happy about that and already we can see some activity in the home building industry. That is another good part of the budget.

My only point to the member for Yukon is that, yes, this is a tough budget and I acknowledge that. We have ourselves in a fiscal bind, the likes of which we have never seen in this country. When we talk about the budget she should at least acknowledge that there are some portions of it that really are exceptional. The section relating to small business is headed in the right direction.

(1315)

Ms. McLaughlin: Madam Speaker, I will agree with my hon. friend. I certainly concur with an emphasis on small business but I would remind my hon. friend that small businesses rely on customers. If farmers are going bankrupt and factories and mines are closing across this country, there are not going to be many customers.

We have to make the link between the two. People living on reduced unemployment insurance with no hope of a job and people living on reduced social assistance are certainly not going to be viable customers for the small businesses that my friend mentions.

I agree that the Canada investment fund, a fund that we proposed during the election, is important to get venture capital to small businesses. I support that. I hope members opposite will review the proposal of the New Democratic Party. It was reasonable. There are some similarities to that of the Liberal Party. We share some good ideas on that. The hon. member across and I both share the necessity of ensuring that part of our economy is stimulated.

I would like to mention two other points on small business. I note that the budget says that Canadian business centres will be established in every province. I hope that was just a lapse. We from the territories have to pick up on this lapse and hope that there will be one in Yukon and the Northwest Territories as well. I am assuming that there was a temporary amnesia there. We do have two territories that cover one-third of Canada's land mass.

The second point I would like to make is with regard to the negotiations, and I applaud the government for doing this, with banks and financial institutions in terms of venture capital to small business. While it is not my place in this period to ask a question, I will phrase it as a comment. I hope that in this consultation the government will raise with financial institutions the possibility of looking at a formula whereby the savings that come into a particular financial institution from a community or a portion thereof will be reinvested in that community.


1786

One of the main problems we have is that a very large proportion of Canadians' savings is not being invested in Canada. It is being invested offshore. We must encourage Canadians to invest in their own country, something that the province of Quebec and Quebecers learned a long time ago and we could take a lesson from.

Mr. Nelson Riis (Kamloops): Madam Speaker, I am pleased to have an opportunity to participate in today's debate.

I listened to eight or nine Conservative budgets. After each budget I could almost hear the champagne corks popping on St. James Street in Montreal, on Bay Street in Toronto and on Howe Street in Vancouver because almost inevitably that same group was always pleased with the Conservative budget.

Of course working people just shuddered because they knew that they would be slapped with additional taxes, they would be hacked here and there and slashed up. Indeed, they were never disappointed because that is exactly what happened time after time after time.

When the election came along in October, the people of Canada said that they were going to send a clear message to Ottawa and they jettisoned all of the Tories, except two. They said that they were going to send the strongest message possible and set these Tories back so far they were never going to come back, at least in the foreseeable future. They disappeared almost like the dinosaurs.

The people of Canada said that they wanted a government with a strong mandate, one that was going to do something totally different. There was going to be a new direction. There was going to be a new approach. We would get off this monetary and fiscal policy that we saw in the past and the government was going to create jobs. It went on and on.

In the red book there were jobs here, jobs there, jobs, jobs. Of course, this was what Canadians wanted to hear. Therefore they elected the Liberals. Almost the next day things started to change. There is a magic conversion that takes place when Liberals walk across that central aisle and occupy the seats on the right hand side of you, Madam Speaker.

I can see all my friends across there. I remember their passionate speeches against NAFTA, how NAFTA was going to be the killer of jobs. I heard ``killer of jobs'' echo throughout this Chamber days on end. The first thing they did was sign NAFTA. This sort of jarred people. They wondered what was going on.

Of course, they remembered the payroll taxes that those mean and nasty Conservatives used to impose on small business. The first thing the government did was to impose another payroll tax. The people of Canada started to get a little shell-shocked at this.

(1320)

Then they remembered that cruise missile testing by the United States was coming up for renewal. They remembered all of the Liberals saying for years that this was dastardly, that it was caving in to the Americans, and they would never do that. When the time came, they did that too. They agreed to it.

I could go on and on, but I think I have made my point. Before we even got started, people were dazed because suddenly the Liberals started to break their promises and do exactly what they said they would not do. They enacted exactly what they said they would never enact.

Along comes the budget. I guess Canadians thought: Well, here is a chance because Liberals were elected to do a job, and that job was to create jobs. What Canadians got was a snow job.

Look at this budget. I am sure that if you went back a few days you would find there were some ghostwriters such as Michael Wilson and perhaps Don Mazankowski. Perhaps they wrote that budget. Maybe Kim Campbell slipped back from Harvard and added her two bits worth.

Has there been a significant departure in terms of domestic policy in this country? No. Has there been a change in monetary policy? No. I know there is a new Governor of the Bank of Canada, sort of a John Crow look-alike. He says that the same monetary policy will continue.

Is there a shift in policy? No. Canadians were hoping for a different kind of budget that would actually put people back to work. What did they find? If they read the budget carefully and they go to page 9, they may ask what the government predicts all of this is going to do. They read through and, lo and behold, they find that unemployment levels will continue in double digits for the foreseeable future.

After all the red book rhetoric, the budget plan says that unemployment will continue at essentially the same level for this year, next year and on into the future.

Ms. McLaughlin: And it is a blue book.

Mr. Riis: Yes, this is a blue book. They did not even change the bloody colour, for Pete's sake.

We had a chance to start setting targets. When it came to reducing the deficit, targets were set. This is what we anticipate the debt reduction to be. However, when it came to setting targets for reducing unemployment, they were woefully absent from the budget. This is a serious oversight and it is really too bad.

We have the old approach to the Peter Pan school of economics. We thought it would be something a little bit different from the Liberals; that if you really believe that unemployment will come down, it will. But you have to take action. You have to set targets and then introduce strategies to reduce those levels of unemployment. That is not in this budget. It is not in here.


1787

Here is what happened to me personally. I received calls from a number of small businesses in Kamloops. They called and said: ``We have not read the budget, Nelson, but what is in it for us?'' I told them there were a couple of things, that there would be a network established and so on so they could bid on international contracts. I was told: ``I am running a hair salon'' or ``I am running a welding shop, I am not going to be exporting my services overseas. What is in it for us?'' I had to say, with a heavy heart, that there was nothing in it for the average business person in this country.

The unemployed, as my hon. leader indicated, were again hit with this budget. The victims of these government policies have been now hit. It is a strange way to run a government. We accept it, but it is a continuation of what we saw for the last nine years under the Mulroney regime.

I want to give credit to the government on one point. Actually I could give it credit on a number but let us just pick one. When it was changing the unemployment insurance system, it acknowledged that some people would be really hard hit. I am thinking particularly of single parents or low income families with dependent children or adults that they are caring for. Their benefits went up slightly. In other words, there was acknowledgement that some people were hard hit.

Is there anything in here for the 1.5 million kids who are living in poverty today?

Ms. McLaughlin: No. Not a thing.

Mr. Riis: Not a single word, not a word.

(1325 )

What about the public servants? The public service was hit in this budget. As a matter of fact 25,000 will likely lose their jobs over the next three years as a result of this budget. The government said it was going to freeze their salaries once again.

Does it make sense to freeze everybody when messengers or people who shovel snow off sidewalks have annual incomes in many cases below $20,000 and deputy ministers have incomes in excess of $120,000? It does not acknowledge the fact that some federal government workers are struggling to simply survive.

The government showed sensitivity when it came to changing UI programs. Why did it not show that same sensitivity to the people who actually work for the government? As somebody said the other day, it is like bombing your own troops.

Show some compassion, show some sensitivity. There are people who work for the federal government right now who quite frankly are just managing to survive by the skin of their teeth. They are suffering. There should have been an acknowledgement about that in terms of that blanket across the board freezing of salaries.

My greatest disappointment is that a handful of people are probably still drinking champagne. Those are the richest families in Canada who had a special tax loophole provided for them by a previous government, actually by the Liberals which was then updated by the Conservatives. There is not a single tax lawyer or single tax accountant in this country who says family trusts make any sense at all, not a single one.

I remember when the experts were before the finance committee. The financial advisers were asked what they thought of this particular tax exemption. They all thought it was crazy. They thought it was nutty. They thought the government was goofy to do this.

The Minister of Finance had a chance to show that even the very wealthy in this country are going to have to pay their fair share this time under this new government. Did he close that loophole? Oh, no. The government is going to study it. What on earth is there to study about a loophole that everybody agrees is absolutely dastardly?

In closing, it was a missed opportunity. I could go on and hopefully I will have an opportunity later. I must say that those Canadians who were hoping for a change of course from the last nine years of Brian Mulroney are very disappointed after this budget.

Mr. Jim Jordan (Leeds-Grenville): Madam Speaker, I think anyone who campaigned in the last election found out that very high on the priority list of Canadians was the need to address the national debt and the national accumulating deficits. I notice my good friend from Kamloops did not allude to that.

Today I think we know where the Reform would stand. They would say: ``Correct that by deeper cuts''. I think I know where the BQ stands, if I understood their leader this morning. We did not get a chance to dialogue with him because of the new rule. I think he was saying: ``We would be in favour of deeper cuts, that way of getting at the national debt''.

I wonder if the hon. member for Kamloops would tell me where the NDP stands in relation to national debt. Were the cuts deep enough, too deep or just right?

Mr. Riis: I think it is fair to say that there were some changes that could have had a very serious impact in terms of deficit reduction. I named one, the closing off of some of the glaring tax loopholes like the family trust loophole, a consideration of a wealth tax. Again, we are one of the very few countries in the world that does not have a wealth tax. These are not going to solve the deficit problem but they would show good faith in moving in the right direction.


1788

I think if a person wins $5 million on a lottery they would not mind paying some tax on that. I do not think anybody would say that is an unfair request.

The question of a minimum corporate tax that we have often discussed in this House is something that deserves examining. In other words a whole number of changes to the tax system would generate an awful lot of wealth.

This budget assumes that the deficit will be brought down, which we all support. No one in this House would say we do not have a serious debt crisis and a deficit problem and we have to take steps to get it down.

This budget assumes that because of the steps taken there will be economic activity occurring and then general revenues will flow to the central government. That is a fair summary I think.

However, as my leader indicated, when one person is unemployed or underemployed or afraid of being unemployed, if one is living on social services, one does not have enough disposable income to make much difference. That is what we require. We must get people back to work. I know my friends opposite when in opposition said the same thing. It is critical. If we are to pay down the deficit we must get people back to work so that they can contribute and not be a drain on those revenues.

(1330)

I do not think the budget will put people back to work. I do not rely only on my own observations. I have listened to the experts who responded to the budget. I have yet to find anybody who says it is going to put a lot of Canadians back to work.

We have all sorts of unused capacity. I remember the figures given earlier this week for manufacturing losses in the province of Ontario alone because of unused capacity and the new technologies. They are simply not putting people to work.

This is why the budget has been such a disappointment. There is nothing in it to give hope to those people who are unemployed or to those people who want to see a meaningful new direction in terms of putting people back to work.

Mr. John Cannis (Scarborough Centre): Madam Speaker, I followed the debate with great interest all morning. If I were confused this morning, I am even more confused now.

Earlier we heard two presentations from the Reform Party. One was saying how we did nothing and there were not enough cuts. The critic for the defence ministry indicated that we cut too much. Now I am hearing something else again. I do not know what it is.

Did we cut enough? Did we not cut enough? We want to entice businesses to hire. The $300 million rollback on the UI will entice companies to hire.

Mr. Riis: Madam Speaker, we in the House would all agree that the area the government has supported in the past to a certain degree and needs to support more in the future is the area of high technology.

What do we find in the budget? We find the abandonment of the KAON project in British Columbia. I see some of my British Columbian colleagues across the way. That project would have put Canada on the cutting edge of high technology. It would have been a vote of confidence for our scientists and our top engineers in the country and around the world.

The Conservatives slapped British Columbia in the face by abandoning the Polar 8 icebreaker. This was to be the federal government's show of support for B.C. KAON was the same and the government let down KAON. Literally hundreds of millions of dollars that would have gone into creating jobs in the construction area and, most important, in the high tech sophisticated scientific engineering area have now been abandoned. It is very disappointing that we missed this opportunity.

[Translation]

Mr. Paul Crête (Kamouraska-Rivière-du-Loup): Madam Speaker, the finance minister's budget speech, that could be described as ``Campbell meat with Martin sauce'', reflects the vicious circle of irresponsibility the federal government has got stuck in.

The Minister of Finance did not allow himself to do the job he has been elected to do. During the whole election campaign, he said ``jobs, jobs, jobs'', but when the time comes to create them, he is not there. Instead, he forecast a record deficit of $39.7 billion, and a new series of committees. There is a disease in Ottawa, the ``committee disease'', which I have rarely seen so rampant anywhere else.

The election slogan has fallen by the wayside due to the timidity of a finance minister who has given in to the federal bureaucracy. How then can politicians ask voters for their confidence when, every time, government parties promise one thing during the election campaign and do the opposite?

This budget will contribute to increasing the differences and disparities between the various regions of Canada because, under the guise of the infrastructure program, the federal government is cutting the budgets of the development agencies without giving the provinces any leeway to take over their own development.

The federal government is courageously taking on the weakest in the system by raising the minimum number of weeks of work required to be entitled to UI benefits and bringing down to 55 per cent benefits paid to unemployed workers. That is a Valcourt plus formula. What is worse, they assume that people do not want to work.

'


1789

(1335)

The lack of jobs and the extensive restructuring of the North American economy are blamed on the unemployed and on other people who try and improve their lot. Instead of trying to help them, we will take a whole year to cook up a reform, the contents of which are not known, when we should be up and running and taking immediate action. We were not elected to create committees but to take action.

I would like to underline more particularly that the situation in regions like Eastern Quebec is certainly as bad as in aboriginal communities, but I do not find the same level of support for those areas as for aboriginal communities. I think the needs of native people are real, but ours are too, and it is extremely unfortunate that the situation is handled the way it is.

Somebody said a while ago that there is no tax increase. Do you not think there will be a hefty increase for those people who will have to go from unemployment to welfare next year because they do not have those two extra weeks of employment? They will have to find news ways of making ends meet only to find that they are accused of cheating the unemployment insurance system or the welfare system.

The federal government turns a blind eye to the elimination of duplication, because it would have to admit that the federal system itself is the cause of runaway deficits. During the election campaign, voters kept asking the same question: Are you going to create jobs like the Liberals promise they will? Our answer was: Yes, but in order to do that, we need some leeway.

Because of a lack of political courage, the Liberals will not reach their goal since they cannot get this breathing space. In no way, since the recall of Parliament, has the government allowed us to seriously examine spending in order to remedy the inequities, the programs which were created a long time ago, but no longer meet our needs. In the national capital, we often forget what the situation of unemployed people really is. We do not want to look at that because if we did, the government would be forced to admit that federalism is costly for Canada as a whole.

If the Liberals had freed the $3 million lost because of duplication, they would have given hope again to the 25-35 generation whose potential is wasted. That generation includes technicians, engineers, skilled people who should be working. We will realize in 10 or 15 years that this generation has been sacrificed, that we did not give these people the opportunity to work for the good of Quebec and Canada. They will struggle along from one project to another.

The government also forgets-since it has decided to tax the elderly, we understand a little better its agenda, which is to become another conservative government-that unskilled workers older than 40 were the ones who were hardest hit by the recession. Nowhere do we find this search for fiscal fairness which was supposed to be the mark of this budget.

Forgotten were family trusts. Forgotten were the $250 million which are wasted because of duplication of labour services for Quebec alone. I personally had the opportunity to work in reclassification and labour assistance committees which systematically have both a provincial representative and a federal representative to do a job that could be done properly by one person only. Quebec has agreed for a long time to take full jurisdiction in that field but no one wants to hear a word about it.

The government reduces transfers to the provinces by $2 billion, which means $700 million less for Quebec. All the provinces will then have to accept the machiavellian plan of the Minister of Human Resources Development to reform social programs.

This is a very difficult situation to live with since the minister will then take advantage of the hardship the provinces will be faced with, because of the budgetary restraints, to impose on Canadians a reform that they do not want. In the foreword, the Minister of Finance said:

Our goal is a Canada where every Canadian able to work can find a meaningful job.

Unfortunately, there are no incentives in that budget for massive job creation, as promissed by the Liberals during the electoral campaign, for all unskilled workers, except for the infrastructure program and that will judged when it is operational.

By not having contingency funds coming from useless expenditures, the government is acting exactly like its predecessor, the Conservative government, but in their case, such an approach would have been understandable.

(1340)

The government did not dare cancel the tax shelters of the rich. Rather it turned on average consumers-the elderly and the self-employed-by increasing their tax burden.

They went so far as to create two income classes for UI beneficiaries. Single people will have to prove they are not hiding a lover in their closet. What a good decision is this, the Year of the Family. Terrific! All the better since individuals living alone very often have fixed expenses which eat away at their budget. The only jobs created by this decision will be those of Axworthy's Macoute-style inspectors they will surely appoint, because of their bureaucratic logic. Federal Liberals should have taken advantage of the experience of their Quebec counterparts. A similar measure is now leading to the downfall of the Johnson administration.

In its process, the federal government even took the incredible decision of increasing the National Research Council's budget, an organization that is far from being as productive as regional research centres. Every part of the budget bears the mark of Ottawa mandarins totally unaware of what citizens are experiencing in the regions, everywhere in Canada and in Quebec. The government members did not do their homework.


1790

On another point, I want to remind the minister of defence that, during the campaign, we did advocate cuts in the defence budget. However, the decision to close the only French language military college in all of North America has been inspired by something else than pure financial arithmetics. I appeal to all the Liberal members from Quebec, who will be stigmatised by this decision, especially the Prime Minister.

The Prime Minister and I come from the same region. The St. Maurice Valley is an area which had long been dependent on American or English-Canadian companies in the pulp and paper industry. Then, we had to slowly blossom as full partners. If he is not aware of the impact a decision such as the closure of the Collège de Saint-Jean will have, I think that he forgot what being a Quebecer means.

If the federal system can no longer assume the training of French-speaking officers in Quebec, Quebec will not take this laying down. We will fight as vigorously as others have done to protect the survival of the French fact in other Canadian provinces. The Acadian and francophone communities know full well that a bilingual education system is the shortest route to anglicization, for soldiers as well as ordinary citizens.

The Liberals have decided to make committees the corner-stone of their job creation program. Let me name a few: a task force to develop a code of conduct regarding loans to small and medium-sized businesses; a task force on the taxation of family trusts; a task force on an improved supplementary plan to make businesses more competitive; a review of how to increase the efficiency of federal assistance. Moreover, a discussion paper on science and technology will be published to trigger a national debate that will lead to a new policy in that area.

As a former civil servant, I know only too well this disease called ``committee-itis''. I know the recipe. It is the best way to go nowhere. A year or a year and a half from now, we will receive reports on reports. They will be quietly tabled here, on a day when the attendance is low, and they will not resurface until the following year.

Today, governments must react quickly to allow this country to enter the excessively competitive world market. While we prepare all these fine reports and that years of pussy-footing in committee go by, Canada will pursue its breathtaking drop on the list of nations with declining productivity. We were not elected here to set up committees.

Action was urgently needed to help college and university graduates. Now, forestry workers will have to hunt down 12-week contracts instead of 10-week ones. Of course, unemployment insurance officers will be overworked, chasing down the bad guys who are trying to save their skins.

The government is not taking its responsibilities and is behaving like a consultant when it should be governing. By giving itself additional time, it avoids making real decisions. However, unlike the Conservatives, the Liberals have dared to increase the qualifying period for unemployment insurance.

(1345)

This budget appears to be the work of bureaucrats unaware of the devastating effect raising from 10 to 12 the minimum number of weeks of work required to be eligible for unemployment insurance will have in our local areas. I urge the Liberal members to remind their Minister of Finance of their election promise to put Canada back to work.

This budget will disillusion those who still believed in election promises. During the election campaign, I met people working in peat bogs and took half an hour or so to explain to them how politics could be useful and how things could change with the coming election. Now, when I will go back home, these people are going to come to me and say: ``See, nothing changed. You elect a new government and, once in office, it does the exact same thing as the ones before''. At least, I will be able to say that we did not change.

My cry to the Minister of Finance is also the cry of the regions, those struggling ever since fishing was restricted and doing their best to cope with their unemployment problems. These are also the regions that the young generation has inexorably fled, as well as those striving to pull through. No, the regions are not applauding this budget. They are scowling and looking forward to taking their development into their own hands. Two thirds of welfare spending goes to the various intermediaries in the system instead of to those who need it-that is something which should be attacked right away, and not worked on in a committee for over a year.

Those who are surprised that Quebecers regularly and repeatedly elect sovereigntists should understand why, faced with these successive Tory or Grit budgets that only show the influence of the federal bureaucracy. If only to get out of this infernal cycle, Quebec can no longer afford to stay in the federal system.

Indeed, next year at the same time, the Minister of Finance will explain to us why he could not keep the deficit to $39.7 billion, but that 1995-96 will really be the year when the government regains control of its budget. I would be quite prepared to bet on that with any hon. member. It is a well-known old refrain that rings hollow.

To avoid this sad situation, I again ask the government to strike a special all-party committee to analyze all spending. This would force government managers to answer our questions about the necessity of the work done and would show all of Quebec and Canada that we, not the senior civil servants, are the ones running this country.


1791

Tomorrow I will go back to my riding to tell the people of Kamouraska-Rivière-du-Loup that there is no more hope of regaining control of the runaway federal government. I would hope that they rise up everywhere to show their disapproval as they have been doing in the media for several days. On the weekend, when you meet your constituents, how will you answer them when they ask all government members how this Liberal budget is different? Is there any hope in this budget of putting Canadians and Quebecers back to work? It is up to the Liberal members to bring their government to its senses.

Mrs. Eleni Bakopanos (Saint-Denis): Madam Speaker, I listened with great interest to the comments made by the hon. member opposite, and I find it strange that the remarks are always the same. Regardless of the issue discussed in this House, the observations made by the hon. members opposite never change. They are always making the same comments and every government measure is invariably taken at the expense of the poor and the unemployed. It is clear to me that they have not read the budget and I will simply give you an example to illustrate my point. As regards unemployment insurance, we clearly stated that women with children are going to benefit from the new system to be put in place. And let us not forget that the government also intends to bring in other changes. Of course, it is in their interest to talk about the unemployed and the poor and to mislead the media to get their message across.

(1350)

In Montreal's newspapers, it was mentioned that senior citizens would lose their pension. I can tell you that I received calls at my office, because people read this inaccurate information released by the opposition, to the effect that the elderly, regardless of their income, would lose their pension, which is not true.

Also, the scenario always being presented by the opposition is not realistic. Again, they did not look at the real figures in the budget and at what we really want to achieve. We do talk about jobs, yes we do. Let us not forget job creation. To what extent will we be able to create these jobs? It will be to the extent that we help small businesses in Quebec, including in Montreal where my riding is and which I know well, because they create jobs.

A few years ago, the city of Montreal conducted a study which showed that small and medium-size businesses were the ones creating jobs. We will help those businesses. We will provide them with the means to create jobs for the poor, as the members opposite keep saying.

Given the narrow vision of the opposition, and given that it keeps saying the same things, I would like to know why these separatists-after all this is their real name-insist on continually misleading Quebecers and not telling them the truth.

Mr. Paul Crête (Kamouraska-Rivière-du-Loup): Madam Speaker, I am very surprised to hear such words from a member who lives in the poorest region of Canada. I feel she has lost touch with our planet.

How can you say that the Saint-Denis riding, in the region of Montreal-

The Acting Speaker (Mrs. Maheu): Order! I am sorry to interrupt the member, but he should address his comments to the Chair.

Mr. Crête: Madam Speaker, can the hon. member seriously tell us that in her riding, increasing the required number of weeks worked before one is entitled to unemployment-insurance benefits will not increase poverty? Let us not be mistaken here; the unemployed will be entitled to fewer weeks of benefits.

As for the issue of women, it is perverse for a member from Quebec to say such a thing; she should know better from her own experience in Quebec where the Bourbeau reform was implemented a few years ago and where women have to find witnesses and leave their homes in the evening just to prove they live alone. That kind of situation is unacceptable. We cannot maintain such a thing.

With regard to the member's question and comment, I for one trust Canadian and Quebec medias. I do not feel they lie, I think they report truthfully what they hear in the House of Commons. This is also partly what Mr. Martin, the Minister of Finance, realized the day after he presented his budget. He discovered that everyone thought he had made no changes at all and that surprised him a great deal.

My last comment is on the issue of what you call the separatists, or at least those who want Quebec to be sovereign. A sovereign country is one which makes its own legislation, collects its own taxes and signs all its treaties. We believe there is 3 billion dollars worth of duplication in a federal system and that means unnecessary expenditures; and because of your ideology, government members refuse to address that question. If they had the courage to do so, they would not have to take money away from the less fortunate among us.

Mr. Benoît Serré (Timiskaming-French River): Madam Speaker, the hon. member for Kamouraska-Rivière-du-Loup certainly did not listen to my speech this morning. He claims that it is only in Quebec that one can get an education in French. In fact, he is asking a question to Acadians and francophones outside Quebec. Earlier, he was telling us: ``Ask them if one can get an education in French outside Quebec''.

Madam Speaker, I think that I am living proof of that. I completed all my studies in Ontario and in French. Not only did the Franco-Ontarians have a good education system, but they also served a good part of Northwest Quebec, where people would come to Sudbury because there was no learning institution in Northwest Quebec.


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Mr. Crête: Madam Speaker, since the hon. member speaks French, he certainly did not listen to my answer, because I was talking about our bilingual colleges. I said we know very well that for any francophone, bilingualism in a bilingual college in any province of Canada leads directly to anglicization. When we know that, in Canada, we had to wait one hundred years for Supreme Court decisions allowing us to have French schools in some Western provinces and that we must still go to court to be able to preserve that, I think it is very clear that bilingual education in Canada does not have any future. You will have to walk all over us before you can impose the closing of the Collège militaire de Saint-Jean. You can be sure that the entire Quebec population will be behind us.

[English]

Mr. Dennis J. Mills (Broadview-Greenwood): Madam Speaker, I listened to the member's speech closely and I appreciated his respect for the fact that we had such limited manoeuvrability because we inherited a fiscal framework that was much worse than any of us ever imagined.

We all realize there is a crisis of confidence in the country. It does not matter whether it is in the member's riding in Quebec or my community in downtown Toronto, one of the factors that affects the confidence of investors is that we have so many members constantly talking about separation.

Does the member not realize or does he not agree that this constant focus on separation affects the economy just as much as any budget does?

[Translation]

Mr. Crête: Madam Speaker, if making a case for the sovereignty of Quebec could be as successful as the process that led to the separation of Norway and Sweden, I think we will have much to be proud of. Today, small countries like these have practically full employment while we are stuck with a federal government that is as cumbersome and slow-moving as an elephant. It is so slow to react to crises that by the time it is ready with solutions, another crisis has already developed.

Mr. Martin Cauchon (Outremont): Madam Speaker, I heard what the hon. member said. To hear him talk, a separate Quebec would be seventh heaven. I would like to ask him why that would be the case and how a separate Quebec could be in better shape economically than it is now within Canada, a Canada that has its place among the Group of Seven, a Canada that operates within a North American free-trade zone and that looks both to Europe and Asia. What more would a separate Quebec be able to offer Quebecers?

Mr. Crête: Madam Speaker, when Quebec is a sovereign state, it will control all decisions that affect Quebec. It will never decide to waste $250 million worth of labour just to make another level of government look good.

Furthermore, we can say that this beautiful Canada of ours is close to being examined by the World Bank. If the government keeps bringing down budgets like this one, not only those terrible separatists from Quebec but the whole world will want to see some changes made.

Mr. Eugène Bellemare (Carleton-Gloucester): Madam Speaker, the hon. member of the Bloc Quebecois is to be commended for his very sensitive presentation on government administration.

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He suggests that once his province is a separate state, which God forbid, he will have all the answers and that Quebec's economy will be the envy of the whole world.

If we look at unemployment insurance, considering the economic situation in Canada today, a Canada which includes the 10 provinces and two territories, I would like to ask the hon. member what he wants to improve in reference to the economy.

Mr. Crête: Mr. Speaker, if Quebec became a sovereign state, I never claimed it would be seventh heaven. Those were the terms used by the hon. members on the government side. However, I did say, and maintain that we would be able to get along as well as many small countries in the world which are doing a better job than Canada is doing now. In 1980, people in Quebec wondered-

The Speaker: Order. It being 2 p.m., the House will now proceed to Statements by Members under Standing Order 31.