1986-02-27

VACANCY


Mr. Speaker:: I have the honour to inform the House that I have received a communication notifying me that a vacancy has occurred in the representation, namely, Jean Chretien, Esq., Member for the electoral district of Saint-Maurice, by resignation. Accordingly I have addressed my warrant to the Chief Electoral Officer for the issue of a new writ of election for the said electoral district.


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, I appreciate you allowing me the opportunity to say a few words. This morning at five after ten Mr. Chretien arrived in my office with a letter of resignation as the Member of Parliament for Saint-Maurice and told me that he was going to see you immediately thereafter. I said to the Hon. Member that it was a shock, that the country needed him, that certainly the Liberal Party needed him, and that I did as well in personal terms. I asked him if there was any way we could reopen the question and try to resolve matters to his satisfaction. He said that after 23 years as a Member of Parliament he felt he had made his contribution to this House and to the country, and that now he wanted to place his family first and seek other opportunities.
It became clear that despite my attempt to persuade him differently his course of action had been set, Your Honour. I understand he did see you and presented his resignation to the House.

1 must say that Jean Chretien is a great Canadian, who served his country for twenty-three years as a Member of this House, and who served his constituents in the district of Saint-Maurice, with distinction, tremendous flair and limitless dedication. In the course of his career he has held some very important positions. It would take too long to summarize Jean Chretien's entire career, but two events stand out, and especially his efforts during the Quebec Referendum. Under the leadership of Mr. Trudeau, Jean Chretien marshalled the forces of the federal wing of the party to work together with Mr. Ryan and others, and to represent and lead the federalist forces in Quebec, and he did so very successfully. This country
and the province of Quebec will never forget Jean Chretien's efforts in this respect.
During the negotiations for patriating our Constitution and enshrining the Charter of Rights and Freedom in that Constitution, Jean Chretien, as Minister of Justice, played a key role. So there was the Referendum, our Constitution, the first Francophone to be appointed by the then Prime Minister to the position of Minister of Finance, and a superb Minister of Indian Affairs and Northern Development who was very proud of the fact he had inaugurated more national parks than any other minister: all this adds up to an unparallelled career and a unique Member of this House. We will miss Jean Chretien in the House of Commons, and I am sure that my opinion is shared by all.
I wish Mr. Chretien and his family, as I have already said privately, the very best. He deserves the gratitude of all his fellow Canadians, and I hope that Jean Chretien, his wife Aline, and the whole family-he became a grandfather for the third time yesterday-I wish him the best of luck. His name, presence and personality will never be forgotten in this House.


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, I want to congratulate my hon. friend, the Leader of the Opposition (Mr. Turner) on the warmth and sincerity with which he spoke of a great Quebecer and a great Canadian. Jean Chretien has resigned. He was a brave and dedicated Member who served Canadians and his constituents with energy and dignity. This extremely likeable man has made an unforgettable impression on all Canadians.
As a Quebecer, 1 remember more specifically his steadfast and courageous leadership during the Referendum campaign, since I worked for him at the time. He showed great leadership and generosity towards all his collaborators, and he showed understanding for the position of his opponents.

He was-I should not speak of Jean in the past tense-he is gone, but only from this House. As a Member of Parliament and a colleague, he was witty and compassionate. He was partisan and caring. He loves Quebec and believes very deeply in Canada and has a unique and thoughtful way of expressing that.
1 still have some of the scars to prove his effectiveness. There were moments in Central Nova when I doubted whether I would ever see this House. Jean Chretien would arrive in New Glasgow, Pictou or Stellarton and create, as he did, a very favourable impression, which dismayed me at the time

February 27, 1986
Resignation-Mr. Chretien
but which I salute today. So we in the House say goodbye to Jean Chretien and his wife and family with our affectionate good wishes.


Mr. Ian Deans (Hamilton Mountain):: Mr. Speaker, I want to join with the Prime Minister (Mr. Mulroney) and the Right Hon. Leader of the Official Opposition (Mr. Turner) in expressing my regret and, I must say, surprise, at Jean Chretien's decision to leave the House of Commons to embark on whatever career he has decided upon. I do not believe there is anyone in the country who would deny that in the 23 years he has been here he has served with dynamism, honesty and courage. He stood up for everything he believed in all of the time.
One never had to doubt where one stood with Jean Chretien. He made it quite clear when he agreed with you that he agreed with you vigorously, and when he opposed you that he opposed you vigorously. He has left a lasting impression on all Hon. Members of the House of Commons who were here during his 23 years.
He seems to me to be a man who will always place the people of Canada first in his efforts, both on behalf of Canadian federalism and on behalf of Canadian independence. He left a mark not only with those of us who were here to watch him, alongside others, fight the battle, but he also left us a legacy and I believe the majority of Canadians would agree that they owe him a debt of gratitude.
He was always available to new Members of Parliament. When I first came to the House of Commons Jean Chretien was on the Government side. He was the first one who came to welcome me to the House of Commons. It was Jean Chretien who invited me, as a newly elected Member of Parliament, using himself as an example, to attempt to learn some of the other official language in order that I could play a more meaningful role. I am personally grateful to him for that kind of understanding. He has a sense of humour which allows for an easing of tensions when tensions grow up. He was always able to find a funny way of putting something which ensured there would not be a lasting breach develop between Hon. Members when they had disagreements.
I hope that Jean Chretien's departure from politics is a temporary departure. I hope he will at some point return to politics in one way or another and will continue to serve the public of Canada.


Mr. Speaker:: I have received notice that there are two Hon. Members who want to make comments. I will allow them both to do so briefly and then we will go on to Routine Proceedings.


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, as Chairman of the Quebec Caucus and an old friend of Jean Chretien, I would like to pay tribute to his tireless dedication to the work he did in this House.
As a person, a Member, and a Liberal, Jean Chretien has always seen Canadian unity as one of his greatest concerns,
but he was also a Francophone Quebecer, a French Canadian who wanted to project and demonstrate his pride in that fact, and often, when talking to his Quebec colleagues and the people of Quebec generally, he gave himself as an example of a unilingual Francophone who managed to make his mark at the national level and at the same time served the interests of his constituency and his province, and served them well.
On behalf of my colleagues, and especially the Liberal Members from Quebec, I want to thank him for what he did, and I also wish to thank him on behalf of all Canadians. I wish him the best of luck in his new career in the private sector, and I want to remind him that... well, Jean Chretien and I started together in politics in the fifties at the Laval University Liberal Club. So we have many memories of battles against Maurice Duplessis and subsequent election campaigns.
I realize that his decision was not an easy one, since at one time I myself had to make that decision. I know it is not easy, and I want to thank him for everything he has done for Quebec and for Canada and wish him the best of luck in his new career.


Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, I want to take this opportunity to say that I am losing a personal friend, and 1 want that to be clear. He has generously and passionately served his country, his province, his constituency and, certainly, his Party.
It is unfortunate that political life be such that Jean came to the conclusion that he would tender his resignation to you this morning.
I got to know Jean at university, one of the Liberal students during the years from 1953 to 1960, and we have always been very close friends.
His departure will create a vacuum in the Commons, the Liberal Party is losing a dedicated worker in the House and, I repeat, I will miss him very much in Parliament.



ROUTINE PROCEEDINGS


[Stage Direction]
A message from Her Excellency the Governor General transmitting Estimates for the financial year ending March 31, 1987, was presented by the Hon. Robert de Cotret (President of the Treasury Board) and read by Mr. Speaker to the House.
Mr. Cassidy:: Mr. Speaker, I rise on a point of order. I hope that the President of the Treasury Board (Mr. de Cotret) will assure us that he will not leave for his press conference until the opposition spokespeople have had time to make-
February 27, 1986


Mr. Speaker:: Order, please.
Statements by Ministers.


EXPLANATORY STATEMENT BY PRESIDENT OF THE TREASURY BOARD
Hon. Robert de Cotret (President of the Treasury Board):: Mr. Speaker, today I am pleased to table the Main Estimates for the fiscal year 1986-87 which amount to $107 billion, an increase of 4.4 per cent over the 1985-86 Main Estimates.
With the additional $500 million expenditure cut-back announced yesterday by my colleague the Minister of Finance (Mr. Wilson), which is not included in these estimates, the growth rate decreases to 3.9 per cent, the lowest rate recorded for the estimates in 24 years.


Some Hon. Members:: Hear, hear!


Robert René de Cotret: Of the total Main Estimates roughly two-thirds, or $69.5 billion, represents expenditures made in accordance with existing legislation, while the remaining $37.5 billion represents expenditures which Parliament is being asked to vote or authorize. It is this $37.5 billion over which the Government has the most direct control in the short and medium term and which most clearly indicates that the Government is determined to cut costs.
I am pleased to announce that for the second year in a row the rate of growth in these expenditures is virtually zero.


Some Hon. Members:: Hear, hear!


Robert René de Cotret: Taking into account the $500 million reduction, this growth rate is two-tenths of 1 per cent, the same as last year. Obviously, in real terms, once adjusted for inflation, this represents a reduction of roughly 4 per cent in these expenditures. This is the first time since the immediate postKorean War period that such a low rate of growth in the Government's operating expenditures has been achieved two years in a row.


Some Hon. Members:: Hear, hear!


Robert René de Cotret: This very modest growth rate stands in sharp contrast to what this country has seen in the past. Indeed, over the period 1970 to 1984 the average annual growth rate in the voted portion of the Main Estimates well exceeded 10 per cent. In fiscal year 1975-76 it even reached a high of 36.8 per cent. It was no coincidence that such a situation prompted the then Auditor General to declare in his report for the fiscal year ended March 31, 1976, that:
-Parliament-and indeed the Government-has lost or is close to losing, effective control of the public purse.

Mr. Speaker, I have already referred to the low growth rate of the annual estimates, and I should emphasize that it has
Statements by Ministers
been achieved in spite of significant increases in expenditures for national defence and external aid to meet our international commitments. If we take the $500 million reduction into account, expenditures in all other operational sectors decline by 4.2 per cent on average, and this is in addition to last year's 2 per cent decrease.
This Government is intent on slashing expenditures, but in a reasonable manner. Last year when the Main Estimates were tabled we were forecasting total expenditures of $105 billion for 1985-86, including supplementary estimates. Although it had to cope with a number of major and unforeseen outlays, the Government now expects real expenditures of less than $104 billion for 1985-86. In fact, never since 1979-80 have total expenditures fallen below forecast levels, as they will this year.

This achievement was made possible as a result of a series of major undertakings over the past 18 months on a number of fronts, all designed to fulfil the Government's goal of managing the public sector more efficiently and more effectively, of doing more with less. All of this without reducing the high quality of our services to the public. More specifically, these low growth Main Estimates result from the tough measures we have undertaken to reduce government spending. During this time the Government has: first, streamlined or eliminated a number of costly or outdated programs, such as the Canada Oil Substitution Program, reduced business subsidies provided through DRIE and phased out Canagrex. Second, we have reduced business subsidies to many Crown corporations and privatized others. Third, we have eliminated the provision for inflation in Government operating budgets. Fourth, we have developed new cash management policies to reduce borrowing. Fifth, we have improved the management and control of Crown real estate. Finally, we have eliminated a five-year program to reduce the size and cost of the Public Service.
On this last point, the Estimates I tabled today show a reduction of some 5,500 person-years, or 2.1 per cent from the previous year for the year to come. This alone will save $150 million in 1986-87. By 1990 the reduction will total, as has been mentioned previously, 15,000 person-years. The accumulated savings to taxpayers will be $1.5 billion. The recurring annual savings will be approximately $500 million.


Some Hon. Members:: Hear, hear!


Robert René de Cotret: As I have mentioned on previous occasions, every effort is being made to minimize the effect on employees and lay-offs, if any, will be kept to a minimum.

Over-all, the measures taken so far will make it possible to reduce projected expenditures or to earn non-tax revenues of about $6 billion in 1985-86 and $8 billion in 1986-87, as compared with the projected expenditures when the Government took office. I might add that such measures were taken

February 27, 1986
Statements by Ministers
after due consideration and that everything has been done to properly define the restraint sectors.
As I just said, yesterday the Minister of Finance announced a $500 million cut-back in expenditures for 1986-87. Treasury Board officials are now advising the various departments about these lower expenditures. However these restraint measures will be flexible enough so as not to harm the health and safety sectors, public services and programs for underprivileged Canadians. This is why reductions will differ from one department to another, overaping 2 per cent of voted expenditures.
The implementation of those measures has not been easy, Mr. Speaker. The success achieved until now points to the determination of all of my colleagues and to the support of higher echelons in the Public Service. Other challenges will have to be met as the management of expenditures remains a major component of this Government's strategy for controlling the deficit.
We realize that we have put and are putting a heavy burden on our managers and they responded well. Yesterday the Minister of Finance (Mr. Wilson) announced that this year there will be no regular annual increase in the salaries of Deputy Ministers, Assistant Deputy Ministers and equivalent political staff. For the lower levels of the management category, salary ranges will be increased by up to 2 per cent only. We felt that this measure was essential to demonstrate the seriousness of our fiscal position. I am pleased to be able to say, however, that we shall continue to reward performance in our management category.
I shall soon announce a new feature in our management compensation package, a productivity bonus, which will reward those managers and Departments that meet and exceed their expenditure reduction targets while achieving their other program and policy goals.


Some Hon. Members:: Hear, hear!


Robert René de Cotret: There will now be an inducement to rational economies with an appropriate reward system. It is our intention to reward excellence in management in a manner never before attempted in the federal Public Service.


Some Hon. Members:: Hear, hear!


Robert René de Cotret: To conclude, Mr. Speaker, good management and reasoned reductions in expenditures over the last 18 months have given unprecedented results. This Budget shows the huge amount of success achieved by the Government in implementing its strategy. Our continuing efforts to restrain expenditures and improve management efficiency and effectiveness confirm this Government's sound leadership.


Mr. George Baker (Gander-Twillingate):: Mr. Speaker, this will not take very long, I can assure you. I know you are going to limit me to the time the Minister took, undoubtedly. I can see why his remarks were so short. Tory times are hard times.


Some Hon. Members:: Oh, oh!


George Baker: What is amazing about the President of the Treasury Board (Mr. de Cotret) and the Minister of Finance (Mr. Wilson) is that they are somehow trying to blame and punish the Canadian people for a problem that they themselves created.
When we examine the official record, we discover that in the past 17 months, the Government has managed to contribute 23 per cent to the total public debt of this nation. That is the exact Figure. The Minister of Finance on the one hand derides the previous administration and then on the other says that our payment on the debt has risen from $18 billion when the Government took over to $26 billion today. Obviously this is a Government of absolute contradictions.
A moment ago, the President of the Treasury Board said that we are now going to have a productivity bonus to pay to managers who save money for the federal Government. Although the President of the Treasury Board did not say it, 1 suppose this is meant for expenditures that are not fixed. However, by the same token, if they are not for those expenditures, then they will affect contractual employees and parttime help, and as well they will effect a saving to the federal treasury by having paid by the Government a bonus called a productivity bonus to save money for the Government. That in itself is absolutely and totally outrageous.
Looking at the facts again, I see that the Prime Minister's Office is still up in the high $6 million bracket for operations. 1 can see that spending in the Privy Council Office is up over $1 million. The Government allows that kind of extravagance but then turns around and tells Canadians that when they go to National Parks they have to go on self-guided tours because the Government can no longer afford tour guides. The Government then turns around and says it now has to pay out $900 million to provide a guarantee that was not there before for people with money in the bank. The Government then turns around and discontinues, through these Estimates, guarantees to primary producers. That is what I call a Government of total contradiction.
This Government has made more political appointments than any other administration, yet it is asking the Canadian public to approve a plan of bonus payments to civil servants who chop money for the federal treasury. In short, this is a disastrous Budget and a disastrous set of Estimates. When this sinks in, Canadians are not going to be pleased with the Minister of Finance and the President of the Treasury Board.


Michael Morris Cassidy: Mr. Speaker, the Budget package and now the Estimates which have been laid before the House today seem to be designed to send a signal to financiers and bankers on Wall Street, Bay Street and in

financial markets around the world. Whatever the impact may be on business circles, I suggest that they also send a signal to ordinary Canadians and average Canadian families that the Government intends to fight the deficit on the backs of the average Canadian taxpayers.
The Government is fighting the deficit in this way, and it is doing it to the extent that next year corporate tax receipts for the Government of Canada will be down by $75 million while at the same time the Government expects to collect $7 billion more in sales taxes and income taxes from individuals. That is true. The President of the Treasury Board (Mr. de Cotret) is shaking his head, but the fact is that for high income earners the tax rate will actually come down. For corporations, the tax rate will come down. It is the little guy who is going to be paying the cost of bringing down the deficit.
In terms of spending, it is also clear that the policy of the Government is to squeeze and squeeze regardless of the impact on ordinary Canadians. I remind the Government that there are a million and a quarter Canadians out there who are still unemployed, yet it is cutting back in the area of Canada Employment commission services and will be cutting the Canadian Jobs Strategy next year from $900 million to $800 million. Also I remind the Government that there are many Canadians who live in many places in this very large and widespread country, yet $70 million is to be taken out of the subsidies for weekly newspapers, other newspapers and magazine mailings across the country. Of course this will have a very direct impact upon the ability of Canadians to communicate with each other. It is something which we have had in the country for a hundred years, and for very good reasons- because of the nature of and the distances in our country. To take it away in the interest of reducing the deficit may please Wall Street, but it will be very difficult for average Canadians.
The Government projects a decrease of $200 million in the postal deficit, not in the five years projected by the March-ment Commission but in the course of one year beginning one month and one day from today. That will mean substantial cuts in services, substantial lay-offs and substantial increases in postal costs. Once again I suggest that they are neither appropriate nor affordable in terms of the services Canadians expect from the Post Office in a country as geographically vast as Canada.
Because the Government is more interested in acting tough than realistically coming to grips with the problems, we have the Government demonstrating that it can throw gore on the floor to the bankers and the financiers, regardless of whether there are other ways by which the necessary targets could be achieved.
In Cape Breton, where last year's measures have been totally useless, the Government has decided to cut back capital spending and is to defer the reconstruction of the Prince Mine coal washing plant, another major job-creating investment in Cape Breton which has been cut by the Government. Perhaps the President of the Treasury Board is not aware that we have
Statements by Ministers
20 per cent unemployed in Newfoundland, 15 per cent in New Brunswick, 13 per cent in British Columbia and 12 per cent in Quebec. However, spending on regional development is being cut once again. The economic and regional development package under the Conservatives is being cut by some $7 billion, if I understand it correctly, under the Government. It is a sign of the commitment of a Government which campaigned on the platform of jobs, jobs, jobs just 18 months or 20 months ago.


Robert René de Cotret: That is what we delivered.


Mr. Dick:: Yes, 580,000 more jobs.


Michael Morris Cassidy: There are a million and a quarter people unemployed out there. The Budget says that the unemployment rate will stay the same. It says that there are many people who will not get jobs. If the Government considered jobs a priority, it would bring the unemployment rate down to 7 per cent, to 6 per cent or to 5 per cent, not 10 per cent. It would bring down the unemployment rate in Newfoundland, New Brunswick and British Columbia, not just in central Canada.
The Government has a policy which says that the private sector is good and the public sector is bad. Somehow Conservatives just do not like Government at all. It is a bit like 1984-public sector bad, private sector good. Therefore we are seeing privatization and public sector services being cut back. We are seeing Government being treated as a scapegoat and therefore public servants in particular being treated as if they were responsible for what is happening, rather than being the victims of Government policy.
Women in particular will be the victims of the Government's policies. This morning we asked the Deputy Secretary of the Treasury Board whether there was any policy to ensure that women would not be unduly the victims of the Public Service cut-backs. "No, we have not thought of that", he said. There have been no directives coming from the political level of Government to ensure that the proportions laid off do not contain a disproportionate number of women. The evidence from Fisheries and other Departments is that a higher proportion of women are being cut back. I call upon the President of the Treasury Board to reverse that particular policy and announce it today.
Vital services are already being cut because of the $150 million cuts in the Public Service which have already been announced. The Government is cutting the Health and Welfare library. A valuable and irreplaceable national resource will be closed. Translation services, which are essential to Government in a bilingual country, are being cut back. Customs officers who, among other things, protect the country from the influx of drugs and pornography from abroad are being cut back. Canada Employment offices which help unemployed Canadians are being cut back in terms of the services which they can provide. Now the Government is taking a further step; we are told that in addition $500 million in non-statutory areas or almost four times as much will be cut.

February 27, 1986
Statements by Ministers
If the Government wanted the co-operation of public employees in making these cuts, it had ample room-and it has been demonstrated that it had ample room-to provide the job security protection which they sought and gain that cooperation. The 700 people which the President of the Treasury Board says will be cut back represent three-tenths of one per cent of the Public Service. If the pay agreement with the unions had been cut back by three-tenths of one per cent-and I am sure they would have accepted that-the money could have been found to save those 700 people from being thrust into a difficult job market. This does not only affect Ottawa, it affects the whole country. If the Government can find $500 million in the cuts announced in the Budget yesterday, it could have found the necessary sums to have kept those 700 jobs, allowing any changes in the Public Service to have taken place by attribution, not by the cuts which are now taking place.
The Government wanted to demonstrate to bankers that it could fire, that it could be tough, that it could be rough, just like back in the 1890s on the 1920s. That is what it wanted to do.
[ Translation]
This is what this Government attempted to do. They wanted to show the financial community that they were a tough Government, that they were capable of laying off secretaries, clerks, messengers, women and other groups that are now being laid off because of this Government's policy. This is simply in order to make a show of their toughness, not because it is needed in terms of budget or fiscal policy.

I ask how the Public Service can work effectively with these policies from the President of the Treasury Board. People will not be prepared to co-operate if they fear that in co-operating they will in fact be jeopardizing their own jobs. The Government has not abandoned the archaic, out of date policy of exercising reverse order of merit and making arbitrary decisions in terms of who goes and who stays. Public employees who have been in office for 20 years and have worked hard are being dumped, while people working in the same office with them, having been there for five years, are being kept. That is clearly unfair, unkind, unwise and ill-advised.


Robert René de Cotret: And untrue.


Michael Morris Cassidy: I want to make a couple of specific proposals. In the first place we were told by the deputy secretary today that the $500 million in cuts would not include further cuts in the Public Service. I suggest that that $500 million could lead to as many as 10,000 more cuts in the Public Service. There must be a better process of monitoring than has been announced up to now. I suggest very specifically to the President of the Treasury Board that the $500 million worth of cuts should be referred to the standing committees of the House of Commons which now have the responsibility of departmental oversight under the new rules that came into force at the beginning of this week when we returned from the break. I
make that suggestion quite constructively and positively to the President of the Treasury Board.
In addition, now we know that 6,151 jobs will be cut; 1,000 in Defence, 623 in Transport, 549 in Public Works, 455 in Supply and Services, 393 in National Health and Welfare, 376 in Agriculture, 374 in Indian Affairs, 296 in Energy, Mines and Resources, and so it goes. At last we have the list. We need a means of monitoring to ensure that those cuts are not being applied unfairly as is shown by the evidence right now. If those cuts have to be made, I want the President of the Treasury Board to ensure on behalf of the Government that they will in fact be monitored and surveyed by the standing committees for each Department, rather than allow arbitrary and unfair cuts to be made by Public Service managers who will be rewarded with productivity bonuses the more efficiently and the tougher they appear in making those cuts.


COMMITTEES OF THE HOUSE
Mr. Vincent Della Noce (Duvernay):: Mr. Speaker, I have the honour to present the first report of the Standing Committee on Multiculturalism.


SELECTION-TWENTIETH REPORT OF STANDING COMMITTEE
Mr. Scott Fennell (Ontario):: Mr. Speaker, I have the honour to present the twentieth report of the Selection Committee, in both official languages.
[Editor's Note: For above reports, see today's Votes and Proceedings.]


PETITIONS
Mr. Barry Turner (Ottawa-Carleton):: Mr. Speaker, I am again duty bound to present yet another petition from 48 residents of my riding who do not live within the immediate neighborhood of the Mile Circle but who are strongly opposed to the National Capital Commission's proposal to turn that piece of parkland into an embassy row.


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February 27, 1986


Hon. Ray Hnatyshyn (President of the Privy Council):: Mr. Speaker, pursuant to the provisions of Standing Order 82(5) and Standing Order 83, I move, seconded by the Minister of Finance (Mr. Wilson):
That, notwithstanding the Order made on Friday, February 14, 1986, the Main Estimates for the fiscal year ending March 31, 1987, laid upon the Table earlier this day, be referred to the several Standing Committees as follows:

Since there is a detailed allocation of the Estimates to various committees and the list is lengthy, if it is agreeable to the House, Mr. Speaker, I would ask that the list be printed in Hansard as if it had been read.


Mr. Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
Mr. Speaker:: Does the President of the Privy Council (Mr. Hnatyshyn) have the unanimous consent of the House to introduce his motion?


Some Hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
[Editor's Note: List referred to above is as follows:]
To the Standing Committee on Aboriginal Affairs and Northern Development Indian Affairs and Northern Development, Votes 1, 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, L55 and L60 To the Standing Committee on Agriculture
Agriculture, Votes 1,5, 10, 15, 35, 40, 45 and 50 To the Standing Committee on Communications and Culture
Communications, Votes 1,5, 10, 15, L20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75 and 80
To the Standing Committee on Consumer and Corporate Affairs Consumer and Corporate Affairs, Votes 1,5, 15 and 20 To the Standing Committee on Elections, Privileges and Procedure Privy Council, Vote 10
To the Standing Committee on Energy, Mines and Resources
Energy, Mines and Resources, Votes 1, 5, 10, 15, 20, 25, L30, 35, 40, 45, 50, 55, 60, 65 and 70
To the Standing Committee on Environment and Forestry Agriculture, Votes 20, 25 and 30 Environment, Votes 1,5, 10, 15, 20, 25 and 30 To the Standing Committee on External Affairs and International Trade
External Affairs, Votes 1, 5, 10, LI5, 20, 25, 30, 35, 40, L45, L50, 55, 60 and 65
Standing Orders
To the Standing Committee on Finance and Economic Affairs Finance, Votes 1, 5, L6, 10, 15, 20, L25, 35 and 40 National Revenue, Votes 1, 5, 10 and 15 Privy Council, Vote 20
To the Standing Committee on Fisheries and Oceans Fisheries and Oceans, Votes 1, 5 and 10 To the Standing Committee on Government Operations Consumer and Corporate Affairs, Vote 10 Finance, Vote 30 Governor General, Vote 1 Parliament, Vote 1 Privy Council, Votes 1, 5 and 25
Public Works, Votes, 1, 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75 and L80
Secretary of State, Vote 15 Supply and Services, Votes 1, 5 and 10 Treasury Board, Votes 1,5, 10, 15, 20 and 25 To the Standing Committee on Human Rights Justice, Vote 10
To the Standing Committee on Justice and Solicitor General Justice, Votes 1,5, 15, 20, 25, 30, 35, 40 and 45 Solicitor General, Votes 1,5, 10, 15, 20, 25, 30 and 35 Privy Council, Vote 30
To the Standing Committee on Labour, Employment and Immigration Employment and Immigration, Votes 1,5, 10, 15, 20, 25 and 30 Labour, Votes 1,5, 10, 15, L20, L25 and 30 To the Standing Committee on Management and Members' Services Parliament, Vote 5
To the Standing Committee on National Defence National Defence, Votes 1,5, 10 and 15 To the Standing Committee on National Health and Welfare
National Health and Welfare, Votes 1, 5, 10, 15, 20, 25. 30, 35, 40, 45, 50, 55, 60, 65, 70, 75 and 80
To the Standing Committee on Regional Industrial Expansion
Regional Industrial Expansion, Votes 1,5, 10, 15, 20, L25, L30, 35, 40, 45, 50 and 55
To the Standing Committee on Research. Science and Technology Science and Technology, Votes 1, 5, 10, 15, 20, 25, 30 and 35 To the Standing Committee on Secretary of State Secretary of State, Votes 1,5, 10, 20, 25 and 30 To the Standing Committee on Transport
Transport, Votes 1,5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65 and 70 To the Standing Committee on Veterans Affairs
Veterans Affairs, Votes 1, 5, 10, 15, 20, 25 and 30 That Privy Council Vote 15 be referred to the Standing Joint Committee on Official Languages and that Parliament vote 10 be referred to the Standing Joint Committee on Parliament; and That a message be sent to the Senate to acquaint Their Honours thereof.
Ramon John Hnatyshyn: Mr. Speaker, as well, after consultations with my colleagues opposite, 1 would like to seek the unanimous consent of the House to propose the following order and have the same considered

February 27, 1986
Standing Orders
and disposed of without debate. This has to do with a message to the other place with respect to changes in our Standing Orders. If I may be permitted to read it at this time, it will be self-explanatory:
That a message be sent to the Senate to inform Their Honours that this House has adopted certain amendments to the Standing Orders of the House of Commons which shall continue in force until this House adjourns on the last sitting day of this year, as follows:
1.	That within ten sitting days of the return to Canada of an officially recognized interparliamentary delegation composed, in any part, of Members of the House, the head of the delegation, or a Member acting on behalf of him or her, shall present a written report to the House on the activities of the delegation.
2.	That certain of the said amendments touch upon the powers, mandates, membership and other matters related to the Standing Joint Committees, so far as the House of Commons is concerned and, in particular;
(a)	the Standing Joint Committees on the Library of Parliament and Printing have been deleted from the list of Standing Joint Committees and that a Standing Joint Committee on Parliament has been added to the same, and that it is suggested that the said joint committee be composed of twelve members and that its mandate include, among other matters, the review of and report on the effectiveness, management and operations together with the operational and expenditure plans of all operations under the joint administration of the two Houses and other related matters as the committee deems fit;
(b)	the Standing Joint Committee on Regulations and Other Statutory Instruments has been empowered to include in a report to the House a proposed motion which, if the report be concurred in, would become an Order of the Ministry to rescind a single specified regulation or other Statutory Instrument which the Ministry has the authority to rescind, and that such reports shall be deemed adopted on the fifteenth sitting day after a motion for concurrence in the report is placed on the Order Paper for consideration unless such a motion is previously disposed of;
(c)	the mandate of the Standing Joint Committee on Official Languages shall include, among other matters, the review of and report on the annual report of the Commissioner of Official Languages which is deemed, so far as the House of Commons is concerned, permanently referred to the said Committee immediately the said document is laid upon the Table;
(d)	the Striking Committee of the House of Commons shall make a report, within the first ten sitting days in the year, establishing annual membership lists of the Standing Joint Committees which expire on the last sitting day in the year; and
(e)	substitution of members on joint committees shall be made by the Chief Whip of recognized parties for one meeting only and twenty-four hours prior to it, that such substitutions shall be made from a list of up to five Members of the House designated by the member of the Committee, that within five sitting days of the organization of the Committee, such lists shall be filed with the Clerk of the Committee and they shall be appended to the Votes and Proceedings of the House of Commons on the tenth sitting day following the last organization meeting, and that any Member failing to submit such a list shall be struck from the list of members of that committee and that the Striking Committee shall replace the said Member.
That this House requests the Senate to unite with this House in order to give full effect to the above-mentioned amendments to make such amendments in the Rules of the Senate as it shall deem fit and appropriate in the circumstances, and to select, if the Senate deems it advisable, some of its Members to act on the said proposed joint committees.


Mr. Speaker:: The House has heard the proposal of the President of the Privy Council. Is there unanimous consent for its introduction?


Some Hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. Doug Lewis (Parliamentary Secretary to President of the Privy Council):: Mr. Speaker, the following question will be answered today: No. 496.


Mr. Tardif (Richmond-Wolfe): 1.	(a) Does the Department of Agriculture plan to build a plant protection laboratory in Victoriaville and, if so (a) what became of the $773,000 allotted for the 1984-85 fiscal year (A) what will become of the $3,500,000 allotted for the 1985-86 fiscal year?
2.	Did the Department in June, 1984, conduct several studies on the technical requirements for the laboratory and, if so, in each case (a) who was the author (A) on what date was it prepared?
3.	Between June and September 1984 did officials of the Departments of Agriculture and Public Works visit Victoriaville and the surrounding area in order to study lands available for building a laboratory and, if so ( a) what were their names (A) did they visit the lands of (i) Mr. Edgar Comtois, Route 116, in Princeville (ii) Mr. Benoit Lemieux of Victoriaville (iii) Mr. Camille Dubois of Victoriaville (iv) Mr. Forent Mercier of Victoriaville (v) Mr. Liguori Gagnon of Princeville (vi) Mr. Jacques Bussiere of St. Albert (c) were other farms or lands visited and, if so, which ones and what were the names of their owners?
4.	On August 9, 1984, did officials of the Department of Agriculture meet with municipal authorities and the industrial commissioner of Victoriaville and, if so, what was the name and job description of each official?
5.	Did Mr. Sandy Ednie of the Department work on the Victoriaville laboratory file and, if so, during which period of time?
6.	Is the laboratory under construction and, if so, who in the Department has been in charge of the construction since September 17, 1984?
7.	Was a report submitted to the Minister of Agriculture and, if so, on what date?


Hon. John Wise (Minister of Agriculture):: I. The department does not plan to build a plant health (protection) laboratory in Victoriaville. The amounts of (a) $773,000 for the fiscal year 1984-85 and (b) $3,005,000 for the 1985-86 fiscal year were approved in principle for building the laboratory, subject to obtaining the funding from the La Prade Development Program. The funds were never made available due to the Government's restraint measures.
2.	Although approval was sought for a technical study in August, 1984, it was never conducted because of the restraint measures, (a) not applicable, (b) not applicable.
3.	Yes, Agriculture Canada and Public Works Canada visited Victoriaville and the surrounding area and conducted a study on lands available for building a laboratory.
(a) The study was completed by H. F. Hinderlang, Property Officer of Public Works Canada (Quebec Region). Messrs. J.R. Charbonneau, J. Benazet, A. Caron and F. Ostiguy,
February 27, 1986

officers of Agriculture Canada, visited the farms and the lands.
(6) (i), (ii), (iii) (iv), (v) and (vi) Yes.
(c) Other farms or lands visited were those of Mr. Rejean Verville, Ste-Clothilde de Horton; Mr. Rene Jobibois, RR 1, Kingsey Falls; Mr. Yvan Pinard, Ste-Clothilde; Ferme Mme F. Blanchette, St-Rosaire; Mr. Robert Pepin, Victoriaville; Ferme Prevost, Gilles Inc., Kingsey Falls; Domaine du centre industriel, Victoriaville; Mr. Marcel Menard, Warwick; Ferme Claire Matin, Victoriaville; Mr. Lionel Baty, Warwick; Mr. Real Landry, Warwick; Mr. Benoit Lemieux, Victoriaville; Mr. Camille Dubois, Victoriaville; Ferme Comtoise, Prince-ville; Terre Florent Mercier, Victoriaville; Ferme Liguori Gagnon, Ste-Victoire; and Mr. Jean-Noel Roux, Victoriaville.
4.	Yes. Mr. J.R. Charbonneau, Head, Real Property, Mr. J. Benazet, Chief of Exports for the Plant Health Program, Mr. A. Caron, Program Officer for the Plant Health Program and Mr. F. Ostiguy, Regional Program Manager for Plant Health (Quebec Region) met with officials of "La Societe du credit agricole" at Arthabaska; the industrial and commercial commissioner of Victoriaville; Mr. Jean-Guy Dubois, Member of Parliament for Lotbiniere, as well as Mr. Albert Beaudet, the Chief Engineer of Victoriaville.
5.	Mr. Sandy Ednie was project leader from August 13, 1984 to November 9, 1984.
6.	No.
7.	No.


Philip Derek Lewis: Mr. Speaker, I ask that the remaining questions be allowed to stand.


Mr. Speaker:: The question enumerated by the Parliamentary Secretary has been answered. Shall the remaining questions be allowed to stand?


Some Hon. Members:: Agreed.


Mr. Speaker:: Prior to Orders of the Day, may 1 inform the House that because of the ministerial statement and pursuant to Standing Order 19(6)(6)(i), the sitting will continue after one o'clock until 1.28 p.m.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, February 26, 1986, consideration of the motion of Mr. Wilson (Etobicoke Centre)
The Budget-Mr. Johnston
that this House approves in general the budgetary policy of the Government.
Hon. Donald J. Johnston (Saint-Henri-Westmount):: Mr. Speaker, it is a pleasure to rise again this morning after having had the opportunity of offering a few preliminary comments and impressions with respect to the Budget presented by the Minister of Finance (Mr. Wilson) in this House yesterday.
I might say that the Minister who is with us at present has had the courtesy to inform me that he will be leaving the Chamber. It is because of another appointment and not because of anything that I am about to say, although I suspect in his heart of hearts he would probably be in agreement with most of my statements and the conclusions at which 1 have arrived.


Some Hon. Members:: Oh, oh!


Donald James Johnston: To begin, I said last night that 1 would take some time between yesterday evening and this morning to examine the Budget to see what I could find in it that might be of value. Unfortunately, some of the lesser areas which will be of benefit to particular taxpayers really do not fit into my speech today, but I will comment on them in due course.
1 must say over-all I can summarize my impressions of the Budget with five adjectives. First, as 1 said last night, 1 believe the Budget is cowardly. I know you corrected me yesterday, Mr. Speaker, when you said I could not refer to people as cowardly, but I am not referring to the Minister of Finance as a coward, I am referring to the Budget itself. Second, 1 think it is appropriate to say that the Budget is grossly unfair. Third, the Budget is deceitful in the way it was presented and crafted. The Budget could be described as short-sighted. It could also be described as unimaginative, and finally, it could be described as economically unsound.

This morning, Mr. Speaker, I would like to take a few minutes to discuss each one of these issues: the economy, the question of equity, etc. As you know-
It is cowardly because instead of bringing forward the Nielsen Task Force report and examining those areas where cuts could be made-
[Translation[
Instead of cutting Government programs, the Minister has chosen to launch an attack on Canadian taxpayers. He has decided not to slash his programs, perhaps with the Prime Minister's encouragement, but first and foremost to launch an attack against taxpayers for the reason that they cannot defend themselves.

I recall, Mr. Speaker, and 1 am sure that the Minister of Finance (Mr. Wilson) does because I have reminded him of it a number of times, the interview that he gave to Question

February 27, 1986
The Budget-Mr. Johnston
Period, I think on March 1, 1985, in the pre-Budget period. In response to a question by Mr. Terry Wills of The Gazette as to whether he would increase taxes, the Minister said that taxes are not the way to go, that there is enough room on the expenditure side. He said that on March 1. Then, as we know, in May of last year he brought in the heaviest tax bill that this country has ever witnessed in peace time.
What happened to the Minister of Finance who appeared on Question Period? With all due respect to the Minister, for whom I have high regard, I suggest that he lost his battle in Cabinet, that he lost to his colleagues and especially the Prime Minister (Mr. Mulroney), and that he was unable to bring forward the Budget which he wanted. He did not want to impose the greatest tax burden that Canadians have ever suffered.
Yesterday the Minister had the unmitigated gall to stand in the House with the Budget in front of him, which again exacerbated the tax bill, and tell the people of Canada, "the buck stops here". What a laugh. I would like to see him say that with a straight face to the average Canadian taxpayer. They know where the buck stops. The buck stops in their pocketbooks, that is where the buck stops. They wanted it to stop with the Minister and with the Government, but no, Sir, the buck stops with them. They know exactly where the buck stops.
How big a buck has stopped in their pocketbooks? For the year 1986-87 alone the Minister has added $560 million in personal surtax, a sales tax bill of $815 million, a tobacco tax of $150 million, and corporate taxes. The total bill comes to $1,905 billion. That is the buck that stopped yesterday in the pocketbooks of the taxpayers of Canada. Adding to that the taxes imposed in May of last year, which come to a grand total of $4,380 billion, the total for 1986-87 is $6,285 billion. That means that each taxpayer will have to pay approximately $628 of additional federal income tax. Next year the story will repeat itself. Next year there will be an additional $3 billion added to the $4 billion from last May, which is a total in excess of $7 billion in 1987-88.
We do not have all the data for the intervening years until 1990-91 because the Government has once again failed to live up to the obligations imposed upon us by the Lambert Commission, which we honoured, to give detailed five-year projections. Therefore, we have a hiatus in the numbers which were offered. In any event, in 1990-91 there will be total of $13.25 billion more in taxes suffered by the people of Canada. That is where the buck stops. It did not stop with the Government. That is what Canadian taxpayers have been asked to bear.
The Minister has slapped himself on the back about all his spending restraint saying that historically no Government has ever done such a thing. I would wager, Mr. Speaker, that there have never ever been tax increases of this magnitude in peace time in the history of the country.
Let us suppose for a moment that the Government was simply going to hold its spending to the 1985-86 level. Is that asking a lot? That would mean that in 1986-87, instead of increasing spending to $116,740 billion, spending could have
remained at $112,250 billion. That would have simply been holding the line. Canadian taxpayers want to know why the Government is not holding the line. The difference is $4,490 billion. Had the Government held the line, that amount would have been available to apply against the deficit. A simple calculation shows that without any additional taxes the deficit would have been further reduced to $26,880 billion. That would have happened without any tax increases at all. If the Minister had held the line and not increased spending, he could have risen to slap himself on the back in the House and proudly say, "the buck stops here". But the buck did not stop here, it was passed on to Canadian taxpayers.
It is cowardly that the Minister and the Prime Minister are not willing to face individual Canadian constituents, but are quite prepared to face the Third World. They are quite prepared to lop $1.5 billion from our foreign aid over the next five years. In his presentation and in the budget documents the Minister points out that Canada is still better than France, the United States, and Britain in terms of the percentage of Gross National Product devoted to foreign aid. However, he neglected to mention that those countries rank between tenth and twelfth on the list of donors and that Canada ranks ninth. In fact,there are eight industrialized countries which make substantially higher contributions to foreign aid than does Canada.
Therefore, he has no reason to slap himself on the back. In fact, he has reason to be deeply shamed, as has the Secretary of State for External Affairs (Mr. Clark) who has responsibility to ensure that that Budget is maintained and that Canada meets the targets which have been set. The target of .6 per cent has now been postponed until 1995. That also contradicts an earlier statement made by the Secretary of State that he would like to have the target increased to .7 per cent.
I do not think that the Minister understands what is happening to ordinary Canadians. You may have seen The Journal last night. On that program some middle-income families in Ajax, Ontario, were interviewed. I thought it was a very good use of television, especially since the Minister of Finance was obliged to sit and watch the direct impact of his Budget on the lives of ordinary Canadians.
One of the gentlemen interviewed in that program talked about his house that he had renovated and worked for. He said, "You know, I own only 25 per cent of my house, the bank owns the other three-quarters". He said, "I have no place to find these funds. I feel that I'm going behind". They all felt that they were going behind. The Minister of Finance when he was subsequently interviewed said, yes, he had empathy and sympathy for these people. He referred to the man with the house ownership problem, and with the big mortgage that absorbed, if you like, three-quarters of the equity value of his house, and he said, "Canada is in the same boat". He seized upon that example to draw a parallel between the circumstances of the country and the circumstances of the individual
February 27, 1986

who is burdened with a mortgage on his home and only has a 25 per cent equity interest. It is not the same thing.
Who does that gentleman we watched on television last night turn to to protect his investment, to pay off his debt? Who does he turn to? We know who the Government of Canada turns to. The Government of Canada is turning to that gentleman, to the taxpayers of Canada. The buck stops with him. He has nowhere to go. He can go to his employer and seek a raise, but if he is not successful I suggest he will go further and further into debt. The Government of Canada simply issues a writ asking us to contribute billions of dollars to its coffers. I suggest the buck is passed. It doesn't stop here, it stops there with those families in Ajax and with families like that right across this country.
Why did the Minister decide to take the easy way out? Why did he decide simply to clobber middle-income and lower-income Canadians? That is the unfair part of this Budget. Having decided to tax why did he tax in such an unfair manner? You may recall the Minister declared not too many months ago that this country suffered from an acute shortage of rich people. With this Minister and this Government there certainly will not be any increase in the number of rich people. In fact, we seem to be on our way to wiping out the middle class. He still is a supply-sider. You may recall last year I talked about the horse and sparrow economics of John Kenneth Galbraith. The theory that if you feed the horse enough that something will be left over for the sparrows. The Minister is not only practising supply side economics by maintaining the capital gains exemption, by reducing the surtax for upper-income Canadians he in fact is going to wipe out the sparrows. It is not even horse and sparrow economics, it is worse. He is still feeding the horse; the capital gains exemption is still there, and in addition to that he is hitting middle and lower-income Canadians.
Mr. Speaker, let me read you a few headlines which really say it all in terms of the fairness of this Budget:
Ordinary earners hit hardest again.
From The Globe and Mail:
When you are middle class, it is a struggle to stay there.
Next headline from The Globe and Mail:
Individual taxpayers cannon fodder in three-pronged assault on deficit.

There was also this headline in La Presse:
The 3 per cent surtax will hurt the individuals.

Another one, Mr. Speaker, again from The Globe:
Middle-income earners will carry bulk of new load.
Then it says:
Surtax less costly than at present for those at high end of the scale.
The Budget-Mr. Johnston
There you are, feeding the horse and attacking the sparrows. The next one:
Happy investors keep exemption on capital gains.
Finally ...

And I quote: "Wilson missed the mark", wrote Alain Dubuc in La Presse. So that is how the Budget is described. There is the clear message given by headlines in today's newspapers.
In conclusion, I would like to quote from Mr. Dubuc's comments: "After all those expectations, the Minister of Finance did a near tour de force by tabling a dumb and unimaginative Budget. The only positive note is that he just about brought the deficit under the $30 billion mark".
Clearly, Mr. Speaker, our Minister missed his shot.

I also said that the Budget was deceitful. Let me take you to page 20 of the budget speech.

-the Minister suggested yesterday, under the heading "Research and Development":
A second priority is investment in knowledge.
The crucial importance of knowledge to Canada's future requires a new partnership between the private and public sectors. The federal Government plays a major role in supporting university-based research and the development of highly qualified personnel in Canada. One channel for this support is through the operations of the Natural Sciences and Engineering Research Council, the Medical Research Council and the Social Sciences and Humanities Research Council. The Government proposes to provide a secure funding base for these councils by adding S300 million over the balance of the decade.

In fact, one would have thought that this followed upon the grand declarations of our now Prime Minister in his book, Where / Stand, when he attacked the Liberal Government of the day for what he considered a lack of interest in research and development. I quote from page 41 of the book:
If the percentage of GNP allocated to research and development were increased by 1 per cent we could create in Canada one million new jobs and $20 billion in additional sales of manufactured products.
Now, that was in the book Where l Stand. The next edition will be called "where I stood".

Because, clearly, our Prime Minister's feet (Mr. Mulroney) are made of clay.

That being said, one would have thought, as some journalist did, that the Government was really giving a boost to research and development in this country, $300 million. I turn here to The Gazette which says:
Research Councils received $300-million boost.
Let me refer you to the five-year plan of only one of those councils referred to in the Minister's speech. Take this particular council, because when I was Minister of Science and Technology I had responsibility for the council, which is the

February 27, 1986
The Budget-Mr. Johnston
Natural Sciences and Engineering Research Council known under the acronym of NSERC. A five-year plan was presented to the Government, and during the period from 1984-85 to 1989-90 the plan requires $1.4 billion in increased funding in 1984-85 constant dollars.
The Government has offered NSERC the Medical Research Council and the Social Science and Humanities Council $300 million to be divided among them. This is supposed to be a great coup. This is supposed to be a boost in research and development.
In this report we find a number of statements which are important. I read from page 202 of the five-year plan of the council as follows:
The initiatives proposed by the second Five-Year Plan are based on the established, well-proven and highly-accepted programs of NSERC and represent an urgent investment opportunity for the federal Government. Given the key role they play in providing for the future of R&D in Canada, their rejection would be tantamount to a rejection of not only the national targets, but also of the economic activity that can only come from a more sophisticated and technologically oriented society. Surely that option of retreat is not a valid one even in today's environment of fiscal restraint.
My goodness, we have not only seen retreat, we have seen a virtual abandonment of this plan. The treatment this Council is receiving, I suggest, is shocking in the extreme. We know that even to provide for inflationary increases and stay even, NSERC alone would require $380 million over that period. But the Government offers $300 million to the three councils and pretends that this is a great step forward in stimulating research and development in Canada.
[ Translation]
Frankly, Mr. Speaker, ever since this Government has come to power, identifying its priorities has been very difficult. When we look at the bailout of the two banks that went bankrupt-$2 billion-and compare that with the circumstances of those councils, in the area of research and development, truly, I understand absolutely nothing about the goals and directions the Government would like to pursue.

This Government, I suggest, is rooted in the economy of 20 years ago and does not understand that the kind of growth which is necessary to get the deficit under control comes from a heavier and greater commitment to research and development, technology and productivity.
This brings me to another one of my adjectives. I said the Budget was "shortsighted". It is indeed shortsighted for the reasons I have just listed in terms of research and development. If there is one place we do not want to cut, it is in that area. We have to improve the intellectual capital. That is where the future of Canada lies. This Budget is a direct assault on that objective.
Something else about which one could make a speech for days is the question of foreign aid-talk about shortsightedness. We who have studied the potential problems in this biosphere know that the greatest problem will not be East-
West. That has to be controlled, and must be controlled, but lying there as a sleeping time bomb is the North-South. That is a problem which this country has a proud record in addressing. We know that unless the standards of living of the third world are raised, the population explosion itself will create demands upon this planet which we will not be able to support by the year 2050. I know that is long-term thinking and that this Government does not consider long-term thinking especially significant. This Government really does not think beyond the next election. That is readily apparent from certain aspects of this Budget. However, I say to you, Mr. Speaker, that we shall pay dearly not only as Canadians but as Members of the international community on this planet earth if we start to reject the responsibilities towards the Third World and the North-South dialogue which we have so readily accepted in the past. This Government, for short-term gain, has set about to cut into the Budget to the tune of $1.5 billion over the next five years.
In addition, I said that this is an unimaginative Budget. Monsieur Dubuc in La Presse makes that point. It does not really require genius, does it, to impose millions of dollars in taxes? I would have thought that any of us here, even without any economic knowledge whatsoever, would say: "If additional funds are required, why don't we increase sales taxes or personal income taxes?" That seems to be the obvious thing to do. That does not require any genius. It does not even require a Minister of Finance. But that is what we have and that is why the Budget is completely unimaginative. Stacked upon the taxes which were imposed last May, not only is it unimaginative, it is economically counter-productive.
The cuts talked about by the Government, for the most part, are not real. They are ghost cuts, as some commentators have described them, but the taxes are very real. We will pay the taxes but the cuts are theoretical numbers. For example, Mr. Speaker, if you went to the Government and said you were going to spend $6,000 on a round-the-world trip and then a day later you said you had decided to go to Florida and it will only cost you $1,500 and you have saved $4,500, the Government would say: "Yes, you have cut your Budget by $4,500". That is the kind of cuts we are talking about in most instances.
As I demonstrated at the outset, the Government has proved itself incapable of holding the line, let alone cutting into expenses. Our expenses are increasing at the rate of billions of dollars per year. They are moving from $112 billion to $116 billion, as I mentioned. But the taxes are real, and in imposing these taxes discretionary spending and necessary spending is being cut to the detriment of the pocket books of Canadians. Canadian men, women and children, if I can go back to my earlier analogy of Galbraith, are the "sparrows" who are suffering.
The Budget has to be inflationary. I said that in May of 1985. I know that some people have said that it has not been inflationary because inflation is still at 4.4 per cent. However, we know that the impact of a Budget is somewhere between eight months, 12 months and sometimes 15 months down the road. You may not be aware of this, Mr. Speaker, but inflation
February 27, 1986

in this country over the last three months is running at 5.6 per cent. If we were to project that forward, we would have an annual rate of 5.6 per cent.
Our neighbours to the south do use a forward projection for certain purposes. We do not. We always reduce the rate of inflation, or increase it, by past experience. The only true test is to look at what is happening now and what is happening now is that we have a 5.6 rate of inflation. I suggest to you, Mr. Speaker, that with the burden of taxes we are putting on consumers, the price of gasoline and the price of food is going to increase that rate of inflation, expecially when it is combined with the weak dollar delivered to us by this Government.
I mentioned the people from Ajax whom we saw on television. What will they and the workers of this country from coast-to-coast do when faced with these tax increases? Will they not try to pass the buck as well? Should they not be entitled to pass the buck? How will they pass the buck? The only means at their disposal is to ask for higher wages. Their only recourse is to increase wage demands. I would say that the workers have been very responsible since the six and five program was introduced by the Liberal Government back in 1982. But I say to you, Mr. Speaker, that when we impose taxes of this kind on goods which they require to maintain their standards of living, they will feel they are justified in asking for higher wages. That is how the inflationary spiral starts. That is how the CPI increases, which in turn is why interest rates can increase and are likely to increase.
If savers continue to demand a real rate of interest at the levels we have seen over the past year, how on earth are interest rates going to come down? How will they come down faced as we are with the incredible tax increases and inflationary impact in this Budget? If interest rates creep up or even stay at their present level, which is much too high in the circumstances-they went up to defend the dollar but may stay up now because of the Budget-the economy is likely to grow more slowly. There will be fewer jobs and, of course, there will be higher taxes. These matters are known to the Minister of Finance and to the Minister of State for Finance (Mrs. McDougall) who I am pleased to see here with us today. They know they are vulnerable and they know, of course, that their $29.5 billion deficit number is equally vulnerable.
The whole Budget proceeds on a number of assumptions. 1 am not going to attack the assumptions. I just want to raise certain questions with respect to them which I would like the Minister of Finance and the Minister of State for Finance to reflect upon. First, there is the assumption that it is inflationary, a point which I have already made. That is a serious matter. I continue to regard another round of inflation as public enemy No. 1. Nothing could throw our economy into a decline as quickly as indications that we will have more inflation-and this Budget is inflationary.
There are also other assumptions. For example, there is the assumption that oil prices over the next two years will be in the neighbourhood of $22.50 per barrel. We know that the spot
The Budget-Mr. Johnston
price at present is much lower than that. It seems that the Minister of Finance and his colleagues must be praying that the price will rise to the neighbourhood of $22.50 per barrel. There is a rule of thumb in this respect with which Hon. Members may be familiar. That is to say, each one dollar reduction in the price of oil represents a loss of revenue to the federal Government of approximately $110 million. In fact, the Economic Council of Canada has indicated that if the price of oil is $19 a barrel-and it is much lower than that on the spot market now-there will be a loss of $500 million to the Treasury. That is one assumption, a terribly fragile one, with very little evidence which any of us can see to support it. The $29.5 billion deficit and everything which flows from it is predicated upon such an assumption.
Another assumption is that interest rates this year will be at 9.5 per cent and will fall off next year to something in the order of 8.7 per cent. That means that we will have to see a reduction in interest rates-let us hope that we will see such a reduction. I have raised a number of concerns with respect to pressures which the Government has placed on the system which may, indeed, make such a reduction impossible. The Minister of Finance, and I presume the Minister of State for Finance are praying for a fall in interest rates. Let us hope that their prayers will be answered. I must say that I am skeptical in that regard.
I cannot help but add one last cynical comment. In some respects this Budget strikes me as a pre-election Budget. The Government seems to be saying: "Let's really sock it to them in 1986. Let's make those taxpayers really pay and then let's have some softening around 1988 just before the next general election". The Government will probably broaden the sales tax or it will come forward with a VAT or a business transfer tax in the next Budget. There are indications of that in the Budget documents. The Government probably plans to remove the personal surtax.
My colleagues and I would like to give the Government some advice in this regard. The Canadian electorate is too smart for this type of gamesmanship. It is not prepared to pay to have its standard of living suffer just to meet the electoral timetable of the Government. We will remind Canadians constantly-that is if they need any reminding at all-of what the Government did to them in 1985 in terms of unfairness and in terms of the tax burden itself, and what the Government is planning for them in the years ahead. We will be here to remind them.
We have no confidence in the Government's fiscal management of the country. The Budget has been a profound disappointment.

As 1 said yesterday in the House, I was disappointed last year. In fact, I am even more disappointed today, because I think there is a lack of imagination in this Budget. It is very poorly planned, very poorly designed, and it is now putting an intolerable burden on the taxpayers of this country.

February 27, 1986
The Budget-Mr. Riis
[English)
Therefore, I move, seconded by the Right Hon. Leader of the Opposition (Mr. Turner):
That the motion of the Minister of Finance be amended by deleting all of the words after the word "That" and by substituting the following:
"this House condemns the Government for presenting a Budget that imposes outrageous and unfair tax increases for ordinary Canadians that deliberately widen the gap between them the rich and poor and between the "have" and "have-not" regions of this country."


Some Hon. Members:: Hear, hear!


The Acting Speaker (Mr. Paproski):: I will take the motion under advisement and call upon the next speaker from the New Democratic Party. The Hon. Member for Kamloops-Shuswap (Mr. Riis).


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, it is a pleasure to have an opportunity to respond to this incredible Budget. I suspect the Minister of Finance (Mr. Wilson) is sitting, cringing in his seat, knowing that some reality will finally unfold in terms of what the Budget means to the average, ordinary Canadian family which has been bludgeoned by his Budget. It has been sugar-coated all right. There are all types of measures in the Budget which first give the appearance that it is a fair Budget. I have actually heard some individuals from the media-people whom I normally respect for their views-say that it is a fair budget. If anyone has read the Budget, then I cannot believe that they would say it is fair. They have probably merely scanned the booklet which sets out the Budget in brief and which highlights some of the sugar-coating.
When one looks carefully at the Budget one will see that the people of Canada have really been misled over the last number of years. On behalf of the New Democratic Party I hope to shed some light on what the Budget really does to the people of Canada.
In order to put the matter into context let us recognize that as we speak today about the Budget there are 4.5 million people in the country who are living below the poverty line. I refer to the poverty line as described and defined by the Government. As we speak there are 1.4 million jobless Canadians. There are hundreds of thousands of young people who are out of work and who are not in colleges or universities. They are jobless and are giving up in terms of ever having a full-time and meaningful job, because in the regions of the country in which they live there is simply no economic growth and expansion taking place. In those regions of the country where new jobs come up people with experience and training are wanted to fill them. Of course, to a large extent, that excludes the young people of our country.
The people of Canada have been taxed to the hilt. The New Democratic Party has just completed a tour of the country, an exercise which we called Tax Probe 86. In this probe we were asking people about the tax system and what they felt about it. The feelings expressed have been absolutely unanimous. It does not matter to whom one speaks or where one speaks to them. Everyone in the country says that the tax system is
unduly complex, unfair and that it does not give the country good value for money. That feeling is unanimous.
Is there one thing in the Budget which indicates that the Government is serious about tax reform? No, there is nothing. As a matter of fact, if one were to look closely at the budget documents one would see that the tax system will be more complex than ever. It will be less fair than it has ever been. There is no mention of tax reform at a time when the Government says it needs more revenue. That is unconscionable. The fact that the Government failed to move on such an important issue at this point in time when the people of Canada would be behind the Government in terms of overhauling the tax system is a missed opportunity.
Let us take a look at the Budget. We have been here before. This is not the first time Canada has experienced difficulties. I would like to read two or three of what I think are appropriate quotes from the Budget. I encourage the Ministers present to reflect on the words of the Budget which are as follows:
Mr. Speaker, the general optimism prevailing throughout Canada has, during recent months, been so widely reflected and strongly emphasized in provincial legislative assemblies, annual reviews and financial statements that, in presenting this annual budget, little need be said beyond submitting official figures which, when analyzed and compared with the records of previous years, will show a steady and continuous reduction of... debt-
Without being unduly optimistic, the Government feels it is warranted in anticipating that, notwithstanding the reductions to be submitted in this budget, the revenues will meet all expenditure obligations and also provide for the redemption of the loan maturing in August next ... For the purposes of eventually effecting a balanced budget, provision was made in the budget... for certain additional taxation. The major increase was made in the sales tax where the rates were increased fifty per cent over the then existing tax. There was also an increase in the stamp tax... Certain other taxes, generally classed as manufacturers taxes, were imposed, the articles affected being automobiles, confectionery, cigars, ale and beer and other beverages:... The national debt, however, cannot be ignored. The annual interest charges... are a direct and pressing charge on the revenues of this country.
It is a sound and helpful policy to plan to reduce this non-productive outlay and to do that the national debt itself must annually be reduced. The government is, therefore, again budgeting for debt reduction ... the concern of all Canadians was... that the nation's purchasing power be substantially increased, that no man willing to work be out of employment, that Canadian goods become firmly established on the international trading markets and that Canadians, wherever they might be, would feel that the problems of each section were the mutual concern of all... Canadians today are prospering ... Our basic and manufacturing industries are producing large quantities of goods for home consumption and also for the vast external trade outlets which have been developed-
As the years go by an increasing quantity of our domestic production must necessarily be marketed abroad. It is our desire to trade freely with any and all who are willing to trade with us... This fiscal record ... has... strengthened confidence in our domestic credit markets, thus smoothing the way for the provinces and private enterprises. A healthy business expansion, the Government feels, is of the greatest importance to Canada.
In drafting the fiscal program for the coming fiscal year, the Government has sought to err on the side of caution.
What is interesting is that that was not this Budget, that was the Budget of March 1, 1929. That was the Budget that was introduced prior to the collapse of 1929. Later, of course, the R. B. Bennett Budget was introduced and the Government at the time said it had a great solution, it was going to raise taxes on everyone across the country to collect more revenue
February 27, 1986

and it was going to give some corporations some tax breaks and increase the sales tax. We know what happened in the 1930s as a result of that. Bennett buggies resulted. We have been here before. We have seen Conservative Budgets introduced during difficult times, and what happens? Do things get better? Do times get better?


Mr. Rodriguez:: Tory times are tough times.


Nelson Andrew Riis: As my colleague has said, Tory times are tough times. We are about to experiment once again-


Mr. Broadbent:: The dollar dropped three-quarters of a cent.


Nelson Andrew Riis: My leader has told me that the dollar dropped three-quarters of a cent today. Is that not interesting? That reminds us that the Government is gambling with the lives of Canadian families. The Minister has launched a Las Vegas style approach to economic development. He said that we are going to gamble and raise sales taxes one more time even though it has already been done twice. He knows it is a regressive tax. It is a tax that hits the poorer families harder than the richer families. As a matter of fact, the richer families probably do not even notice the sales tax. The Government is going to level a regressive sales tax and jack up the personal tax rate again by 3 per cent.
By taking a lot of money out of the pockets of families across the country, the Government believes that somehow all sorts of money will start rolling into the country. Businesses will then begin expanding operations to take advantage of this new-found optimism and purchasing power, but there is no more purchasing power. When the Government takes disposable income away from people they are not going to buy a new refrigerator, a new car or go for dinner. They are going to err on the side of caution. They are going to be very reluctant to purchase goods and services. Without consumers purchasing goods and services, businesses will not expand and will not hire more people. The economy will not grow. Yet that is the gamble the Minister of Finance is taking on the backs of Canadian families; if we cut those programs that service Canadian families, somehow or other the international corporate and investment community will have confidence in the Government's ability to manage the economy and will feel that the economy will grow.
The first indicator we have seen is that the dollar is falling the day after the Budget was brought down. That sends a very clear signal to us about what the international community thinks about this Budget.
I think this can be best summed up when we look at the fiscal plan itself. The fiscal plan lays out what the Government is going to collect in new taxes. Here is the story, the story that Canadians across the country will be recognizing in the days ahead as the real Budget information comes out.
The additional taxes that Canadians are going to be paying either through more personal tax or more sales tax amounts to an increase of $7 billion between 1986 and 1987. What about the corporate sector? Someone said the Budget was fair. We
The Budget-Mr. Riis
would then assume that corporate-sector taxes would be going up. However, they are going to go down. The taxes collected from corporations in the next year will go down and the personal taxes paid by Canadians will go up by $7 billion.


John Edward Broadbent: Tory justice.


Nelson Andrew Riis: It is a very, very sad day. However, this is misleading. When looking at particular aspects of the Budget, we see that $800 million will be allocated for the Canadian Jobs Strategy next year. That sounds interesting until we realize that this year it had $900 million in its budget. The Government is going to cut the funds for the Canadian Jobs Strategy. What does that mean for the regions of Canada? Job-creation funds might not be needed in many constituencies in the City of Toronto, but in the regions of Canada job-creation funds are an absolute necessity and the Government is cutting back on them.
Then there is a provision in the Budget for helping older workers, workers who are 55 and over and have lost their jobs. The Government is going to put $125 million into this program over the next four years. Again, that sounds like it would be a useful program. That amounts to about $30 million a year. However, we realize that presently the program receives $75 million a year. Again the Government is cutting programs to assist older workers who have lost their jobs.
There is a lot of sugar coating over this Budget, but when we start looking through it, we notice that there are some very disappointing aspects to it, particularly for the regions. The regional industrial expansion section of the Budget indicates that $2 billion will be cut over the next four years. How does that help the regions develop their economies? A $4-billion cut will cause serious damage.
Transportation will be cut by $3.6 billion. The employment part of the Budget will be cut by $1.8 billion. Agriculture is going to be cut by $502 million but there is a program introduced to help people get out of farming. The Government is cutting existing programs, but for those people who are having trouble it is helping them get out of the business. It is giving them an exit visa out of the farming community. That is what is in the Budget. The Government says that it has a program to help farmers who are in trouble. Approximately
50,000	farms across the country are experiencing serious financial difficulty, but they will only be helped if they are doing business with the Farm Credit Corporation, which amounts to about one in four troubled farmers. If a farmer is having trouble with the Royal Bank of Canada there is no help. If farmers have loans with chartered banks there is no assistance or possible support in the Budget. For those few farmers who are having difficulty in terms of repaying their debts or loans with the FCC, they will perhaps receive some support. It is a sugar-coating. I saw the little clips on television about assistance to farmers in trouble. They forgot to say that only one out of four farmers in trouble will possibly receive assistance.

February 27, 1986
The Budget-Mr. Riis
There is a 3 per cent decrease in corporate taxes over the next three years, but this coming year there will be a 3 per cent increase in personal taxes. Earlier today my Leader held a press conference and pointed out an interesting shift over the last few years. Not many years ago when we looked at the revenues collected from corporations and from individuals, there was a 50-50 balance-50 per cent of the revenues coming in through taxation was from corporations and 50 per cent was from individual Canadian taxpayers. Over the years this has shifted in a very interesting direction. Now 81 per cent comes from the personal tax side and 19 per cent comes from the corporate side.


John Edward Broadbent: As a result of the Budget.


Nelson Andrew Riis: Especially as a result of the Budget. It has simply added to the same process; more and more on the backs of middle-income earners and less and less on the backs of the corporate sector.
As we all know average Canadians will be faced with a 3 per cent increase in their taxes as well as an increase in sales tax. What about upper-income earners? They receive a reduced tax as a result of the Budget. Their tax rate goes down. The situation is that upper-income earners and the corporate sector will have reduced tax rates as a result of the Budget and ordinary Canadian taxpayers will experience increases in their tax rates and in the sales tax.
People are asking about the real impact of this, how it can be measured and what it really means. It does not take much analysis to break it down in terms of what this Government has meant to Canadian families. If we look at the November 8, 1985 statement and tally up the costs as a result of it on the average Canadian family-and I am using for this example an average Canadian family of four with an income of $35,000 per year-we find that it resulted in $452 in increased costs.
If we look at the May 23, 1985 Budget, we find that the increased costs to that same family as a result of the modification to indexation, the cut in family allowance payments, the increased taxes on cigarettes, alcohol and gasoline and the sales tax increase, amounted to $512.50. Then we have the Budget of February 26, yesterday. When we add up the costs as a result of it the very conservative total, if I may use that term, comes to $340. If we add up the totals as a result of that economic statement and those Budgets, we find that the increase from the federal Government alone amounts to $1,304.50 for an average Canadian family of four. It is the largest tax grab in modern history, in recent times.
We have never seen anything like this before, when a Government has gone in and ripped out more than $1,000 from Canadian families in just 14 months. This means that for every family in Canada-whether it be in Port Alberni, Red Deer, Thunder Bay, Chicoutimi, Moncton or St. Catharines, it does not matter where-in excess of $1,000 or $1,300 will not be circulating in those communities time and time again during the year to support the local economies. It has been
dragged out of those communities and down to Ottawa to be used for some highly questionable purposes.
What are those purposes? Let us look at how the tax system is used. We asked for a major overhaul of the tax system because we were convinced that the hidden spending which takes place through the shelters, loopholes and various tax expenditure programs comes to billions and billions of dollars each year, and they are never evaluated. We asked the Government to look at these tax expenditure programs and to evaluate them to see whether or not we are getting good value for the money. If we have a program which is designed to encourage the construction of low-income rental housing, is it doing that? Of course when we look at the program it never does that. Is the use of the tax system to encourage mining exploration the most effective way of accomplishing that? We have to ask these questions. Was there one mention of tax reform, tax overhaul or evaluating the value of those tax dollars in the Budget? Not a word, not a word.
Let us look at the incredible amount of money involved in the tax system. One of the favourite areas people mention is the amount of taxes known as deferred corporate taxes. It now approaches nearly $30 billion annually. Numbers of corporations do not pay; they simply defer their taxes year after year. Mr. Speaker, when you and I do not pay any income tax or make a mistake on our income tax return and owe money to the Government, we pay interest on it whether it is two weeks or two months.


The Acting Speaker (Mr. Paproski):: Order, please. Under the rules the Hon. Member has 20 minutes plus 10 minutes for questions and comments. If he would like to wind down, we could go into the 10-minute question and comment period. Otherwise I would require unanimous consent for the Hon. Member to carry on.


Some Hon. Members:: Agreed.


The Acting Speaker (Mr. Paproski):: Is there unanimous consent?


Mr. McKenzie:: He is making no contribution, so there should be no difference.


Some Hon. Members:: Sit down!


The Acting Speaker (Mr. Paproski):: I will allow the Hon. Member to finish his comments and then we will go into the 10-minute period of questions and comments.


Nelson Andrew Riis: Mr. Speaker, I will wrap up my comments. I appreciate the usual progressive voice from Winnipeg over there.


A. Daniel McKenzie: Thank you.


Nelson Andrew Riis: Just before the Budget was brought down, the New Democratic Party wanted to offer the Minister of Finance a whole set of suggestions about things he might do to help ordinary Canadians. We suggested that there should be an overhaul of the tax system and that a number of tax
February 27, 1986

programs should be eliminated immediately. At the top of the list was the $500,000 capital gains tax exemption, which means that a person who makes money from playing the stock market in Hong Kong or selling real estate in Arizona does not have to pay any income tax. At the same time the rates are being increased for ordinary Canadians. We suggested a number of tax measures which could have been eliminated and could have saved the Government about $3.5 billion. We suggested a number of recommendations to improve the tax system, for example, that the taxes on farm fuels and the like should be eliminated. We also looked at the result of our youth task force, the NDP task force on jobs and the report entitled "Canada Unlimited", which contained a number of recommendations on how the Government could take positive steps that could result in economic growth and expansion. We feel that the best way to collect revenue is not by taxing people more and more, but by taking steps to develop a strong and healthy economy.


Some Hon. Members:: Hear, hear!


Nelson Andrew Riis: If we have a strong and healthy economy, then we have people who are not necessarily receiving UIC and welfare payments. They are paying more taxes in terms of personal taxes and sales tax. As well, successful businesses are paying corporate taxes and the Government is collecting excise taxes. A healthy economy results in revenues coming in to the Government for useful social programs, and if necessary part of it could be used to reduce the deficit. We would like to see the Government accumulate more revenue, and we have suggested a host of ways of doing it.
The Secretary of State for External Affairs (Mr. Clark) last September suggested at the UN that Canada would approach 0.7 of 1 per cent GNP by 1990, but this has now been abandoned as a result of the $1.5 billion cut in development assistance. The Government says that maybe we will get to 0.6 per cent by 1995. We say that is not good enough. It is completely inappropriate in terms of the role that Canada plays in the international community, completely inappropriate.
My colleagues will have much more to say about our concerns with the Budget in the specific areas they represent as spokespersons for our Party.
I move, seconded by the Hon. Member for Kenora-Rainy River (Mr. Parry):
That the amendment be amended by changing the period at the end of the last sentence to a comma and by adding immediately thereafter the following words: "and this House further condemns the Government for its brutal, uncaring and unfair tax increases on average income families while at the same time lowering taxes for upper income families and the corporate sector, and for its refusal to undertake an overhaul of the income tax system to bring about tax fairness and to give Canadians a tax system that they can understand."


The Acting Speaker (Mr. Paproski):: Before having questions or comments, I would like to say that the motion presented by the Hon. Member for Saint-Henri-Westmount (Mr. Johnston) and seconded by the Right Hon. Leader of the
The Budget-Mr. Riis
Opposition (Mr. Turner) is in order. We will now proceed to questions or comments.


Ms. Mitchell:: Mr. Speaker, I would like to congratulate my colleague on his very fine challenge to the Minister of Finance (Mr. Wilson) and the Government in putting forward the impact this Budget will have on Canadians.
Has the Hon. Member any views on the Budget's impact on women? I did not see anything that mentioned equality for women. Women are already far behind in the workforce. We have cuts in employment training programs which will have a disproportionate effect on women. There is absolutely nothing in the Budget that refers to child care. There is a desperate need for action in this area within the next year. There are cut-backs in health and welfare programs which will have a dramatic disproportionate effect on women as well as cuts in transfer payments. The Minister, supposedly responsible for women in a crummy kind of advocate because he did not have a thing included in the Budget applying to women in a positive way. The Minister was at the Nairobi conference. He is sitting there. He has allowed development programs which are desperately needed by women and children around the world to be cut back. This Budget is hurting women in Canada and women around the world. I know my hon. friend has comments to make on that.


Nelson Andrew Riis: Mr. Speaker, my colleague has raised a very important issue. In all of the Budget documents presented there is virtually not a single mention of programs and initiatives that will assist women. There is virtually nothing in the Budget documents that will assist families. There are whole lists that will cause more hardship on families, more hardship on women and children in Canada. That is why I said at the outset that it is a very uncaring and callous Budget. It indicates a Government that does not care about the people of Canada. Perhaps it does not understand Canadians and the economic and social suffering that is going on.
In response to my hon. colleague, in all of the Budget documents there is virtually nothing that addresses the plight faced by women in Canada.


Mr. Clark (Brandon-Souris):: Mr. Speaker, I have some comments and some questions for the Hon. Member. I want to address myself particularly to the New Democratic Party's critic for finance on the subject of agriculture. I could not help but wish that the Party's critic for agriculture was speaking rather than the critic for finance, because I suspect the critic for agriculture is better informed.
It seems to me that the Hon. Member for Kamloops-Shus-wap (Mr. Riis) needs to bear in mind certain things when he looks at the Budget. First, can the Member recall and if so could he indicate which Budget in the previous history of this Parliament addressed the problems of agriculture in more detail, more specifically and with more urgency than this one?
Is the New Democratic Party opposed, as I understand it, to the rural transition program? The Hon. Member had nothing but criticism toward that program. I will be surprised if that is

February 27, 1986
The Budget-Mr. Riis
true because the Member was supporting the Canadian Job Strategy Program which discriminates against farmers and does not permit farmers to participate in it. Now for the first time there is a program that will be of assistance to those farmers who wish to benefit from it. The Member is denying the right of those farmers to participate. The Member's statements are discriminatory against farmers. I am sure the critic for his Party will apologize.


Mr. Benjamin:: Humbug!


Walter Leland Rutherford (Lee) Clark: Mr. Speaker, with respect to the commodity based mortgage program, about which the Hon. Member for Kamloops-Shuswap was so critical, could he tell me what percentage of the farmers who are in difficulty today are FCC customers? Would the Member not agree that this program is of immense value to them as far as their capacity to pay is concerned. Where else would the Member find a program of a similar nature and effectiveness in this country?
Finally, why in the Province of Manitoba, which is the only province today governed by the New Democratic Party- which may not be governing for much longer-is it that the MACC program designed to reduce interest rates for its customers is limited to its own customers? Why did the Province of Manitoba not come to the assistance of Canadian farmers who are customers of the banks?


Mr. Gustafson:: Like Saskatchewan did.


Nelson Andrew Riis: Mr. Speaker, I think I can summarize it best by saying that the Government of Manitoba is more interested in finding ways and means of getting people into farming as opposed to this Government's efforts to get people out of the farming business. The document is an admission of failure. It is an admission that the Government has nothing else but to offer ways and means of getting out of farming. That is what the transition program is all about. The Member knows that.
There are many things that our agricultural critic has offered time and time again to support and develop the agricultural sector.
I would be embarrassed if I were that Hon. Member standing up and justifying what is in this Budget for the agricultural community of Canada when you have 50,000 farms in serious financial difficulty. Is that addressed in this Budget? No, it is not, Mr. Speaker. Are farmers supported in this Budget? No, they are not. Their taxes will go up. Sales tax goes up and now there are excise taxes and so on. I give the Member credit for having the courage to stand up and attempt to say that there is something in this Budget for farmers.


Walter Leland Rutherford (Lee) Clark: I have a supplementary question, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: I will give the Hon. Member a short supplementary and then recognize the Hon. Member for Churchill (Mr. Murphy).


Walter Leland Rutherford (Lee) Clark: Mr. Speaker, I asked the Member a question. Let me repeat it. What percentage of those farmers deemed to be in financial difficulty today are FCC customers and eligible for this program? It is a very specific question and it can be answered in very simple, non-rhetorical terms.


An Hon. Member:: He doesn't know.


Nelson Andrew Riis: Mr. Speaker, 50,000 farms are in difficulty and are identified as having serious debt problems, about one quarter are participating with loans from the Farm Credit Corporation so let me toss the question back to the Hon. Member.
There is nothing in the Budget which will help farmers who have loans with any of the chartered banks. They must be exclusively with Farm Credit. In a sense, it discriminates against all farmers who do business with anyone other than the Farm Credit Corporation. It is highly discriminatory, Mr. Speaker.


Mr. Murphy:: I will keep my question short and say more on the Budget later. Is there not a real danger in the Government's plan that what will happen to farmers will be the equivalent of what happened to people who registered under the AHOP program of the previous Liberal Government? At the end of that program people under it found out that their mortgages had gone up so much that they ended up walking away from their homes. Is this not a built-in AHOP, too? Will we not have farmers walking away from their homes and farms five years from now?


Nelson Andrew Riis: Mr. Speaker, we know how successful the AHOP program was in terms of housing and what happened to the people who had to walk away from their homes. We are seeing basically the same thing now with agriculture. Having no other programs for dealing with the situation, let us make it easy for people to get out of the business.
On page 26 of Canada's Economic Prospects it is indicated, by the Government's own figures and admission, that next year the GNP increase will be down, consumer expenditures will be down, residential investment will be down, business non-residential investment will be down, business machinery and equipment investment will be down, and business non-residential construction investment will be down. By the Government's own statistics, some of the critical indicators of our economy will be down next year as a result of the Budget. I give credit to the Minister of Finance for being honest and admitting that the GNP, investment, and consumer spending will be less as a result of the Budget. For that honesty, I thank him.


The Acting Speaker (Mr. Paproski):: I have looked at the amendment proposed by the Hon. Member for Kamloops-Shuswap (Mr. Riis) and I declare it to be in order. Therefore, the debate will be on the amendment to the amendment.
February 27, 1986


Ian Deans: Mr. Speaker, I rise on the point of order, with some aggravation. I had very carefully worked out an agreement with the two other House Leaders that my colleague, the Member for Kamloops-Shuswap (Mr. Riis), would be given the opportunity to speak for up to 40 minutes. I do not quite understand why the Conservative Party decided to ignore that agreement, but I want to assure you, Sir, that there will be no further agreements in this House on anything unless I can count on the support of all of the Members of the agreements that we make.


The Acting Speaker (Mr. Paproski):: Order, please. The Chair was not aware of any agreement that was made. 1 tried to extend the question and comment period in order to give the Hon. Member as much time as possible. The Chair is not privy to negotiations that are going on.


Ian Deans: 1 am not blaming the Chair.


The Acting Speaker (Mr. Paproski):: I think the Hon. Member had a little more than 40 minutes, but I appreciate what the Hon. Member for Hamilton Mountain (Mr. Deans) has just said. I feel that we have done as much as possible at this time. I would like to recognize the Hon. Minister of Consumer and Corporate Affairs (Mr. Cote).


Hon. Michel Cote (Minister of Consumer and Corporate Affairs and Canada Post):: Mr. Speaker, 1 consider it an honour to speak in the House today on the important legislation tabled yesterday, and I am referring to the Budget of my hon. colleague the Minister of Finance (Mr. Wilson).
Mr. Speaker, you will remember that during the last election campaign, our party was in favour of returning to sound management principles in public administration, a change that was absolutely essential because of the incredible growth of the federal deficit up to that time. When a country the size of ours gets to the point where it has a national debt of $200 billion, it is hardly exaggerating to talk about a disaster situation. Now I am sorry for the Members opposite, but they are mainly responsible for this state of affairs.
Mr. Speaker, to support my claim need I mention that for the current financial year, servicing the public debt alone will cost the incredible sum of nearly $26 billion? This is more than a thousand times the population of Canada. In a veritable frenzy of spending, the previous administration ended up spending the equivalent of 26 per cent of our Gross National Product. When a Government manages to spend more than one-quarter of what the country produces, I think that alone should be enough to muzzle our hon. friends opposite or at least make them blush with shame.
The result of more than twenty years of Liberal government boils down to this: During that period, the cumulative debt rose from $17 to $223 billion. This means it became fourteen times as big, and in 1985, it added up to $22,000 per Canadian family. Today, every Canadian family of four has to spend
The Budget-Hon. M. Cote
more than $4,200 per year on interest payments alone on the national debt. This means that every week, that same family has to spend more than $80 on this item. It means that every day, nearly $12 per family goes to repaying the interest on the profiligate spending of our hon. friends opposite. The situation became untenable, and Canadians gave us a mandate to put the country back on the road to common sense. Consequently, we opted for the implementation of three specific principles. First, restoring fiscal responsibility; second, increasing the effectiveness of public management, and third, providing maximum encouragement for private initiative.
As my hon. colleague the Minister of Finance pointed out yesterday, we have applied these principles very strictly, and we are already getting concrete results. The national debt is regressing, and will certainly continue to do so. The objective of our administration is still to eliminate wasteful expenditures and streamline Government operations. When someone is up to his neck in debt, common sense dictates belt tightening and, if at all possible, selling certain assets to accelerate repayments. That, Mr. Speaker, is exactly what we are doing.
One of our first moves in the fall of 1984 was to set up the Ministerial Task Force on Program Review responsible for recommending specific measures to reduce administrative overlapping, rationalize operations and, we believe, make significant savings. As the Minister of Finance pointed out, the detailed findings of the task force will be made public on March 11. In the current fiscal year this initiative has already made it possible to save more than $530 million. With that in mind, Mr. Speaker, we have decided to privatize certain Crown corporations. The Government has already sold most of its assets in the Canada Development Corporation, as it did in the case of the Northern Transportation Company and de Havilland. A number of other Crown corporations will also be sold to private interests in the coming months.
With a view to recouping a larger share of costs to service users, the Government of Canada has revised its rate schedules for various goods and services such as fares on federal ferry boats and inspection fees. For instance, Mr. Speaker, at the Department of Consumer and Corporate Affairs, we have substantially increased the charges for our metrological inspections.
One of the most important aspects of this program of cost recovery for services provided certainly involves the Canada Post Corporation. As underlined by my colleague, the Minister of Finance (Mr. Wilson), the Canada Post Corporation has made substantial efforts in the last few years to reduce its costs and increase its productivity. We have only to recall, for instance, Mr. Speaker, that in 1985-86, its operating losses amounted to approximately $347 million while they will be approximately $243 million this year.
However, Mr. Speaker, these efforts are not enough to meet our objective of increasing the efficiency of the Government machine, and especially the Canada Post Corporation. I have

February 27, 1986
The Budget-Hon. M. Cote
therefore asked the Chairman of the Corporation to submit to me as soon as possible a new operational plan providing for elimination of the operational deficit of the Canada Post Corporation by the end of the 1987-88 fiscal year, as requested by the Minister of Finance.
Obviously, the objective of a better postal service for Canadians remains an absolute priority, even in this context of financial self-sufficiency. Indeed, I shall have other opportunities is to come back to this issue in the coming weeks.
Beyond past and future savings, however, the budget brought down yesterday by the Minister of Finance proposes to keep at the same level as last year expenditures for statutory programs, which will represent in real terms a 4 per cent reduction.
Not only will the cost of these programs be limited to the level of last year, but, within its comprehensive cost reduction and public management improvement strategy, the Government will also apply a 2 per cent general reduction of all departmental budgets. This reduction will represent savings of over $500 million and will affect expenditures such as those related to capital costs, operations and maintenance, travel, advertising, and so on. Whole programs have been eliminated in this effort to provide stricter management of Government activities.
Here are just a few, Mr. Speaker, the Canadian Home Insulation Program, the Petroleum Incentives Program, the Petroleum Compensation Program, the Katimavik Program, the VIA Rail subsidies and, finally, the heavy water plants in Cape Breton.
Needless to say that it would be impossible to improve the productivity of the Government administration without controlling the Public Service. As we have already announced, the authorized number of person-years will be reduced by 2 percent next year, and another percent in each of the next four years, so that by 1990 the Public Service will have decreased by 15,000 person-years.
Together, Mr. Speaker, these various measures will mean a reduction of $6 billion in Government spending as compared to what was originally forecasted. For the whole period from 1986 to 1990-91, these measures will represent savings of nearly $80 billion.
[Engl is h\
The Minister of Finance (Mr. Wilson) also announced a number of new measures aimed at assisting low-income Canadians. First, he talked about the Child Tax Credit. Members will recall that the May, 1985 Budget provided for an increase in the Child Tax Credit to $384 per child in the taxation year. We are not, however, stopping here. The Child
Tax Credit will be further increased to $454 per child in 1986 to $489 in 1987, and to $524 in the 1988 taxation year.
As part of the efforts of this Government to ensure that the federal benefits program reach those directly in need, and to do away with the negative social impact of the tax rebate discount, and as I have announced it during the debate on amendment of the Tax Rebating Discounting Act, a system of advance or prepayment of the Child Tax Credit will be introduced for 1986 and subsequent years. As announced by the Minister of Finance this prepayment will amount to $300 per child, or about two-thirds of the maximum payment for recipients who had family incomes of $15,000 or less in 1985. Claimants will receive this payment automatically in November, 1986, rather than be forced to wait until the filing of their tax return in early 1987. Since this prepayment will be based on 1985 tax returns there will be no additional administrative burden imposed upon claimants. This will benefit about one million Canadian families.
Too often low-income Canadians, and expecially Child Tax Credit recipients, have been encouraged to use discounting services because they did not have their rightful benefit in hand at the moment they needed it. This system of prepayments will ensure that this money goes directly to those who need it most, rather than going to tax discounters.
Second, the Government is introducing a new refundable sales tax credit of $50 per adult and $25 per child for families whose income is below $15,000. More than four million Canadian families will receive this credit. This is clearly a fundamental innovation to the income tax system that will resolve in significant benefits to low-income Canadians, many of whom are elderly.
Third, the disability deduction available to 185,000 disabled Canadians will be increased by $250 in 1986. The total deduction will now be worth $2,860 for 1986.
Fourth, a special training program for Canadians or social assistance will be established. The federal Government will commit up to $100 million per year for the next three years. Matching funds will be provided also by provincial Governments. This new program will help train Canadians on welfare, enabling them to find meaningful employment. The Government's commitment to social justice is clear and ongoing. Yesterday's Budget continues this effort.


The Acting Speaker (Mr. Paproski):: It being 1.28 p.m., I do now leave the Chair until 2 p.m.
At 1.28 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
February 27, 1986


Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, last night we saw clear evidence of the lack of commitment of the Government of Canada with regard to regional economic development. I say that with great sadness. When the facts are placed before all Members of Parliament, they will see that the Government has no commitment and has abandoned the poor regions of the country in a startling way.
The Budget Papers show very clearly that the percentage of change in the economic and regional development envelope is absolutely staggering. In 1985-86 the reduction in expenditures in that envelope will be 15.4 per cent. In 1986-87 it will be 11.1 per cent, and in 1987-88 it will be 17.7 per cent. That makes for a 38 per cent reduction in expenditures in the regional economic development envelope which will affect-


Mr. Speaker:: I regret to advise the Hon. Member that his time has expired.



EXTERNAL AID


Mr. Jim Manly (Cowichan-Malahat-The Islands):: Mr. Speaker, yesterday the Minister of Finance (Mr. Wilson) said that our economic performance during the past 18 months has been much better than anyone predicted. If this is so, why have Conservative commitments to development assistance been slashed? In the 1984 election the Conservatives promised to allocate 0.7 per cent of our GNP to world development by 1990. This commitment was then reduced in October to 0.6 per cent. Yesterday the Government cut it back to 0.5 per cent.
These cuts not only mean broken campaign promises-we are used to that-but they also mean a broken moral commitment of the Canadian people to the needy people of our world. In the name of humanity, the Government must restore its original commitment to 0.7 per cent of GNP for official development assistance by 1990.



REGIONAL INDUSTRIAL EXPANSION


Mr. Lawrence I. O'Neil (Cape Breton Highlands-Canso):: Mr. Speaker, yesterday our Government demonstrated to Canadians an unprecedented commitment to economic renewal. A key part of that commitment is deficit reduction, not for the sake of reducing the deficit but because the deficit remains the single largest barrier to full employment.
As we take control of the deficit, we see the creation of hundreds of thousands of jobs. A job remains the best social protection for ordinary Canadians. As well, a lower deficit will make more money available to expand benefits and services to needy Canadians.
For the first time in more than a decade we see the deficit declining. Tomorrow the Minister of Regional Industrial Expansion (Mr. Stevens) and I will be announcing jobs for ordinary Canadians who live in my riding. These jobs will result from the first new private sector investment of this kind in more than 20 years in my region. I invite all Hon. Members of the Opposition to join with me in congratulating the Minister. Many families I represent will be given job opportunities and, therefore, their rightful place in Canada. Surely that is what it is all about-


Mr. Speaker:: Order, please.



BANKS AND BANKING


Mrs. Mary Collins (Capilano):: Mr. Speaker, today in Capilano the crocuses are blooming and the people are jubilant, as are Canadians across the land, because they finally have a Government with enough guts to reduce the deficit, and looking ahead at the next five years we see the dramatic impact these measures will have. We will be a nation which will be $100 billion less in debt than it would have been. This is financial restraint with a human face.
There are so many good things to say, but I will add only one. We in British Columbia are particularly pleased with the commitment of the Government to facilitate the establishment of an international banking centre in Vancouver. This will provide the opportunity for Vancouver to fulfil its destiny not only as the jewell of the Pacific but as the new business, financial, trade, and service centre for the Pacific Rim. Yes, as in Capilano, Canadians right across the country are jubilant with yesterday's news.



ENVIRONMENT CANADA


Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, this week the Minister of the Environment (Mr. McMillan) defended his move to censor his officials on the basis that it is very important that officials speak within their area of expertise and competence.
Last November two officials of Environment Canada gave their professional assessment of environmental issues. In one case one of the most respected hydrogeologists in Canada

February 27, 1986
suggested that, should the underground salt caverns leak into the St. Clair River, it would be an environmental nightmare. When a hydrogeologist speaks of underground water resources, he is entirely within his or her area of expertise and competence. The official was reprimanded by the Minister, who later referred to the situation as "awesome".
In a second case one of Canada's leading experts on toxic chemicals, an employee of Environment Canada, spoke of the degree of toxic chemical contamination to which we as a society are subjected. The Minister disowned this official as well. The Royal Society released shortly thereafter a report which called the Great Lakes the most contaminated body of water in North America-


Mr. Speaker:: I regret to interrupt the Hon. Member but his time has expired.



FINANCE


Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, yesterday's Budget struck at the prosperity of ordinary Canadians. Obsessed with deficit reduction to slow the growth of the national debt, the Minister of Finance (Mr. Wilson) chose to reduce expenditures and increase taxes for Canadians, especially middle-income Canadians. He had a choice. He chose not tax reform which would raise much needed revenues while improving tax fairness, but increases of income, sales, and excise taxes which already burden individuals.
Among Canadians most disappointed by these decisions are the Citizens for Public Justice who recently put forward an imaginative package of spending and tax proposals which would create over 250,000 new jobs and reduce unemployment by some 2 per cent.
Yesterday the Minister of Finance chose to ignore all of this sound and progressive advice. The tax system has been made even more unfair than it was already, and unemployment may not fall at all.
I expect many members of Citizens for Public Justice voted for Conservatives in 1984. 1 doubt they'll do that again.



THE ECONOMY


Mr. Murray Dorin (Edmonton West):: Mr. Speaker, the 1986 Budget of the Minister of Finance (Mr. Wilson) continues on a course set out in the November, 1984, economic statement and reinforced in the May, 1985, Budget. The deficit will be reduced from $33.8 billion this fiscal year to $29.8 billion next year. This will restore confidence in the economy and allow interest rates to come down. A 1 per cent reduction in interest rates saves $500 per year on a $50,000
mortgage-far more than the approximately 50 cents per day that Canadians are being asked to pay.
Overall, the Minister of Finance has made a concentrated attack on the deficit with a balanced attempt to spread the burden. Those who receive the benefits of Government transfers and programs will be asked to receive a little less. Those who pay will be asked to pay a little more.
The Minister has demonstrated that he can achieve what he sets out to do. The results speak for themselves. More than
580,000	jobs have been created. The critics were proven wrong last time and they will be proven wrong again.



AGRICULTURE


Mr. Ken James (Sarnia-Lambton):: Mr. Speaker, as the owner of a family farm, I, plus other farmers in my riding of Sarnia-Lambton, want to express our enthusiasm and appreciation to the Minister of Finance (Mr. Wilson) and the Conservative Government.
The understanding and concern of this administration have been clearly demonstrated by its ongoing commitment to the agricultural sector. The initiatives brought forward by the Government, not just in the present Budget but ever since our election in September of 1984, have accomplished more on behalf of farmers than those failed attempts of the Liberal-Socialist alliance in all their years in power.
We have kept our promises. When we made commitments we followed through on them. This is a Government of action, not just idle talk. This is a Government of substance, not just image.



THE BUDGET


Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Yesterday, Mr. Speaker, the Tory Government launched an attack against ordinary Canadians. The Minister of Finance (Mr. Wilson) brought down his Budget and Bang! on the Canadian taxpayers with a 3 per cent surcharge on income tax and a 1 per cent increase on the sales tax.


Some Hon. Members:: Bang!


Jean-Claude Malépart: Bang! on smokers, Mr. Speaker.


Some Hon. Members:: Bang!


Jean-Claude Malépart: Bang! on those who drink wine, Mr. Speaker.


Some Hon. Members:: Bang!
February 27, 1986


Jean-Claude Malépart: Unfortunately, Michael's corporate friends were spared. Once again, the ordinary Canadian-


Mr. Speaker:: Order, please. The Hon. Member may want to continue his statement and he might be allowed to finish it.


Jean-Claude Malépart: Mr. Speaker, this Government which pretended that it was protecting the ordinary Canadian has now decided that the head of a family with a wife and two children and earning $18,000 is rich and is not entitled to a sales tax credit. Mr. Speaker, this is shocking and they will have to back down on that issue.



MEMBERS OF PARLIAMENT


John Edward Broadbent: Mr. Speaker, 1 want to say a few words about a former Member of Parliament. I refer to Jean Chretien, the former Hon. Member for Saint-Maurice. I was unable to make such remarks this morning, so I would like to join with the leaders of other Parties in saying a few words now.

Today, Jean Chretien may be leaving the political scene, but certainly not the Canadian scene. I am sure he will continue to influence the Canadian society in his inimitable fashion.
In all the portfolios he has held, whether that of Justice, Indian Affairs and Northern Development, Finance, National Revenue, or Energy, Mines and Resources, Jean Chretien demonstrated the same serious commitment. Obviously, I was not always in agreement with him. But nobody could doubt his impassioned dedication. He was both true Quebecer and a true Canadian.
I wish him the best of luck in the future.



THE BUDGET


Mr. Marcel R. Tremblay (Quebec East):: Mr. Speaker, judging by the sterile comments voiced by the Opposition until now, one will realize that they have nothing to say. This would explain the level of their criticism which is inconsistent, unfounded, and worthless. They are truly disarmed, Mr. Speaker.
Under the Liberals, we were saddled with huge tax increases while the inflation rate was kept above the 12 per cent level, and that led to disastrous losses for the Canadian taxpayers.
The assumption is that the additional measures which Canadians will have to live with in order to make up for past wastefulness provide greater fairness and justice to citizens generally than under the previous Government. That, Mr. Speaker, is sound management, and we will carry on with the mandate entrusted by the people and with our role as trustees for the welfare and to the benefit of all groups in our society.




Mr. Clement M. Cote (Lac-Saint-Jean):: Mr. Speaker, February 26, 1986, will be seen as a historical and happy day for all Canadians because they had a chance yesterday to see that this Government's financial commitments have been upheld not a single one of our forecasts was overrun.
The actual deficit for 1985-86 will be $33.8 billion-our forecast was for a $33.8 billion deficit.
Our expenditures will not even reach the estimated level of $105 billion. For the first time in decades, there has been a reduction in absolute terms in program expenditures.
As against what the Opposition is suggesting, reducing our expenditures and the deficit will benefit the average Canadian, because he would have had to foot the bill had we not made such cuts.



THE ECONOMY


Mr. Bob Hicks (Scarborough East):: Mr. Speaker, yesterday Parliament and the nation were presented with a gift. With the policies outlined by the Minister of Finance (Mr. Wilson) we shall be able to pass on to our children and grandchildren the gift of a nation restored to financial health.
There is no greater gift than that of a future, and a future is just what the Government has offered Canadians. Gone are the days of "fly now and pay later". The Government has brought financial sanity back to our nation and thrown aside the irresponsible policies of spend, spend, spend.
Yes, the Government has presented the nation, in an open and forthright manner, with a game plan for economic renewal. It has plotted the course and it has led the way. History will commend the Minister of Finance for this Budget. Future generations will thank the Government for this precious gift that has been given to them.

February 27, 1986
Oral Questions EMPLOYMENT CRITICISM OF BUDGET MEASURES


Ms. Sheila Copps (Hamilton East):: Mr. Speaker, we have seen with this Budget that the Conservative Party has no heart for the old or for the young. Not only has the Government cut almost $30 million from the Labour Adjustment Program but it has refused, despite repeated pleas from all sides of the House, to bring back some kind of fairness to the unemployment insurance scheme.
The Government has cut off older workers. It has cut off younger workers. One in six young people in Canada today is without a job, and yet there was not one single word in the Budget about a whole lost generation. What we saw were cuts in the employment programs for young people, cuts of $100 million in the last Budget and $100 million in this Budget. There were cuts for the older workers, but at the same time the Government has enough money in its pocket to give tax rebates to the corporations. That is the true face of the Conservative Party. The old, the young, and the middle-class do not have a place in the "Big Blue Machine".



ORAL QUESTION PERIOD


John Napier Turner: Mr. Speaker, yesterday afternoon in the House the Minister of Finance, on orders from Wall Street, raised the misery index of ordinary Canadians by imposing the second massive tax increase in nine months. Why did he continue to do this in such an unfair way? Why, if he was to impose such a burden upon the average Canadian family, did he not revoke the $500,000 exemption over a lifetime for those wealthy enough to achieve a capital gain?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, possibly the Hon. Member has not noticed that 580,000 jobs have been created over the past 15 months.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: One of the reasons for that capital gains exemption is to encourage small business and other investors to invest in Canadian companies so that they will create jobs. That is clearly evident by the number of mutual fund sales which have been made to small investors who want to take advantage of that, to help create jobs and to help the country to grow. That is what the small business community is saying to me as well. That is why we did not make any change in the $500,000 exemption.


DIVISION OF FISCAL BURDEN
John Napier Turner: Yesterday, Mr. Speaker, the Minister imposed again on the Canadian people a burden which was not equitably distributed. Why did he insist on imposing an unfair burden on middle-income families in Canada?


Michael Holcombe Wilson: Mr. Speaker, let me be quite upfront here. We have a major problem in the mounting debt of the country, a debt which has been growing at 20 per cent and 25 per cent per annum for the last 10 years. We felt that it was important that that problem be faced head on and that all Canadians had to be part of that battle-70 per cent of it would be fought through spending reductions and 30 per cent through tax increases. Part of those tax increases are closing off tax expenditures which are no longer effective. However, in the balance of 30 per cent, that is a broad tax increase, all Canadians who are taxpayers will have to be a part of the battle against this major problem.


SALES TAX INCREASE
John Napier Turner: Mr. Speaker, that 70-30 ratio of which the Minister speaks has no application to yesterday's Budget. The reverse was true. Most of the effort to control the deficit was done by way of a tax increase. It was the third successive increase in the sales tax since September, 1984, each one at a billion dollars a crack. Why did the Minister choose this most regressive style of taxation to try to cover his problem?


Michael Holcombe Wilson: Mr. Speaker, I will make two points on that. The first sales tax increase was announced by the previous Liberal Minister of Finance who did not have the guts to put it in on time. He delayed it long past when he thought an election would come.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: 
FINANCE
Raymond Garneau: Mr. Speaker, in presenting his Budget yesterday the Minister of Finance said: "The buck stops here". Obviously Wall Street was not listening, because the buck went downward. It has lost a cent
February 27, 1986

and a quarter since yesterday. How can the Minister of Finance believe that the Canadian population will have confidence in him when his own friends do not believe in his Budget?


Michael Holcombe Wilson: Mr. Speaker, if I may, let me quote from The Globe and Mail this morning:
Finance Minister Michael Wilson continues to move in the right direction with more energy that he did last spring. His commitment to spending cuts is more credible, his pursuit of higher revenues more politically sound. Yesterday's federal Budget is better-
It is a good budget.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: That is a Tory columnist.


Mr. Speaker:: Order, please.


GOVERNMENT POSITION
Raymond Garneau: Mr. Speaker, the Canadian dollar which was trading at 71.94 cents is now trading at 70.67 cents-


Mr. Speaker:: Order. Just a question, please.
[Translation[


Raymond Garneau: Could the Minister of Finance tell us what he intends to do in order to correct this deplorable situation resulting from his Budget of yesterday?


Michael Holcombe Wilson: Mr. Speaker, let me make one comment on what the Hon. Member has referred to.


Ian Deans: Why don't you answer?


Michael Holcombe Wilson: I would encourage him not to draw judgments based on three or four hours' action in the market-place. It takes a while for the markets to analyse a document of this order of magnitude. For that reason it is more important to see how this happens over the next little while.


An Hon. Member:: That is what you said about the banks last year.


Michael Holcombe Wilson: Let me quote something further:
The Canadian dollar is likely to stabilize and perhaps even rise against its U.S. counterpart.
That is what Peter Rester, vice-president of the Searson Brothers Investment Bank of New York, has said.


Some Hon. Members:: Hear, hear!
Oral Questions


IMPACT OF BUDGET ON TAXPAYERS
John Edward Broadbent: Mr. Speaker, I have a question for the Minister of Finance. The Minister and other members of the Government claim in part they were elected to take Government off the backs of Canadians.
Last night, with another increase in the tax burden, we now have a total of some $1,300 in tax increases for the average family, the largest increase in modern history.
What does the Minister say to the man who was on television last night who claimed that, instead of getting off the backs of Canadians, the Government is crawling all over everybody?


Michael Holcombe Wilson: Mr. Speaker, first, I would outline the magnitude of the problem. I would tell him that a 20 per cent to 25 per cent rate of growth in the debt of Canada must be stopped and that all Canadians must be a part of that.
I would then say that if we are able to get this deficit down, interest rates will come down, making it easier for him to renew his mortgage, something about which the Hon. Member himself has shown some concern recently. It will also relieve the burden of debt on his children and his grandchildren, and relieve his children and grandchildren of paying far, far larger taxes if this problem is not brought to order.


Mr. Speaker:: Order, please.


EFFECT ON HIGH-INCOME GROUPS
John Edward Broadbent: Mr. Speaker, the Minister also knows that the average Canadian is interested in some fairness.
Will the Minister admit to the House that, as a result of his Budget last night, a taxpayer in the $40,000 a year bracket with two dependants, a year from now will actually have a tax increase, while a $100,000 a year person with two dependants will get a tax cut of some $800! Is this the Conservative view of justice?


Michael Holcombe Wilson: Mr. Speaker, let me point out that in The Fiscal Plan it says in 1987-88 the net personal income tax change will be $460 and the corporate income tax change will be an increase of $805 in 1987-1988. There is good balance here between the changes in tax rates.


Mr. Orlikow:: Why didn't you answer the question?


FAIRNESS CONCEPT
John Edward Broadbent: Mr. Speaker, the Minister knows that within two years corporation taxes will actually be going down and the share paid by individuals will go up by $7 billion. That, for us, is not justice.
1 ask the Minister to deal with the second question that 1 asked. Will he admit that while the $100,000 a year guy will have an $800 tax reduction in two years, the average person

February 27, 1986
Oral Questions
will have a tax increase? Is that his concept of fairness? Answer that question.


Michael Holcombe Wilson: Mr. Speaker, the Hon. Member is well known for his agility in twisting figures.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: It's out of your tables.


Michael Holcombe Wilson: If the Hon. Member will tell me what base he is using, I will be able to show him that he is wrong in the statement that he has made.


John Edward Broadbent: I'll show you.


Some Hon. Members:: Hear, hear!


REQUEST THAT REVISED FORECASTS BE TABLED
Donald James Johnston: Mr. Speaker, the Minister must be at least inwardly devastated by the widespread negative reaction to his Budget. The assumptions the Minister made with respect to interest rates of 9.5 per cent and oil pricing of $22.50 this year simply are not believable. In order to recover some credibility, would the Minister table revised realistic assumptions at least with respect to those two items, as soon as possible?


Michael Holcombe Wilson: Mr. Speaker, I am not going to revise those statements. I have made comments publicly since the Budget which support the projections we have made. I could go into those in some detail but, Mr. Speaker, you have asked us to respond briefly to questions. If the Hon. Member would like to come to see me after, I can set out very clearly the basis on which those assumptions are made and why they are very realistic assumptions.


INTEREST RATE FORECAST
Donald James Johnston: Mr. Speaker, I have done a few simple calculations myself on interest. Would the Minister stand in his place and tell us that he honestly and sincerely believes that a 9.5 per cent interest rate is a realistic assumption upon which to base public expenditures in the coming year?


Michael Holcombe Wilson: Mr. Speaker, I can. Right now interest rates on four-year bonds are at about nine and five-eights per cent. That, together with the 11.5 per cent rate on Treasury Bills, indicates that this is a short-term aberration. We will get interest rates down below those rates in a short period of time.
I will also remind the Hon. Member that the fiscal year has not yet started. It does not start until April 1, and we have 12 months after that during which there will be an average interest rate of 9.5 per cent. Interest rates in the United States
are also expected to go down during the same period. All of those reasons support that 9.5 per cent projection.


REVENUE FROM DIRECT TAXES
Nelson Andrew Riis: Mr. speaker, my question is also for the Minister of Finance. Would he confirm that in his own fiscal plan he points out that direct taxes on persons between this year and next year will increase $5.5 billion while direct taxes on corporations will actually decrease by $75 million? Will he simply confirm that?


John Edward Broadbent: It's your table.


Michael Holcombe Wilson: 1 just read out some tables, Mr. Speaker. In 1986-87 personal income taxes will go up $160 million and corporate income tax will go up $380 million. In 1987-88 it will be $460 million against $805 million. That is quite a change.


FISCAL PLAN STATISTICS
Nelson Andrew Riis: Mr. Speaker, on page 99 of The Fiscal Plan it is indicated that between 1986-87 and 1987-88-


Mr. Speaker:: Order, please. This is a preamble. Is there just a question?


Nelson Andrew Riis: Will the Minister confirm that personal taxes will go up $5.5 billion and direct taxes on corporations will decrease by $75 million?


Mr. Rossi:: You wrote it.


John R. Rodriguez: Is it a misprint, Mike?


John Edward Broadbent: Is that the French edition or the English?


Michael Holcombe Wilson: Mr. Speaker, what I indicated to the Hon. Member-


Ian Deans: Will you confirm or not?


Michael Holcombe Wilson: He has read out the figures there, but the tax changes-


John R. Rodriguez: Thank you.


Ian Deans: Thank you, Michael.


Michael Holcombe Wilson: Mr. Speaker, those reflect-


Ian Deans: Well done, Michael.


Mr. Speaker:: Order, please.


Michael Holcombe Wilson: Mr. Speaker, he is looking at a table which indicates-
February 27, 1986


Ian Deans: What the hell do you think he is going to look at?


Michael Holcombe Wilson: If the Hon. Member will let me continue, I will give him an answer. The Hon. Member is looking at a table which indicates what total revenues will be over this five-year period. However, the changes, as a result of this Budget and the May Budget, are on page 42 which shows that net personal changes will be $160 million against a $380 million increase for corporations.


Some Hon. Members:: Order!


Michael Holcombe Wilson: In 1987-


Mr. Speaker:: I must interrupt; this is too long.


Some Hon. Members:: Hear, hear!


EFFECT OF BUDGET ON MIDDLE-INCOME TAXPAYERS
Miss Aideen Nicholson (Trinity):: My question is also for the Minister of Finance. Although the Minister says he expects to save more through expenditure cuts than through tax increases, that is not what the estimates show. Two-thirds of Government savings this year will be from tax hikes loaded onto taxpayers, in this1 Budget and the last. Why is the Government telling middle-income Canadians to pay their fair share when clearly they are paying the lion's share?


Michael Holcombe Wilson: Mr. Speaker, I have made it absolutely clear. When we have to face the problem of the magnitude that we faced on September 4, 1984, it cannot be done in one Budget. We have had three different documents, the November statement, the May Budget, and this Budget.


Ian Deans: You should read the one you presented first.


Michael Holcombe Wilson: The changes have to be judged as a package and that package clearly is set out in The Fiscal Plan showing that 70 per cent-


Nelson Andrew Riis: Make the poor pay.


Michael Holcombe Wilson: -of the changes is in expenditure reductions, 30 per cent is in tax changes, and part of that 30 per cent is in removing some of the tax expenditures which we viewed as no longer fair and which benefit high-income earners.


GOVERNMENT POLICY
Aideen Nicholson: If the Minister really wants to release the creative spirit of individuals from the heavy hand of Government, as he says, why does he not take his hand out of their pockets and let individual Canadians boost the economy by spending more of their money as they see fit?


Some Hon. Members:: Hear, hear!
Oral Questions


Michael Holcombe Wilson: Mr. Speaker, 1 listen carefully to the self-righteous questions of the Hon. Member saying to me I should not have my hand in their pockets when it was the previous Government ran up this huge deficit that we had to deal with. Let's look at what we are doing and spending. If the Hon. Member would let me finish-


Mr. Speaker:: Order, please.


Sheila Maureen Copps: Don't be so self-righteous.


Michael Holcombe Wilson: Total spending in 1984-85 increased by 13 per cent. Total spending under this administration for the next three years will increase at 3.2 per cent.


Sheila Maureen Copps: What about last year?


Michael Holcombe Wilson: Non-statutory spending has been stopped dead in its tracks.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: It will decline at a rate of 2.7 per cent on average over the next-


Mr. Speaker:: Order, please. The Budget Speech was yesterday.


EFFECT OF TAXES ON INDIVIDUALS
Michael Morris Cassidy: Mr. Speaker, my question is directed to the Minister of Finance. Since he is asking us to consider the impact of all the fiscal measures implemented since 1984, is he now prepared to recognize that the impact of these measures will be that, in 1987, the tax burden of individuals will rise to $5.25 billion, while the tax burden of corporations will be reduced? Is it fair that the taxes for individuals should increase to $5.25 billion, while those for corporations are reduced?


Michael Holcombe Wilson: Mr. Speaker, 1 think that is an identical question that was previously put by the Member from Kamloops-Shuswap. I will repeat my answer. On page 42 of The Fiscal Plan net corporate tax changes are up $380 million as a result of actions taken in the Budget, against $160 million in personal tax changes. Next year it is $460 per person as against $805 for corporations. That shows a clear balance here. The answer still stands on the difference between the table that the Hon. Member referred to and the one from which I just quoted.


PERSONAL AND CORPORATE TAXES
Michael Morris Cassidy: The Minister's answer is he doesn't like the figures on page 9 in light of his Fiscal Plan so he has chosen to take another instead. If all Canadians
11020

February 27, 1986
Oral Questions
are to contribute in bringing down the deficit, corporations should contribute, rather than having their taxes cut while taxes on individuals go up by $5 billion.


Michael Holcombe Wilson: That is exactly the same question, Mr. Speaker. But I will try again for the Hon. Member. The chart on page 90 or 92 of the book shows what the total revenues will be of taxes for individuals and corporations. The chart on page 42 shows the changes that are being made as a result of this Budget, and that is the fundamental difference between those two pages.


John Edward Broadbent: What's the net effect, Michael, the net effect?


Michael Holcombe Wilson: Mr. Speaker, 1 would like to ask the Hon. Member-


Mr. Speaker:: Order, please. Perhaps I could just ask all Hon. Members to let questions and answers please be heard. The Hon. Member for Notre-Dame-de-Grace-Lachine East.


LABOUR CONDITIONS
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, I would like to direct my question to the Minister of Finance. In his Budget why is he ready to accept a 9 per cent unemployment rate at the end of 1987, a full three years after the recession, when in 1981, the year before the recession, the rate was 7.5 per cent? From 1965 to 1980 it was 5.6 per cent. In these circumstances how can he justify accepting 9 per cent in 1987? Why hasn't he made it a priority to bring the rates down to at least 7.5 per cent by that year like Liberals had it before the recession?
Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: Mr. Speaker, a soft ball like that is too easy; I have got to hit it out of the ball park. The unemployment rate in 1983, I believe it was, or it may have been '82, was 12.7 per cent.


Mr. Allmand:: That was a recession.


Michael Holcombe Wilson: The Hon. Member says that was a result of the recession. That was a recession that was engineered by the Budget of 1981.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. Order, please.


An Hon. Member:: It was not a home run; it was a strike out.


YOUTH UNEMPLOYMENT RATE
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, the Government has now redefined full employment as 9 per cent, and is willing to live with that in 1987, a full three years after the recession. If the Government has such a commitment to do something about employment, why hasn't the Government said one word in the Budget about the 15.9 per cent youth unemployed, 700,000 people whom Senators of all Parties have called a lost generation? There is not one word in the Budget and you are not doing a damn thing about it.
Michael Holcombe Wilson: Mr. Speaker, we are doing a damn thing about it. We created 580,000 jobs.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: Nowhere in that Budget does it say that I accept 9 per cent, or 9.7 per cent, or 9.6 per cent as a rate with which I am happy. That figure is an economic projection; it is a projection that we are bound and determined to do better. To demonstrate how well we are doing, you read the other part in the Budget which says that this country has created more jobs in Canada than all of the western European countries which have 16 times the population of Canada. We have created more jobs than all those countries.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Order, please.


THE BUDGET
Mr. Simon de Jong (Regina East):: Mr. Speaker, my question is directed to the Minister of Finance. When the Minister was in opposition he repeatedly criticized the Liberals whenever they increased the sales tax. As Minister of Finance he has increased the sales tax not once, not twice, but three times. Will the Minister explain why he is continuing the policy of increasing this fair-


Some Hon. Members:: Oh, oh!


Simon Leendert de Jong: -unfair and harmful tax?


Mr. Clark (Yellowhead):: There is that old NDP
ambivalence.


An Hon. Member:: You got it right the first time.


Michael Holcombe Wilson: I believe, Mr. Speaker, when the Hon. Member referred to the word "fair", what he was referring to was the refundable sales tax credit- which is of benefit to low-income Canadians-to offset the
February 27, 1986

impact of the sales tax, and I thank the Hon. Member very much for his support.


Simon Leendert de Jong: The Minister's notion of fairness and unfairness certainly has us all baffled.


EFFECT ON TAXPAYERS
Simon Leendert de Jong: Is the Minister of Finance not afraid that the unfairness of his Budget will trigger a tax revolt among the Canadian taxpayers?


Michael Holcombe Wilson: No, Mr. Speaker. The simple answer is that I do not believe that is so.


Simon Leendert de Jong: You don't think they have had enough?


Michael Holcombe Wilson: I think Canadians understand the magnitude of the problem we are facing as a country. They have also seen very clearly what we are doing with our own Government spending here in Ottawa. As I said before, discretionary spending, the non-statutory spending has been stopped dead in its tracks. It will decline during this year, next year, and the year after, relative to the last year before we took office. That demonstrates to Canadians that we are getting our House in order here in Ottawa. We are asking them to do a little bit by accepting that sales tax-


Mr. Speaker:: Order, please.


Michael Holcombe Wilson: -in order to help get the problem under control.


EFFECT ON LOW-INCOME FAMILIES
Hon. Douglas C. Frith (Sudbury):: Mr. Speaker, last year the Government's Budget hit at our grandparents. This year it is hitting at our families. I would like to ask the Minister of Finance this question. Do you really believe-


Charles Joseph Clark: Order.


Douglas Cockburn Frith: -that this is a fair Budget?


Some Hon. Members:: Order.


Douglas Cockburn Frith: Does the Minister really believe that this is a fair Budget when you are asking-


Charles Joseph Clark: Order.


Douglas Cockburn Frith: -four million Canadian families who live below the poverty line to share in deficit reduction to the tune of an increase in their taxes of $225 and an additional $300 in sales tax?


Michael Holcombe Wilson: Mr. Speaker, I am sure the Hon. Member has been talking to the same people I have spoken to this morning. I am also sure that he would like me to relate those comments which say that what we are doing on the refundable sales tax credit is good social policy;
Oral Questions
what we are doing on advancing the payment of the Child Tax Credit is good social policy; what we are doing in directing $100 million to those people on welfare to help them get back into the job force is good social policy; and what we are doing on a program for older worker adjustment, to help those Canadians who have lost their jobs get back into the workforce, is good social policy. All of these things together demonstrate clearly that this Government is very sensitive to the needs of those people, those lower-income Canadians and those Canadians who are out of a job.


SOCIAL POLICY INQUIRY
Douglas Cockburn Frith: Mr. Speaker, does the Minister really believe it is good social policy to ask families earning $20,000 a year to pay an additional $225 more this year in income tax plus an additional $300 more in sales tax? Is that good social policy?


Michael Holcombe Wilson: Mr. Speaker, the figures the Hon. Member uses are wrong. They are wrong, wrong, wrong. What I would point out to the Hon. Member is that the items which are referred in my first answer to him are good social policy and there is not one person in the Liberal Party-if they look into their own heart and soul-who will not say to himself or herself: "You are on the right track, Mike".


EFFECT ON SASKATCHEWAN FAMILIES
Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is directed to the Minister of Finance.


Mr. Guilbault (Saint-Jacques):: Kneel down.


Lorne Edmund Nystrom: For ordinary Canadians, yesterday's Budget meant taxes, taxes, and taxes. Is the Minister of Finance aware that the average Saskatchewan family have had their taxes increased by $1,340 since the election of the Conservative Party in September of 1984? is he aware of that?


Michael Holcombe Wilson: Mr. Speaker, the Hon. Member refers to families in Saskatchewan. I think that those families in Saskatchewan are very pleased with the initiatives we have put forward-


John Edward Broadbent: You said that about the pensioners last year.


Michael Holcombe Wilson: -for Saskatchewan farmers. I believe those families in Saskatchewan are also very pleased with what we have done in support of those farmers in Saskatchewan who were suffering from the drought last summer. I suggest the Hon. Member speak to those families in Saskatchewan and just find out where they are coming from.


John Edward Broadbent: He will; don't worry, Mike.


Michael Holcombe Wilson: I believe they will be pretty supportive.

February 27, 1986
Oral Questions


Lorne Edmund Nystrom: Those families in Saskatchewan know that Tory times are tough times.


An Hon. Member:: Right on.


TREATMENT OF THE WEALTHY
Lorne Edmund Nystrom: Does the Minister of Finance think it is fair that the average Saskatchewan family should pay $1,304 dollars more in Conservative taxes since September, 1984 just because the wealthy people are not paying their fair share? Is that fair?


Michael Holcombe Wilson: Mr. Speaker, the Hon. Member neglects-not deliberately, I am sure-to remind people that we have reduced the dividend tax credit from which investors benefit, that we have eliminated the scientific research tax credit and income splitting, and have eliminated the use of tax shelters to finance yachts and things like that.


Lorne Edmund Nystrom: We don't have yachts, Mike.


John R. Rodriguez: What about capital gains?


Michael Holcombe Wilson: We have eliminated the carve-outs which were of benefit to the oil and gas industry. All of these measures demonstrate that this Government has brought in more tax reform and cleaned up the Tax Act left to us by the previous Government, in a much more-


John R. Rodriguez: Horse feathers.


Michael Holcombe Wilson: -forthright way than-


Mr. Speaker:: Order. These answers are long.


PUBLIC ACCOUNTS DEFICIT
Mr. Don Blenkarn (Mississauga South):: Mr. Speaker, my question is directed as well to the Minister of Finance. The deficit about which the Minister spoke yesterday on Public Accounts was $29.5 million, after doing some strange changes with respect to the Public Accounts. The National Accounts deficit is only $23.2 billion. Why did the Minister not use the National Account deficit figures when speaking yesterday, particularly in view of the fact that it is the National Accounts we compare when we are comparing one country's deficit to another country's deficit?


Michael Holcombe Wilson: Mr. Speaker, the Hon. Member has a very valid question.


An Hon. Member:: Have you got a valid answer?


Michael Holcombe Wilson: We have used the Public Accounts figures because those are the ones which have been used over the years and those are the ones with which people are most familiar. But the National Accounts figure and the cash requirement figure are the two calculations which are
most comparable, as an example, to the United States definition of a deficit. The cash requirement-that is the money we have to borrow every year-will be down to $11 billion by 1990-91 on very conservative economic projections. We could even have a balanced Budget, with a little better performance in the economy.
[ Translation]


FAMILY INCOME STANDARDS
Jean-Claude Malépart: Mr. Speaker, my question is directed to the Minister of Finance. Yesterday, he announced a refundable tax credit in connection with sales tax. Could the Minister tell us on the basis of what tenet of social justice he decided that, from now on, a family with a $16,000 income is a rich family, while a family with an income of $15,000 or less is a poor family?


Michael Holcombe Wilson: Mr. Speaker, as the Hon. Member, I believe, would acknowledge, this is a major progressive innovation in tax policy and I am sure he is quite supportive of the direction in which we are going. He would probably say that he would like to see us go further and we may well go further. But this is an experiment. We are trying to get this tax credit into practice so that we can see whether in future years we can expand on this as a means of providing some offset to the burden of sales tax on low-income earners.


REQUEST FOR CLARIFICATION OF TAX CREDIT
Jean-Claude Malépart: Mr. Speaker, I have a supplementary question for the same Minister. Does he realize that in his May 23rd Budget, he reduced the maximum income for admissibility to the tax credit from $26,000 to $23,000, and that he is now reducing it further from $23,000 to $15,000? Why did he not use the same figures as for the child tax credit? Why create three classes of poor people within the Canadian society?


Michael Holcombe Wilson: Mr. Speaker, the Hon. Member is using apples and oranges for comparisons here. 1 am sure he knows that.


An Hon. Member:: He wouldn't know that.


Jacques Guilbault: Be honest, now.


Michael Holcombe Wilson: Possibly the Hon. Member does not know that.
What I would say to him is that this is an initiative upon which we want to build.
February 27, 1986


Jean-Claude Malépart: Des pauvres, ce sont des pauvres; des riches ce sont des riches!


Michael Holcombe Wilson: If the Hon. Member would keep his mouth more tightly closed, he might be able to hear an answer.
What we are saying is that this is a start. This is an initiative upon which we want to build in future years. Once we get some experience with it I think we will be able to expand it, as I indicated in my previous answer.


EFFECT OF BUDGET ON ONTARIO FAMILIES
Mr. Neil Young (Beaches):: Mr. Speaker, my question is for the Minister of Finance. Does he not realize that in Ontario the average family has had an additional tax increase of some $1,304,50 imposed on it since his Government was elected?


Michael Holcombe Wilson: Mr. Speaker, I am sorry. I missed the question.


Neil Young: Does the Minister not realize that the average family in Ontario has had an increase in additional taxes of some $1,304.50 since his Government was elected?


Michael Holcombe Wilson: Mr. Speaker, I am not going to hide behind the fact that we have had tax increases. I have been right upfront with that. I have said that we have had tax increases. The reason for that is because we have to beat this deficit problem.
I should also point out that during this same period an individual will save $576 annually on his one-year mortgage, and on a three-year mortgage it will be about $1,164. These are savings. There is a balance here. As we get the deficit down, we will be able to spread the benefits of it through lower interest rates into every nook and cranny of the country. Every Canadian will benefit.


CORPORATE TAX LEVELS
Neil Young: Mr. Speaker, my supplementary question also is for the Minister of Finance. What 1 want to know from the Minister is why taxes on average Canadians are increasing while taxes on corporations are decreasing?


Ramon John Hnatyshyn: They are not!


Ian Deans: They are.


Neil Young: Is that fair?


Michael Holcombe Wilson: Mr. Speaker, I think this is the fourth time-look to page 42.


Ian Deans: Look to page 99.


Ramon John Hnatyshyn: Page 44 comes before page 99. We got you there.
Oral Questions


John Edward Broadbent: That's very good, Ray.


John R. Rodriguez: You should have written the Budget.


SCIENCE AND TECHNOLOGY
Mr. Bill Tupper (Nepean-Carleton):: Mr. Speaker, my question through you is for the Minister of State for Science and Technology. For some time I have been concerned about the level of funding for the three granting councils, in particular NSERC. In yesterday's Budget some $300 million was set aside for the granting councils. Can the Minister tell the House if the level of funding will be adequate for NSERC to provide that flow of trained scientists and engineers for us to build a technological society?


Hon. Frank Oberle (Minister of State for Science and Technology):: Mr. Speaker, it is my intention, together with my colleagues, the Secretary of State and the Minister of National Health and Welfare, to announce tomorrow the details of the significant increases for the funding councils, which will amount to $1 billion over five years. Indeed, it is expected that we will meet the expectations of the science community to build on Canada's future for the 21st century.


Some Hon. Members:: Hear, hear!


REGIONAL ECONOMIC DEVELOPMENT
David Charles Dingwall: Mr. Speaker, my question is for the Minister of Finance. I remind the Minister that equality of opportunity is of paramount concern to a great many Canadians. Will the Minister explain the fairness of the substantial reductions which have been made in the economic and regional development envelope when the poorer regions of the country in Atlantic Canada and in British Columbia are crying out for additional assistance from the national Government here in Ottawa?


Michael Holcombe Wilson: Mr. Speaker, one of the things upon which I have commented on a number of occasions is that if we can get interest rates down, the effect of lower interest rates will affect every part of the country. John Bulloch and Michael McCracken have both indicated their expectation that there will be significant reductions in interest rates-2 percentage points, 5 percentage points.
The Hon. Member is also very much aware of the important initiative in the Budget to help the Atlantic region in terms of creating jobs. The $1 billion Atlantic Enterprise Program, which the Minister of Regional Industrial Expansion is announcing today in the Atlantic provinces, will be of great

February 27, 1986
Oral Questions
benefit to people throughout the Atlantic community, as well as the Gaspe region.


PROVISIONS AFFECTING ATLANTIC CANADA
David Charles Dingwall: Mr. Speaker, I am glad the Minister has mentioned the $1 billion fund because this Government has reduced its commitment to regional and economic development in that envelope by $6 billion-


Mr. Speaker:: Just a question, please.


David Charles Dingwall: Where is the fairness to the poorer regions of the country? The Minister is slashing Atlantic Canadians and the people of western Canada by a substantial amount. Where is the fairness?


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: Mr. Speaker, again the Hon. Member is dead wrong.


David Charles Dingwall: It's right here in your book, The Fiscal Plan, at page 31, a 38 per cent reduction.


Ian Deans: I think someone should have given lessons on the book.


Mr. Speaker:: Order, please. The Hon. Minister may want to complete his answer.


Michael Holcombe Wilson: Mr. Speaker, I would be very happy to give an answer if the Hon. Member would care to listen.
We have cut spending in the economic and regional development envelope; but we have done it in a very selective way.


Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: We have cut spending in those areas of the country which can afford to take cuts. We have cut spending in the off oil program, CHIP, and the insulation program. We have cut spending in those programs which have not proven themselves to be effective. However, we have been very careful not to cut spending in those parts of the country which can least afford it, which is why we have not cut spending


Mr. Speaker:: Order, please.


David Charles Dingwall: Supplementary question, Mr. Speaker.


Mr. Speaker:: The Hon. Member for Vancouver East.


UNEMPLOYMENT IN BRITISH COLUMBIA-BUDGET MEASURES
Margaret Anne Mitchell: Mr. Speaker, my question for the Minister of Finance concerns British Columbia. Does the Minister realize that unemployment remains very high in British Columbia and that his Budget has
not provided any special assistance in this regard to British Columbians? Does he also not realize that families who face unemployment and who may lose their jobs tomorrow simply cannot afford an extra $1,300 in taxes which his Government is imposing on them?


Michael Holcombe Wilson: Mr. Speaker,
51,000	jobs have been created in British Columbia since 1984. That is a pretty good record.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: In addition to that, the Minister of Regional Industrial Expansion signed a very generous Economic Regional Development Agreement with the Province of British Columbia. We recently entered into an agreement with the mining company Cominco to support employment in that part of the Province of British Columbia. Those are three clear initiatives which indicate our support for the Province of British Columbia.


TAXES PAID BY AVERAGE FAMILY
Margaret Anne Mitchell: Mr. Speaker, is it fair that an average Canadian family, many of which are headed by women these days-women who are working on low wages-has to pay over $1,300 in extra taxes while wealthy Canadians are not paying their fair share?


Michael Holcombe Wilson: Mr. Speaker, again I think we have some imaginative use of numbers here. What is very important to remember, and the Hon. Member should recall my last answer to the Hon. Member from Nova Scotia, is that if we cut spending more it will require fewer taxes. However, if we cut spending more it will probably affect those parts of British Columbia about which she is concerned. This is why we have a balance here. This is why we have put 70 per cent in savings while keeping 30 per cent for tax increases in order that all Canadians can participate.


HUMAN RIGHTS
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Mr. Speaker, my question is for the Secretary of State for External Affairs. Press reports indicate that the Government is negotiating with the German Democratic Republic which wants to open an embassy here in Ottawa. In view of the abysmal human rights record of that country and the fact that it is not living up to the Helsinki Accord, and that just a year ago citizens of-


Mr. Speaker:: Order, please. I think it is time for a question.
February 27, 1986


Benno Friesen: 1 would like to ask the Minister if he would use this opportunity to negotiate with that country so that it may improve its human rights record and provide for better delivery on the Helsinki Accord.


Charles Joseph Clark: Mr. Speaker, we are discussing actively with the authorities of East Germany a number of particular cases of abuses of human rights, some of which the Hon. Member himself has been involved in very helpfully. We intend to continue to do that. We also intend to continue to discuss with them a possible reciprocal arrangement regarding embassies.


BUSINESS OF THE HOUSE
Hon. Herb Gray (Windsor West):: Mr. Speaker, 1 would like to ask the Government House Leader what business he proposes for the coming week.


Ramon John Hnatyshyn: Mr. Speaker, I have already advised the Opposition House Leaders of a slight change in the projected order of business that I had announced last week. Tomorrow, rather than carry on with the budget debate, we will proceed to second reading of the borrowing authority Bill that was introduced by the Minister of Finance (Mr. Wilson) last night. We will return on Monday to the Budget debate and carry that on to its conclusion.
I should also point out that there have been discussions with the House Leaders and I think it is agreeable that there is an extraordinary circumstance which we are all happy to accommodate. On Monday, there will be, by unanimous consent and by order of the House, a disposition to adjourn the House after Question Period and suspend the sitting of the House until 4.30 p.m. to allow Hon. Members to attend the memorial service for our late colleague, the Hon. T. C. Douglas. This time will be lost to the debate but it will be counted as a full day in the debate on the Budget.


Ian Deans: Mr. Speaker, I would like to extend the thanks of our Party to the Government for extending that opportunity and courtesy.


Mr. Speaker:: The House should know that we now have, in effect, a motion put by unanimous consent that the House suspend the sitting at the end of Question Period on Monday until 4.30 p.m., and I think there is unanimous consent for its introduction and adoption.


Some Hon. Members:: Agreed.


Mr. Speaker:: So ordered.


[Stage Direction]
Motion agreed to.
The Budget-Mr. Allmand


[Stage Direction]
The House resumed consideration of the Motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government; and the amendment of Mr. Johnston (p. 11006); and the amendment to the amendment of Mr. Riis (p. 11009).
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, any examination of the Budget presented last night must be considered jointly with the Budget presented in May, 1985. When the two Budgets are considered together, it is pretty clear that the Government has made a massive attack on the taxpayers and consumers of Canada.
There have been massive tax increases but no tax reform. There has been an ouright attack on wage earners and salaried employees. There has been no repeal of the $500,000 capital gains tax exemption. As I have said, there has been outright gouging through taxation of Canadian taxpayers and consumers.
Let us look briefly at what Canadians have in store for them. As a result of last night's Budget, taxes have been increased by $1.9 billion. If we project those increases through to 1990-91, they amount to $3.42 billion. What is interesting is the inequity between the amounts raised by those tax increases on individuals and the amounts raised by taxation on corporations and businesses. Of the $1.9 billion that the Budget will raise through taxation, $1.5 billion will be levied on individuals and only $380 million on corporations.
The Acting Speaker (Mr. Paproski):: Order, please. If there are people who would like to have conversations, would they please go behind the curtains?


William Warren Allmand: If we look at the figures in the Budget, we will see that the impact of the massive taxation falls on individuals and does not fall on corporations and businesses. As a matter of fact, over the next three years, corporate taxes will decline and taxes on individuals will increase.
I simply referred just a moment ago to the increases in taxes as a result of last night's Budget, but if those are put together with the increases in taxes imposed by the Budget of last May, the total increase in taxes for 1986-87, the next fiscal year, will be $6.2 billion, by 1990-91, it will be $13 billion, $13 billion taken out of the pockets of Canadians through taxation as a result of the two Budgets presented since the Conservatives came to power.
These are massive increases in taxation for individuals. Some say that they are the greatest increases in I 5 years. The tax reductions are for the benefit of corporations and very little is done for individuals.
As well, I must remind the House that the measures introduced in the Budget of May 1985 are still in effect. There is



February 27, 1986
The Budget-Mr. Allmand
still a Bill going through Parliament designed to reduce the indexation on family allowances. That Bill is presently in the Senate. It was pushed through this House by means of closure. There is still legislation that provides for the deindexation of personal taxation and cut-backs on unemployment insurance for Canadians taking early retirement. The Government is not only massively raising taxes but also cutting back on Government programs and in many cases on Government programs which are useful to needy Canadians.
For example, as was referred to during Question Period by my colleague, the Hon. Member for Cape Breton-East Richmond (Mr. Dingwall), there has been a cut of $9.1 billion from the economic and regional development envelope, a cut amounting to 38 per cent over three years, a cut which will affect very severely the regions with very high unemployment which are facing difficult economic times. There are not only increases in taxation but very important and callous expenditure cuts. It is amazing that the Conservative Party bragged about those cuts as if it were a great achievement to take away benefits needed by Canadians to meet their daily needs of life.
The Canadian Jobs Strategy Program is being cut back by $100 million in 1987-88. There are employment programs in the Budget for older workers and welfare recipients, but those programs are vague for the time being and are being delayed. The Budget indicates that they will have to be worked out in due course with the provinces and the private sector. We do not really know the details of those programs, and in any case they do not come into effect right away. On the other hand, the taxes announced last night are certain and immediate. They come into effect as soon as possible.
With respect to the cuts, the blue book of Estimates which we just received today will reveal more. We will know what other spending programs will be cut back. However, the cutting of these programs, many of which had a humanitarian purpose, is nothing of which to be proud. Many of these programs provided essential services to needy Canadians and now those Canadians will have to do without those services and they will get to know about that as they begin to live with the situation of those programs no longer existing.
It is also clear that the cutting of the regional development programs and so on will lead to a situation where the gulf between the rich and the poor will become greater, where the rich will become richer and the poor will become poorer. A recent article in The Toronto Star indicated that welfare cases in Metropolitan Toronto were up by 48 per cent. It indicated that the number of people on general welfare in Metropolitan Toronto went up 48 per cent in the last four years, at a time when the Government was claiming that there had been a decline in unemployment. In fact, the number of working poor is increasing at a time when those people in the upper or richer brackets are becoming even richer and are escaping many of the tax measures that are being imposed upon those who earn income from salaries and wages. One could argue that not only are these measures to cut back on Government programs and to
impose heavy taxes on salaried and wage-earning Canadians cruel in themselves, but they are against the provisions of the new Constitution. Section 36 of the Constitution, one of the outstanding sections, is a very concise declaration of Liberal policy and philosophy. It indicates that without altering the legislative authority of Parliament or the provincial legislatures, or the rights of any of them in respect of the exercise of their legislative authority, Parliament and the legislatures, together with the Government of Canada, are committed to promoting equal opportunities for the well-being of Canada, furthering economic development to reduce disparity and opportunity, and providing essential public services of reasonable quality to all Canadians. We have a commitment in the Constitution by the Governments of Canada to narrow the gulf between the rich and the poor, not only on an individual basis, but on a regional basis-central Canada vis-a-vis the Atlantic area, the south of our country vis-a-vis the north of our country. There is a commitment in the Constitution to do that. The Government is cutting programs without paying any real attention to whether or not the programs are necessary. That is how it is being done. Priority has not been given to the programs themselves but simply to cutting back.
This imposition of taxes is contrary, if not to the letter of Article 36 of the Constitution, at least to the spirit of it. The gulf is getting larger all the time, yet the Government persists with a program which it believes will bring good to the country. The Government's models in all this are Margaret Thatcher in Great Britain and Ronald Reagan in the United States. It is interesting to read an editorial which appeared in the New York International Herald Tribune and was written in London, England. It dealt with the growing criticism against the Thatcher Government for doing the very thing which our Government is doing in the Budget. It read in part:
Mrs. Thatcher's rivals from the libera! wing of the Conservative Party now say to her that enough is enough, and that the unemployed should be put to work to build needed housing and public works. They say that industry should be backed by government, just as it is in France, West Germany, and Japan; that "not everything can be left to market forces"-
The critics are calling for a restoration of that measure of social spending and of government intervention in the economy that is both traditional Conservative Party policy and exists in one form or another in all Western European countries.
It is true that it has been a tradition of Conservative Parties, of Liberal Parties and of Social Democratic Parties to try to bring back some balance between the rich and the poor. Since the Second World War, Governments in western democracies have played the role of redistributing wealth in their countries. It has only been in the last few years, under the Governments of Reagan in the United States and of Thatcher in England, that there has been an abandonment of that principle of Government. As was pointed out in the editorial, it was even a policy of Conservative Parties at one time. The tide is turning in Britain. They have seen the result of that type of policy-a widened gulf between the rich and the poor, and a two-tiered society in which there is turmoil and in which there are soccer and race riots in the great northern cities of Britain because not enough attention is being paid to the humanitarian side, to social problems or to political problems. The total concentra-
February 27, 1986

tion has been on the bottom line, on what is profitable and on what is and is not a deficit. That is not enough in the long run. As a matter of fact it is even poor economic policy because these conditions undermine economic well-being.
At the present time there are 4.5 million people living below the poverty line in Canada. There were several measures in the Budget of last May and the one of last night which are contrary to long-standing traditions in western democracies of dealing with broad-based social and economic problems. The Government, with these two Budgets, is abandoning its traditional role of equalizer between the rich and the poor to ensure that the wealth of the country is distributed more fairly.
Let me concentrate for a few minutes on the problem of unemployment. It was very interesting during Question Period today when I asked questions of the Minister of Finance (Mr. Wilson). It was mentioned in the Budget that they expected to have a 9 per cent unemployment rate at the end of 1987, which is a full three years after the turn around in the recession. The recession not only hit Canada; it hit the whole western world. A full three years later the Minister is still willing to accept a 9 per cent unemployment rate. In a supplementary answer he said that he did not accept it, but there was no other target in the Budget. The only target mentioned in that document was the 9 per cent. I pointed out to him that in 1981, the year before the recession, the average rate of unemployment in Canada was 7.5 per cent. In the period from 1965 to 1980, it was 5.6 per cent. It jumped in one year, from 1981 to 1982, to 11.9 per cent.


Mr. Andre:: Who was in Government?


William Warren Allmand: The Liberals were in government. The Conservatives were in Government in Britain under the same circumstances, and it jumped to 13 per cent and is still 13 per cent. The Government ignores the fact that the recession is over and it is still willing to live with a rate of unemployment which is much higher than it was in pre-recession times. It is putting its head in the sand and is ignoring the feelings of the people of the country. When we read the editorials and the polls on this subject, it is evident that the Canadian public is not impressed with the repeated claims about the 580,000 jobs. Perhaps it is because there are so many new Members in the House that many of them do not know anything about what happened before September, 1984. The Conservatives boast that these 580,000 jobs in 17 months, from September, 1984 to January, 1986, is some kind of a record. That is false. In the 17 month-period from August, 1978 to January, 1980, 597,000 new jobs were created, and 631,000 new jobs were created in the 17-month period from September, 1972 to January, 1974 in a smaller labour market.


Mr. McKnight:: What recession are you talking about?


William Warren Allmand: That was a period of expansion, and it should be a period of expansion right now. Here we have a Government in a post-recession period yet willing to live with a 9 per cent unemployment rate and doing nothing about it. As a matter of fact there are only two measures in the Budget that
The Budget-Mr. Allmand
will do anything very specific about unemployment. One has to deal with older workers and that for the moment is very vague. The program will not come into efect until God knows when, for many months, if not years, because there is no target. The Government says it has to be developed with the provinces and with the private sector. There is also a program to help find employment for people on welfare, but that also is vague. It has to be negotiated and is sometime in the future.
Ministers get up one after the other and boast about their great performance. But what is the reaction of the Canadian public? Another Gallup poll published today showed that over 55 per cent of Canadians have little faith in the Government's jobless tactics. In a poll published on January 13, 1986, 50 per cent say that unemployment is still the major concern.
The editorial I read into the record the other day came from the St. John's evening Telegram for February 8, 1986. Its headline read, "Nothing to Cheer about when there are still 1.25 Million Canadians Unemployed Three Years after the Recession and we have a Government that is still Happy with its Record in Employment". I have an editorial that expresses the situation very well. It is from The New York Times on the situation in the United States where the unemployment rate is down to 6.6 per cent. It reads, in part:
Still, Too Few Have Jobs.
Each month the White House trumpets another increase in the number of Americans with jobs.-Even 6.6 per cent is high unemployment, especially so in a strong economy.-For unemployment to endure at such high levels is bad news.
The same thing applies in Canada, Mr. Speaker. This Budget is a massive gouging of Canadian taxpayers and consumers through taxation and cuts in Government programs. It is a Budget which, I believe, will not stimulate prosperity but will retard the recovery because it is taking too much out of the economy at a time when we want to expand. It is a Budget which has given no priority whatever to unemployment. There is nothing for youth unemployment, nothing for those who are on long-term unemployment, and nothing for women. It is a Budget that is a very regressive economic document that has very little to say about it in micro or macro economic terms. I believe that once Canadians have had an opportunity to read it and to feel its impact, the standing of the Government will fall even faster than it did after the last Budget.
By repeating misleading figures over and over, as the old saying goes, you can fool some of the people some of the time but a lot of them are going to find out sooner or later what the real situation is. Then you will face the reality of the anger and frustration of those Canadians who are not getting a fair deal and cannot Find the jobs they deserve.


The Acting Speaker (Mr. Paproski):: Are there any questions or comments? Debate. The Hon. Member for Thunder Bay-Nipigon.

February 27, 1986
The Budget-Mr. Epp (Thunder Bay-Nipigon)


Abram Ernest Epp: Mr. Speaker, I have under the Standing Orders of the House 20 minutes to address the subject this afternoon. I regret that because there is a great deal to be said on this Budget. The people of Canada and my constituents in Thunder Bay-Nipigon certainly expect us to speak to the Budget and to express their indignation and outrage at what the Government plans to do to them.
There are only 70 of us in the Opposition, and since this morning only 69. I would think Canadians from coast to coast would wish that there were many more of us in the Opposition to speak honestly to the situation facing us and make quite clear how much the Minister of Finance (Mr. Wilson) has misjudged his targets in deciding how to deal with economic situations and what kinds of taxes and spending plans to arrive at.
Last night at eleven o'clock I had a call from a constituent. I was busy looking through some of the pre-Budget speculation in the press. He wanted to underscore his reaction against the Budget, against the taxing proposals it included, and to encourage me to be very clear about his reaction and the reaction of many people in Thunder Bay-Nipigon at what the Government presumes to do.
1 assured him that I would have the opportunity this afternoon and, given the Budget which the Government has laid on us, I appreciate the opportunity to say something about its shortcomings.
I think it is worth taking a moment to consider our situation. The Minister of Finance has done that from his own limited perspectives. Of course, the Government has done a good deal to emphasize the good things that happened in 1985. 1 think we can say that the Government and the Canadian people were lucky in 1985. Interest rates fell. The existence of a new Government gave many people hope. As a result of those factors, a good deal of them coming from outside the country, things improved.
I remember being shocked about a year ago to have a Conservative back-bencher tell me that the Government's budget plans were tied into hopes that Canada would be able to ride toward recovery on the coat-tails of the Americans. If we could only tie into the American recovery, we would be in luck. In 1985, we got a certain measure of that luck but there is no assurance in 1986 that we will get the same thing. There is every possibility that interest rates will not decline. Certainly real interest rates, the difference between the inflation rate and the going interest rates, are very, very high. There is concern about what will happen to the dollar.
Actions of the Government, particularly focusing on deficits have done a good deal to bring uncertainty into the money markets. The stupid statement of the Prime Minister (Mr. Mulroney) last September, for example, that Canada was bankrupt was one of those irresponsible statements that would sooner or later come home to roost. Unfortunately, when it does, it does so for all Canadians.
The uncertainty in the energy markets is surely designed to make 1986 as perilous a year on an international basis as well
as in Canada as we have had for a long time. All of that brings into question the proposition of the Minister of Finance that we will have a 3.7 per cent growth rate in Canada. If we are that lucky, we will see a decline in unemployment of 0.2 per cent which, given a growing labour force, could mean no decline at all in the number of people who are unemployed.
That is the situation that we face in 1986. What could the Government have done about these circumstances? What would have ensured that this would be a Budget for prosperity rather than a prescription for continued depression in the outlying regions of the country and depression in southern Ontario where the recovery of 1985 was the most obvious? What is there to ensure that my constituents in Thunder Bay-Nipigon, who have been very responsive to the arguments that the country desperately needs tax reform, will do better, that they will live better and that more business will be done in the shops and the stores in Thunder Bay if there is an improvement in the fairness and a decline in the unfairness of the present tax system? What hope do we have out of the Budget given to us yesterday afternoon?
I do not think there is any hope at all in those terms. One of the uncertain factors for 1986 is the increasing weight of taxation on individual Canadians and on families. The increasing weight of taxation includes particularly very sharp increases in sales taxes which are borne by all Canadians. The Government has been half-way compassionate enough to recognize that sales taxes bear heavily on everyone, no matter what their income level, and so there is a refund of some of the sales tax in this credit proposal, which is one of the two bright spots in the Budget. The other is some small changes in tax expenditures. In that we see recognition of how serious the effect of the Budget will be on people all across the country.
The weight of taxation is a fundamental problem which faces the Canadian economy. I want to say something about that while emphasizing that the Government's need for revenue, which is obvious to everyone, is the challenge which the Minister of Finance chose to address, but in a most misguided way. If we needed revenue, why, in God's name and in the name of Canadian prosperity, did the Minister of Finance not consider that great range of tax breaks, which he knows is out there, which he has tried to estimate but many of which he has been unable to estimate?
Why did he not come to grips with more than the inventory credit and the investment tax credit provisions which, between them, are expected to bring in $380 million while the 3 per cent surtax on personal income tax alone is expected to bring in $560 million? That is a measure of how half-hearted, tentative, and almost nonexistent the response of the Minister of Finance is to the enormous revenue challenges that face him and to the incredible unfairness of the Canadian tax system.
There is a need for revenue. Why was there not a consideration of the other tax expenditures? There was no shortage of discussion of them. Speculation in the press focused on these. 1 could point out various instances to which others pointed.
February 27, 1986

Some of them, of course, would bear on individuals. Far more of them would bear on the activities of corporations. As John Bulloch, President of the Canadian Federation of Independent Business, recognizes so well, the areas that encourage large companies to spend money on capital equipment should be dealt with, because they are designed to reduce employment. When economic activity is slow there is no investment of this sort taking place anyway. Therefore, to provide breaks to companies is a short-sighted thing to do.
The Minister of Finance blew the opportunities in these areas. I would like to put two of them together in a way which may perhaps be somewhat novel. Lottery earnings are not taxable in this country. It is estimated that if lottery prizes were taxed it might produce $500 million to $600 million for the Government. It is possible that it would bring in even more money than the 3 per cent surtax on personal incomes does now. There was no such proposal.
However, insurance awards remain taxable. When making decisions on liability insurance claims judges will have to make adjustments for tax losses in order to ensure that someone who has won a suit resulting from an injury receives a decent income. Judges will have to drive the amounts up into the billion dollar range. Surely one could have considered making insurance awards of this sort, which are rare enough in this country, nontaxable, while at the same time taxing lottery prizes where blind luck is involved. In the process every Canadian would have benefited. It may have been possible to avoid a 3 per cent surtax on personal incomes, and it would surely have been possible to introduce some stability into the insurance market which has been incredibly difficult over the last weeks. There is an example of some novel thinking which should have been brought to bear in drafting this Budget. There was nothing of the sort, of course.
This Budget is a continuation of the principles of budgetmaking which go back to the early 1970s. This is in fact a Lib-Con Budget. It is the kind of Budget that Liberal Finance Ministers have brought forward quite a number of times, including the restraint. It is perhaps more severe on the taxation side. My Conservative colleagues would surely throw the petroleum and gas revenue tax at me as an instance of a similar kind of Liberal Budget, just to underscore the point that there is not much to choose from between Liberals and Conservatives when they are Ministers of Finance.
What is the consequence of the taxation systems that we have had over the past 13 or 14 years? One of the consequences which the Minister of Finance is obsessed by is a national debt that is nearing $225 billion. If the Auditor General is right that the tax expenditures are running at anywhere from $30 billion to $50 billion a year now, the larger part of that being to the advantage of corporate enterprise, then the Canadian people bear a national debt burden of over $200 billion, which matches the amount of money that has been put into the pockets of large corporations, managers, shareholders, and so on, over the last dozen years.
What is the consequence of that? In the current budget year the Government is hoping for budgetary revenue of over $70
The Budget-Mr. Epp (Thunder Bay-Nipigort) billion. Of that, $37 billion will come from personal income tax. If the interest on the national debt next year is $27 billion, then three-quarters of what all Canadians pay in taxes will go toward interest on the national debt. If successive Liberal and Conservative Governments have financed corporate enterprise with our money to the tune of $225 billion, and that represents an interest loan next year of $27 billion, then three-quarters of the money that all of us will be paying to the Government of Canada is going to go to those who hold the Government's financial instruments. We are going to be loaded down with more and more tax and are going to be paying more and more of our hard-earned money to the Government of Canada for transfer to those who have had the money over the last dozen years to buy the Government's financial instruments.
That is what Lib-Con Budgets have done. The Canadian people have been conned in the most incredible way. Big enterprises in the country have been enriched in the most astounding way. All of us, as individuals, pay the shot to the financial institutions that hold such large portions of these instruments. If they are not financial institutions, they are surely prosperous Canadians who have the money to invest in these. They get some of it back if they pay taxes and also hold these. That is the result of a dozen years or more of budgeting.
Did we see any recognition of that on the part of the Minister of Finance? Did we see any recognition that this country is in desperate need of real tax reform in which the tax expenditures are dealt with? All of those that do not generate employment in this country are done away with so that the mind, and spirit-sapping impact of unemployment would be ended for the Canadian people. Did we see any of that? No, we did not. We saw our Minister of Finance remain obsessed with a national debt, whose total he does not consider in terms of how it was built up and who is quite prepared to continue to burden individual Canadians with this kind of taxation. On these facts ordinary Canadians are not going to support the Conservative Party. If I had my way they would not allow Liberals to con them into thinking that the Liberal Party will do any better, because its record over the years is responsible for much of this.
The Minister of Finance has done his part to add to the complexity of a tax system that everyone knows is almost incomprehensible. I had a Government back-bencher telling me just yesterday after the Budget Speech that my colleague, the Hon. Member for Kamloops-Shuswap (Mr. Riis), is absolutely on the right track, maybe not so much on fairness as on simplifying the tax system. The Minister of Finance does not plan to do that.
Colleagues from the Conservative Party, do you really expect the people of Canada to support you when you pull off that kind of stunt? There is a tax revolt building in this country. I discovered in the election campaign of 1984 that that is a tax revolt that we New Democrats can lead. 1 am going to do my part to see to it that the people of Canada know exactly how you, as well as the Liberals, are transferring

February 27, 1986
The Budget-Mr. Epp (Thunder Bay-Nipigon) their hard-earned money into the wealth of those who control the large enterprises, the seven families and groups that dominate so much of our economy. I want them to know that that is what Liberals and Conservatives do to them. Once they appreciate those things, there is going to be a political revolution in this country that will surprise you and be enormously gratifying to me and to my constituents in Thunder Bay-Nipi-gon who desperately want to lead good and prosperous lives to find the employment that the Government promised them. The Conservatives are not going to do that. In fact, the Minister of Finance has suggested that he wants to get the balance of program expenditures back to the early 1960s. He is too much of an economist and has been absent from here so that he does not remember what the early 1960s were. A lot of Canadians have not forgotten the Diefenbaker depression. If he wants to take us back to that time, the only good thought I can utter is that he might try to take us back to the more balanced tax situation of those days, a good deal closer to fairness between the corporate and the individual. For the 1.3 million Canadians who continue to look for work and are told by the Minister of Finance that if the growth rate is really terrific this year at 3.7 per cent we may see a 0.2 per cent decline in unemployment, this could mean, as happened in January when it dropped to under 10 per cent, that there were actually more people looking for work in January than there had been before because the labour force continues to grow.
The Canadian people expected a lot better. The Minister of Finance, when he was in the Opposition, spoke at various places against the Finance Minister of the time, Allan Mac-Eachen. I have a copy of his speech to the Canadian Club here. He quoted a businessman at the time saying to him, "What could the Government do for the value of the dollar?" He hesitated for a moment and then said, "Mr. MacEachen could rise from his seat in the House and say, 'I quit'." I think that that is a fair thing to say to a Minister of Finance who has been an incredibly naive man and politically insensitive. If Michael Wilson would like to rise in his place in the House and say, "I quit" then the country would stand a better chance of becoming the prosperous place that my constituents and people from coast to coast want it to be.


Mr. Thacker:: Mr. Speaker, I have just a comment and three points I would like my hon. friend to respond to. He was attacking the sale tax increase and, in fairness, he did acknowledge that there was the sale tax credit, which will help lower income Canadians, and I thank him for that acknowledgement. He went on to make quite an attack on the corporate tax system. I would like his comment on this, because a corporation is nothing more than a legal fiction. Any taxes imposed on that corporation are simply passed through on the price of their goods to the consumers. To increase the corporate tax has always seemed to me personally to be a regressive tax very much like the sales tax. If a corporation is building widgets it is going to pass that through, because if it does not pass it through it is going to go out of business.
There is quite a strong argument that corporate taxes should be seen in the same light as sales taxes as compared to the
progressive income tax that is levied on people so that the people with more wealth pay more than those with less wealth. I would like his comment on that.
With respect to lotteries, it has long been thought that if you make an investment for a business you deduct the cost of interest on the money against the earnings. If we are going to tax the earnings of lotteries then surely the Government would have to permit a deduction of the tickets purchased, which leads you to the position that if you sell 14 million tickets at $1 and $14 million are deducted from income tax, in order for somebody to win $5 million-because the rest of that money, the difference between the pay-out and the number of tickets sold, goes usually into charitable goods-will we not be in a net loss position? I would appreciate his comment on that.
The last point is with respect to tax expenditures. I wonder if he would be kind enough to acknowledge that it was the present Minister of Finance who, in 1984, for the first time since the former Conservative Minister of Finance in 1979, filed a statement listing all the tax expenditures? So that it has really been only a year since we have had a general public debate to find out how large those expenditures are in terms of our personal deductions, our spousal deductions, our child deductions, and, true, all of the benefits that go through to corporations. Surely as part of that national debate he would recognize that one year is not an unduly long time. The Minister has already attacked about nine of those tax expenditures, and I am sure we can expect more in the future. Will he acknowledge that that was a wise policy move to publish that document?


Abram Ernest Epp: I thank my colleague for those questions. As far as the taxation of corporations is concerned, I know there has been a prevailing tendency for some time to argue the proposition that he suggests, that corporations should not be taxed; we should just tax the ultimate recipients of the gains, if you will. The fact of the matter is that you can talk about legal fictions or whatever, what counts in the courts is the existence of the corporation as a legal person. It does not take any perception at all, in examining corporations at work, to realize that they are, in fact, most active and constructive, dynamic, acquisitive, legal personalities. The Hon. Member refers to the fact that corporations use a good deal of this profit. Perhaps I should refer to the fact that in using these retained earnings for investment purposes corporations are doing some odd things, at least in economic theory. One would think that if there were anything like free competition prevailing then these profits would be competed away. What we see instead is corporations that have substantial retained earnings and are able to use them to invest. This fact leads me to think that having these legal persons in the country not by any means distributing anything like all of the earnings that they take in justifies our saying that if they are going to use them for investment purposes they should share some of those earnings with the people of Canada. This is in order to reduce the weight of taxation on individuals so that those individuals would have larger incomes which they could take off to supermarkets and shopping
February 27, 1986

centres to buy products these companies produce which would keep them in business. These people who make this particular argument for the corporation seem to forget completely that they are in the business of making money. The way to make money is to have business grow, and the only way to have business grow is to have people with more money to spend. That means sharing in the burden of taxation, so that that particular argument follows.
Perhaps in an analogous way 1 can suggest that 1 would not be in favour of giving people a credit for the purchase of lottery tickets. But when one makes this windfall gain, I think the people of Canada have a right to share in it in the same way the people of Canada expect to share in capital gains of all sorts, and they are mostly outraged at the $500,000 capital gains tax holiday which the Minister of Finance offered in the Budget of last spring.
As far as the tax expenditures to which the Flon. Member referred are concerned, if he will check I think he will find that it was in August, 1985 that the Minister published the statement on various tax expenditures. So it is even less in that sense than the time he suggested. The fact that the Minister did not use the opportunity in the February Budget to do anything more significant than a couple of measures which will bring in some $380 million when tax expenditures run from $30 billion to $50 billion, suggests to me that the Minister of Finance has blown an opportunity. He talked tough, but instead of being tough with the people with whom he should have been tough, that is, the corporations, he socked it to individual Canadians.
[ Translation]


Mr. Blackburn (Jonquiere):: Mr. Speaker, 1 would like to comment on what was said by the Hon. Member for Thunder Bay-Atikokan (Mr. Angus). Mr. Speaker, I think it is a sad reflection on the Hon. Member that he is trying to frighten Canadians and predicting all kinds of gloom and doom for 1986. Unlike the Hon. Member, 1 think the Minister of Finance (Mr. Wilson) brought down a very realistic and very responsible Budget yesterday evening. And why do we have a realistic Budget. Mr. Speaker? Because we also have to deal with what happened previously.
The cumulative deficit had reached $200 billion when we came to power on September 4, 1984, and if we had continued the previous Government's policies, twenty years from now the deficit would have been one trillion dollars, and for the taxpayer, $1 trillion with a 10 per cent interest rate would mean that twenty years from now, the cost of servicing the debt would be almost as high as the sum total of the Budget. Yesterday evening, being realistic meant realizing that we are in a difficult financial situation, and, Mr. Speaker, this is the first Minister of Finance in twenty years who has attained his objective. He told Canadians we had to bring down the deficit. And he talked about cutting $4 billion off the deficit. Well, we
The Budget-Mr. Stackhouse
went from 38.2 to 33.8 billion this year, which I think this is a vast improvement, and we are now talking about cutting another four billion off the deficit to bring it down to 29.2 billion. That is less than $30 billion, and I think that shows the Government's message is a serious one.
I also said this was a responsible Budget. Mr. Speaker, what is the most important source of jobs in this country? Small business. There are 700,000 small businesses in this country. The Government has great confidence in this sector, and that is why the tax rate on small business income will be reduced from 15 per cent to 13 per cent, to help small businesses generate new investment in the economy and create additional jobs. I believe that our performance in our first year is good enough to warrant the trust of Canadians. We created 580,000 jobs in fifteen months, more than in all sixteen European countries combined. I think that is a good performance. We must persevere and continue along the same path, and that was the message the Minister of Finance gave us yesterday.
I also think we considered another important aspect which is to help those Canadians who are most in need, and I am referring to two measures more specifically, including the $300 prepayment of the tax credit to families whose income is less than $15,000. Furthermore, in connection with the one per cent increase the sales tax, the Government will provide a refundable sales tax credit of $50 per adult and $25 per child, and I think that is important. We have considered the plight of the neediest and poorest in our society, and I think that is what responsible Government means. Mr. Speaker, I wish my hon. friend would remember this in his comments.


The Acting Speaker (Mr. Paproski):: Would the Hon. Member care to reply?


Abram Ernest Epp: Yes, Mr. Speaker. I will be very brief, as I should be. The Hon. Member makes the same kind of speech he and his colleagues will be making all over the country, I do not doubt. The situation is a very serious one and the Minister of Finance has focused wrongly in trying to come to grips with it. Rhetoric may work. But if this year turns out to be as difficult as anticipated, then the Canadian people will surely become all the more unhappy. It is a matter of how one sees these things, not a matter of piling up rhetoric to suggest how well things are going to turn out.


The Acting Speaker (Mr. Paproski):: The period for questions and comments has now terminated. Debate.


Mr. Reginald Stackhouse (Scarborough West):: Mr. Speaker, I am deeply honoured to speak in this debate. Budget debates have been part of the parliamentary tradition since 1773 and none has had more importance in the parliamentary year than the budget debate. This is especially so in terms of this budget debate in Canada in the year 1986. There has been no debate in the history of this Parliament, and in the history of this country, more significant for our national future than the debate on our Budget and the policies it represents. These

February 27, 1986
The Budget-Mr. Stackhouse
policies are vital to Canada's future. Because of these policies the future can be worthy of our past.
A few weeks ago in the riding of Scarborough West, in one of our public schools, I spoke to a class. One of the children asked me what I would choose if I could choose anything 1 wanted the Government to do. I answered that I would teach Canadians to be proud of Canada. We have so much of which to be proud as a people. No twenty-five million people in the world have done what we have done as a people. We have a population equal to that of the State of California, yet we have taken the second largest country in the world, with one of the most challenging environments, and have made it into one of the major industrial countries in the world. We have such a distinguished history of which to be proud, yet so very few years ago that one would only need one hand to count them, Canadians were wondering if they had a future. They wondered if the future of their country would be in any way like the past of which they were so proud. The answer to their concerns, and the reason why Canadians are no longer worried about their future, is the success of the economic policies which have been put into place by the Government since its election in the fall of 1984.
This Budget is not to be considered on its own. It should be seen as part of an economic plan which began with the Economic Statement of November 1984. It was continued in the Budget in the spring of 1985 and has now taken a significant step further in the Budget of February, 1986.
I would like to review ways in which those economic policies have guaranteed to the people of Canada that we can anticipate a future which will be worthy of the past of which we are so proud. First, our policies have been aimed at reducing the deficit. This has been a major challenge. Indeed, it is a challenge which has concerned the world, which in turn has given its judgement on the Canadian dollar, and that was in large part because of the concern with the deficit, and with good reason. In the year 1975, the deficit represented $87 per capita. In the last year of the Liberal Government, it represented $1,469 per man, woman and child. That is the Liberal record. The Liberals themselves knew what was wrong. They talked reduction. They talked as if they believed they should reduce the deficit. The Minister of Finance in 1980, the Hon. Allan MacEachen, said in his budget address: "We must slow down the growth of public debt charges". Three years later, the Minister of Finance, the Hon. Marc Lalonde, made a stab at it when he said: "We must manage the deficit now to ensure it will come down as quickly as possible". Year after year the Liberal talked reduction, but we have done it. The Liberals had debt charges which in 1975 represented $3,025,000,000. That was the total charges for servicing the public debt in 1975. By the end of the Liberals' term in office, those charges had risen to $22,500,000,000. No wonder people are worried about this country having a future on which they can rely. It is no wonder people are concerned that their country, which was so affluent, prosperous and strong is going down the pipe. They can now be assured that the future is something in which they can have confidence, for, at last, reducing the deficit is
not something about which a Government talks but something about which a Government does.
Second, our policies as a Government have been aimed at restraining Government expenditures. That is also something in which our Liberal predecessors believed. The present Leader of the Opposition (Mr. Turner), when he was Minister of Finance in 1975, said that no measure is more important than the control of public expenditures. It was with good reason that he said that, for public expenditures had escalated beyond belief. At the most intensive time of World War II, public expenditures by the Government of Canada totalled $5.5 billion. A generation later, in 1967-68, they had doubled to about $11 billion. And what are they now? I wish it were possible to say that we are reducing expenditures to such an extent that we are getting back to those days when they represented a much smaller part of the Gross National Product. However, we must take heart when we consider that the Estimates submitted by the President of the Treasury Board (Mr. de Cotret) this very day show that we have almost zero growth in the expenditures of the country for the second year in a row, while other costs in our society are growing steadily. There is still growth with respect to the cost of living to the tune of 4 per cent. But the cost of Government is not keeping pace with that. Why would the country not have renewed confidence in the future when it sees that at last through its Government its people are gaining some control on Government spending?
Third, our policies stand for reshaping Government and reducing deficits. We are restraining expenditures and reshaping Government. As the Minister of Finance said in his impressive address last night, we need not more Government, we need more effective Government. I draw to the attention of Members of the House and to the attention of the public three specific ways in which we can do this. For example, the Government is introducing a merit criterion for increasing the salaries of executives. That is a new thought. When did this country's civil service ever have itself challenged by the prospect of showing merit as the standard for gaining a salary increase? When did we last replace seniority, longevity and survival with something called merit? That is a reshaping of Government.
We were also told that within two years Canada Post will be challenged to pay its way. That is a staggering thought. However, it is not a staggering thought south of the border where the United States Post Office not only pays its way without subsidy but actually shows a profit.
We were also told in the budget address that other Crown corporations will be sold and that further steps will be taken to get the Government out of the private sector. One of the most significant ways in which we are reshaping Government is by getting Government off the backs of the people. I draw the attention of the House to one way in which that has been done and on which we should focus attention. I refer to the reform of the Registered Retirement Savings Plan regulations. Plan-
February 27, 1986

holders will now gain a freedom of which they should never have been deprived. At last, RRSP holders will be treated as adults who have the right to decide how they will spend their own money. No longer will a person cease to be treated as an adult when he reaches the age of 71 and is required by legislation to collapse his RRSP. He can now have a registered retirement investment fund, to which he had been entitled for many years, but will not have the freedom to withdraw from that fund whatever amount he chooses. His retirement years can be shaped by his own choices. There will be a minimum withdrawal required by legislation, but no maximum imposed. Retirees will now be free again, free to live their own lives by making their own choices and by spending their own money. That is an example of what I mean when I say that our policies are reshaping Government itself.
Fourth, we are renewing the economy. Once again, because of our economic policies, Canada is big league. We have had an economic growth rate equal to that of Japan-twice the growth rate of the United States, greater than the growth rate of all the major countries of western Europe. That's big league, especially because the stress has been on generating that growth through the private sector. The expansion has come about for one simple reason, that is, investors again believe in the country. They believe that we have a Government in which they can have confidence. We see this in the way in which month after month the leading economic indicators are up, all of them pointing to the way in which the economy is being renewed. We have heard so much said about the need to help this part of the population and that part of the population. The most important way we can help people is by renewing the economy and giving the people an economy in whose prosperity they can share. We are doing that.
This brings me to the next way in which our policies are benefiting Canadians, namely, restoring employment. Hon. Members are familiar with the macro figure of 580,000 jobs which have been created since our Government took office. We are familiar with the way in which the unemployment rate has fallen to 9.8 per cent, the lowest rate in five years. However, I want to focus the attention of Hon. Members on the way in which the Budget is targeting certain groups of our population and offering them particular assistance in restoring employment. In this regard I refer specifically to young people, women who want to re-enter the labour market and older men who find themselves out of work after years of working for a company or an organization which has suddenly closed down or been taken over. I am thinking of the job strategy programs. I am thinking of the program for older worker adjustment. Each of these programs offers hope and assurance to people who wondered if their futures were not behind them. We are not treating people as statistics. We are treating them as people with feelings and aspirations, people who have a right to dignity and a right to believe that they have years ahead in which they can provide for themselves, live independently and have the dignity of daily work. We believe in that. We are offering it and succeeding in it, as the statistics indicate.
The Budget-Mr. Stackhouse
As well, our economic policies have aimed at reforming the tax system. The Budget continues the reform measures which were heralded in the 1984 Economic Statement, continued in the Budget of 1985, and which have now been taken a step further in the Budget of 1986. I refer to the reduction of tax avoidance policies, so many of them added by the previous Government. There is the introduction of the minimum tax, a new tax introduced into the fiscal system of the country. There is the removal of several corporate and personal tax breaks which did not contribute to the fairness of the taxation system. I would say that I looked upon these particular reforms as only a first step toward what I believe this country profoundly needs, and needs critically. It needs a more fundamental re-examination and restructuring of the income tax system. The problem with trying particular reforms of the income tax system, worthy and necessary as the effort is in this interim period, is that the structure of the income tax system itself is wrong. No particular changes to it will get at the basic need, which is to start over again with a healthy tax structure which will provide adequate revenues for Government services, equitable distribution of the tax burden and a tax method which will not work against the incentives to expand our production as a people.
I speak here not on behalf of the Government or of my Party but I express only the opinion of a private Member of the House. I hope that the time is not distant when we could have appointed a task force which could address itself particularly and wholly to a fundamental examination and reform of the Income Tax Act, reform that will aim at removing the dominance and monopoly of personal income tax as the main source of financial supply for the Government. I believe that will not only be a measure of social justice but equally it will contribute to the expansion of our productivity as a country.
In those ways, I draw to the attention of the House and the public that this Budget is to be judged in terms of economic policies which, since the fall of 1984, have achieved this objectives which the Government set for itself during the election. We were elected to reduce the deficit, and we are doing it.	We	were	elected to restrain expenditures, and	we	aredoing it.	We	were	elected to reshape Government, and	we	aredoing it.	We	were	elected to renew the economy, and	we	aredoing it.	We	were	elected to restore employment, and	we	are
doing it. We were elected to reform the tax system, and we are doing it. These are the reasons for which we can look forward to the future with the confidence we were denied in the years 1981, 1982, 1983 and 1984 until the election.
The historian Arnold Toynbee once analysed the history of mankind by pointing out that great civilizations have resulted from a combination of challenge on the one hand and response on the other. The people of Canada were faced with a challenge in 1984. They responded by electing a Government able to make a response equal to the fiscal challenge, which has been described in words no more accurate and eloquent than those of the Premier of Ontario, the Hon. David Peterson, who has said that the federal Government inherited a mess. That

February 27, 1986
The Budget-Mr. Stackhouse
was the challenge and the Canadian people and the Government addressed themselves to it.
Once to every man and nation comes the moment to decide. In 1984, the people in Canada had that moment and they decided. The success of these economic policies has shown the wisdom of that decision for we are now able to face the challenge and combine it with what is now the assurance of opportunity.


A. Daniel McKenzie: Mr. Speaker, I would like to congratulate my colleague on his excellent address. I would like to give an example of how Government policies could work. In 1972, when the Right Hon. Member for Vancouver Quadra (Mr. Turner) was the Minister of Finance, there were 544,000 people out of work. When he left office, 732,000 Canadians were unemployed. We can see that his record as a Minister of Finance was an absolute disgrace. Since the election, under our Minister of Finance (Mr. Wilson), 580,000 new jobs have been created including 129,000 in January. We have turned this record around.
I would like to discuss a disgraceful statement that was made by the President of the Federation of Labour in Alberta. He has been telling the people of Alberta to stay on welfare or UIC and not to take any jobs. In Canada today, there are more than ever job openings and opportunities right across the country, except for a few pockets. There are "help wanted" signs all over the place. Newspapers carry special supplements for "help wanted" ads.
This gentleman to which I refer, Mr. Werlin, has said that no one should take a $4-an-hour job in Alberta. However, the business people have said that many of those jobs are full-time and would pay a junior trainee with no advanced education about $6 per hour or $950 per month. I do not think it is so bad for someone to start with. In fact that people are starting out by making $4, $6 or $8 an hour does not mean they are going to stay at that wage the rest of their lives. If they are ambitious, they will advance.
I would ask my hon. friend what he thinks should be done about the statements of this labour leader. I have passed this information on to the Forget Commission. I want the commission to examine this information to find out why there are so many job openings and yet we still have a high unemployment rate.


Reginald Francis Stackhouse: Mr. Speaker, I think there are two aspects to the question which my hon. friend raises. The first is the possibility some suggest-and in reporting this I do not concur necessarily with the opinion expressed-that the entitlements through unemployment insurances and other Government programs are too great to encourage people to take jobs that are paying a minimum rate. The other possibility is that there are many, many people in society who need to be able to move, not necessarily from one place to another, though that may be part of the answer, but move from one skill to another, from one occupation to another.
If I may quote the economist John Kenneth Galbraith, he has said that historically, mobility has been the solution to
poverty. We are seeing this today, not simply in geographic terms or moving from a high unemployment area to a low unemployment area, but in more sociological and economic terms, with the need to move from skills and occupations that are no longer in demand to those that are in a new demand. That has been the thrust of this Government to a very large degree, particularly in the recently introduced Canadian Jobs Strategy Program and the other programs for older workers to which I had referred.
I have profound confidence that through retraining, educational opportunities and other means, we are going to give people a chance to move from a set of circumstances in which there may be no viable future to another set in which there is promise. They are facing a challenge and this Government is giving them an opportunity.


Clément M. Côté: Mr. Speaker, we have just heard two speeches made by Members of different parties, one by the Hon. Member for Scarborough West (Mr. Stackhouse), the other by the socialist Member for Thunder Bay-Nipigon (Mr. Epp). Both Members listened to the same Budget speech, but their observations this afternoon were altogether different.
The Hon. Member for Thunder Bay-Nipigon said a moment ago that yesterday after the Budget speech Canadians lost every hope for the future. He said that a Budget such as the one introduced yesterday will reduce employment in this country, but when the Budget was introduced last year his leader stated that 55,000 jobs would be lost. Well, the results are in and, one year later, we have 580,000 new jobs and this economic performance of last year has been matched only by Japan. Now, if this is not good news, if this is not encouraging results, I wonder what socialists expect in terms of encouraging results.
They claim they speak on behalf of ordinary Canadians. He said earlier that ordinary Canadians would not vote for a Conservative Party. Mr. Speaker, only ordinary Canadians voted for Conservative candidates in the last election because there are only 30 extraodinary Canadians in this country-the 30 socialists Members on the other side of the House. Mr. Speaker, those Members are here only to save their jobs. They are not here to promote the well-being of Canadians. They keep talking about ordinary Canadians, and that is getting to be a hackneyed expression!
If the Budget's $27 billion in interests are not paid by ordinary Canadians, I wonder who does.
Mr. Speaker, those $27 billion are paid to the banks, to rich people. Those are $27 billion which ordinary Canadians-as the socialists call them-cannot have for social programs, for job creation projects, for anything, period. Mr. Speaker, those $27 billion flow from their pockets right into those of wealthier people.
February 27, 1986

Mr. Speaker, no-one can possibly be more blind than somebody who does not want to see, and the socialists will always be blind because they simply do not want to see or hear anything.
Mr. Speaker, Canadians generally are satisfied with the Budget because they are pleased with the direction taken by the Government and the Minister of Finance. And that is hope-


Carlo Rossi: On a point of order, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: Order, please. [Translation]


Carlo Rossi: Mr. Speaker, I rise on a point of order.


The Acting Speaker (Mr. Paproski):: Order, please!


Carlo Rossi: Mr. Speaker, you allowed two groups from the Government side to speak, but when the Member of the Opposition rose to take part in this debate .. . This is not a question or a comment, but a speech he is making.


The Acting Speaker (Mr. Paproski):: Order, please. I have not recognized the Hon. Member yet.


William Hunter (Bill) McKnight: You knew that his question would not be any good.


The Acting Speaker (Mr. Paproski):: Could we have some order for a moment, please, so that I know what is happening here. 1 should like to bring to the attention of the Hon. Member for Lac-Saint-Jean (Mr. Cote) that at this point he cannot comment upon the speech of a Member other than that of the Hon. Member for Scarborough West (Mr. Stackhouse).


Carlo Rossi: The 10 minutes are over.


The Acting Speaker (Mr. Paproski):: He had two minutes in which to speak, and I was hoping-


Carlo Rossi: The 10 minutes are over.


The Acting Speaker (Mr. Paproski):: Order, please. The Chair does not wish to get into a debate with the Hon. Member. The Hon. Member for Lac-Saint-Jean has made his statement, but I bring it to his attention that when he puts a question or makes a comment he should do so on the speech of the Hon. Member who spoke immediately before him, not that of another Member.
The period provided for questions and comments has now terminated. Before recognizing the Hon. Member for Sudbury (Mr. Frith) on debate-


David Orlikow: On a point of order-


Carlo Rossi: I have a point of order.
The Budget-Mr. Stackhouse


The Acting Speaker (Mr. Paproski):: -just a minute, please.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Paproski):: Order, please! It is my duty, pursuant to Standing Order 46, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The Honourable Member for Beaches (Mr. Young)-Canada Mortgage and Housing Corporation-Proposed rental increases, (b) Request for referral to Ontario Rent Review Board; the Honourable Member for Papineau (Mr. Ouellet)-Transport-Possible closing of Marine Industries rail division-Government position, (b) Request for clarification of Via Rail requirements; the Honourable Member for Ottawa-Vanier (Mr. Gauthier)-Public Service-Salary increases-Government position, (b) Request that privatization cost benefit studies be tabled.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government; and the amendment of Mr. Johnston (Saint-Henri-Westmount); and the amendment to the amendment of Mr. Riis.
Carlo Rossi: I rise on a point of order, Mr. Speaker. 1 should like to bring your attention to the fact that following the speech made by the Hon. Member for Scarborough West (Mr. Stackhouse) during the ten minute period reserved for questions and comments, you allowed remarks which, with deference were debatable. Hon. Members from the Opposition had no time to grill the Hon. Member for Scarborough West about his speech.


The Acting Speaker (Mr. Paproski):: 1 appreciate the Hon. Member's comments. I did not see anyone in the Opposition rising to question him, therefore I did not recognize anyone on

February 27, 1986
The Budget-Mr. Frith
that side. I see the Hon. Member for Sudbury rising on debate, but I will recognize the Hon. Member for Winnipeg North (Mr. Orlikow) on a point of order.


David Orlikow: Mr. Speaker, I rise on a point of order, and I am not happy to do so. The fact is that after the Hon. Member for Scarborough West (Mr. Stackhouse) sat down, both the Hon. Member for Sudbury (Mr. Frith) and I rose. It seems to me that the purpose of the period for questions and comments is really for opposition Members to raise questions with the Hon. Member who just spoke, and so we should have been recognized.


The Acting Speaker (Mr. Paproski):: The Hon. Member has been here a long time. He realizes that I would never neglect the Opposition. I would never neglect the Hon. Member for Winnipeg North or the Hon. Member for Sudbury. It was my understanding that they were rising to speak on debate, and I will now recognize the Hon. Member for Sudbury.


Reginald Francis Stackhouse: Mr. Speaker, I want to speak on the point of order raised by the Hon. Member for Winnipeg North (Mr. Orlikow). I go on record as opposing his interpretation of the purpose of the period for questions and comments. As I understand it, each of us is equally a Member of Parliament. That has been stressed in the reform measures which have been adopted. We should not impinge upon the rights and freedoms of any Member of the House, regardless of his or her Party, to participate in debate. I would be very happy to face the Opposition at any time; in fact, I would prefer it.


Carlo Rossi: Mr. Speaker, that is not a point of order. It is
debate.


The Acting Speaker (Mr. Paproski):: Order, please. The problem has been resolved. I appreciate what the Hon. Member for Bourassa (Mr. Rossi) is saying. As I said previously, the Chair was looking at the Hon. Member for Winnipeg North and at the Hon. Member for Sudbury and thought that they were seeking the floor on debate. I know they will be speaking very shortly, as will the Hon. Member for Kenora-Rainy River (Mr. Parry). I think we have resolved the problem. The Hon. Member for Lac-Saint-Jean appreciates what has happened, so it will not happen again. Therefore we will resume debate, and the Hon. Member for Sudbury has the floor.


Douglas Cockburn Frith: Mr. Speaker, I just want to begin my discussion this afternoon by referring to one point which was made by the Hon. Member for Scarborough West (Mr. Stackhouse). He feels that budget time provides the people of Canada with the opportunity to judge the performance of their Government. I remind him that not only is judgment being made on a daily basis about the conduct of the Government, but the judgment of the people of Canada is given once every four years or five years at the end of the Government's mandate.
I personally find it galling that the Hon. Member indicated that he was in favour of tax reform. He said that it would
remove the yoke of Government from the backs of individual Canadians and allow private enterprise to fly free again. He stood in his place and defended the Budget. I hope he stays for some cross-examination, but in the meantime I point out to him the document which was tabled yesterday entitled The Fiscal Plan. Page 100 of the document indicates that in 1984, 9 per cent of the Gross National Product was taken up in direct taxes from individuals and that 2.8 per cent was taken up from corporations. I hope the Hon. Member will answer me in about 18 minutes with regard to how he could defend the Government's Budget which increases the percentage of the Gross National Product taken directly from persons under taxation from 9 per cent in 1984 to 10.5 per cent in 1987. In the same period of time, the corporate sector of the economy will be paying even less in taxes. Perhaps he could answer my concern about that. I would be delighted to debate the issue of fairness with him.
The point I want to make today is that the Government will be judged not only on the basis of this Budget but on the basis of the previous one. There is a tendency on the part of Hon. Members opposite to demand that we focus only on the immediate Budget before us. However, I submit that the two Budgets-the Budget of May 23, 1985 and the one of February 26, 1986-are interlinked. A great deal of thought has been put into that interlinkage. The Hon. Member from Prince Edward Island clearly indicated that. I suspect that the two Budgets are the beginning of a plan in which there will be another phase of sales tax increases over the next three years to four years and in which there will be the introduction of a value-added tax to the income tax system. I suspect that some of the social programs introduced in the Budget will be the forerunners of programs which will supposedly protect the poor in society from some of the regressive nature of the tax proposals in the Budget. The fairness issue will be one of the ways in which the Canadian public judges the Government. It is also going to be judged in the way it has handled the regions. On both of those counts the Government will fail.
First, let me talk about the issue of fairness. On May 23, the Opposition indicated to you, Mr. Speaker, our concern about the fiscal intent of the May 23 Budget. We indicated that for the first time in Canadian history, by direct Government taxation, fiscal policy, there will be a widening of the gap between the rich and the poor in our society. Nothing has made us change our minds. What is astounding is that after the debate on the fiscal implications on middle and low-income Canadians that began on May 24, 1985 and ended with the budgetary votes in December, one would have thought the Government had learned its lesson as a result of the debate that took place then.
In addition to the effects of the Budget of May 23, 1985, the gap between rich and poor will widen and be compounded and aggravated by the Budget put forward yesterday. On pages 99 and 100 of The Fiscal Plan the Government will increase taxes this year. The percentage increase on persons from 1984-85 to 1985-86 will be an astounding 17 per cent.
February 27, 1986

That 17 per cent increase in one year is being done in the same year that corporation taxes will be increased by a measly 2 per cent. Yet the Hon. Member for Scarborough West has the gall to tell me he is in favour of a restructuring of the income tax system. He should be in favour of a restructuring of the income tax system, and it should be a restructuring that would allow the Canadian middle class to have less of the burden of taxation than exists today. From the time the Government took office, there has been a consistent fiscal and social policy to widen the gap between the haves and the have-nots.
Let me put this into perspective so the Member for Scarborough West can understand the point I am making. In 1986, a family earning $100,000 a year paid $35,236 in tax. Under the budget proposals tabled yesterday and combined with the Budget of 1985, that family earning $100,000 will pay $34,450 in tax by the year 1988. That family's tax load will decrease by $1,000 over the next three years. However, a family earning $20,000 a year will find its tax bill increased from $1,388 to $1,409 in the same period of time. I question the perverse social logic that would lead a Government to bring in budget legislation that will widen the gap between the haves and the have-nots, between the rich and the poor in our society.
Let us look at the fairness of the taxation changes introduced yesterday. There will be a further increase of 1 percent in the federal sales tax. You have heard it said, Mr. Speaker- it has not been argued in Question Period in questions put to the Finance Minister-that every 1 per cent increase in the federal sales tax results in a further $1 billion being taken out of the economy.
Since September 17, 1984, when the Conservative Government took office, there have been three successive 1 per cent increases in federal sales tax. Three billion dollars has been taken out of the hands of consumers as a result of the federal sales tax changes.
I mentioned earlier that the Government would prefer us to view this Budget in isolation. There is good reason for that, but First I will give the Government credit in the area of social programs. The Government introduced a refundable sales tax credit in this Budget that will give $50 per adult and $25 per child for those with incomes below $15,000.


David Orlikow: Less than $1 a day.


Douglas Cockburn Frith: Can you imagine, Mr. Speaker, that the Conservative Government's definition of a median family income is $15,000 a year? In other words, a family with four children earning $18,100 in 1986 will not get one penny of relief from the federal sales tax. That is the 1 per cent federal sales tax that has been introduced in this Budget. The Government would like us to forget about the sale tax increases in the May 23, 1985 Budget and in the November Economic Statement of 1984.
Let us look at the effect of the Budget in 1985 and 1986 on a family of four with one wage earner earning $20,000 a year. As a result of those two Budgets, that family's income tax will go up by $225 and the wage earner will pay an additional $300
The Budget-Mr. Frith
in sales tax. The Government's social policy is wrong. It has widened the gap between the poor and the rich. It is wrong to expect 4 million Canadian families, who live below the poverty line with $20,000 a year in family income, to share in the burden of deficit reduction, especially at a time in which we are introducing budgetary measures that will lessen the corporate sector's share.
That, Mr. Speaker, is what the Canadian people will judge three or four years from now when we have the next federal election. I am sure Canadians will speak loudly.
In 1950, federal personal income tax amounted to 23.4 per cent of federal tax revenue and, incredibly, corporate income tax at that time was 28.7 per cent. Over the intervening 25 to 30 years, the share of federal tax revenue derived from corporate income tax has decreased to an estimated 17.2 per cent. As I have indicated, by purpose and by budgetary design the amount of dollars expected from the corporate sector over the next three or four years will be further reduced to its lowest point in history as a percentage of the Gross National Product. That is the kind of social Fiscal policy the Conservative Government believes in.
Let us look at some reactions to the Budget of last evening. I am told that the business community was mixed in its judgment on this Budget, but there were several business organizations that were laudatory about the Government's Budget. No wonder, Mr. Speaker. If I were in the private sector in business and found the Government bringing in a Budget that would decrease my tax rates, I would be rather complimentary about the Budget as well.
Who speaks for middle class Canadians and who speaks for the poor, who are being ravaged as a direct result of the Fiscal policy of the Government? It is not the individual back-benchers of the Conservative Party. I have yet to see Ministers on the front bench defend the social policy being instituted by the Minister of Finance.
What other kind of reaction should we judge this Budget by? In the last 24 hours the business community, the money markets, have reacted in a very negative way. As of one hour ago, the Canadian dollar has fallen to 70.65 cents U.S. Yesterday, 24 hours ago, when the Minister of Finance just began his speech on the Budget, the dollar stood at 71.68 cents U.S. The dollar has fallen a full percentage point in the space of 24 hours. That is a shocking indictment and should be of some cause for worry for the Government front benches. The money markets are reacting very rapidly.
On the issue of the way in which the Government is handling its commitments to the regions, not only have we witnessed the Conservative Government, which over two successive Budgets has ravaged the middle and low-income Canadians, but we have witnessed its abandonment of its commitments to the regions of the country. Let me be specific: Atlantic Canada, in terms of the unemployment rate and in terms of the number of dollars being allocated under the Department of Regional and Industrial Expansion; northern Ontario, northern Quebec, Sudbury and parts of western Canada. These regions have not been part of the economic

February 27, 1986
The Budget-Mr. Frith
recovery, and the Government has abandoned them. That is the way in which Canadians will judge the Government. Governments are judged on their commitments. In this case I do not take anything away from the Conservative Party. I take nothing away from the fact that we have had an economic recovery in the last 18 months. That recovery has been worldwide, but I will not get into that kind of philosophical argument. I will give the Government credit where it is due. The unemployment rate is down. It is still unacceptably high, but it is down.
However, I appeal to the Government not to abandon the regions of the country which expect the central Government to give them a share of the economic pie of the country. That is what is wrong. The Government has asked that the economic recovery take place only by use of the private sector. It has indicated that there is no role for the Government to play in the economic recovery in terms of public sector involvement. That is wrong.
The International Nickel Company or Falconbridge cannot be expected to be the full engine of growth for economic recovery. MacMillan Bloedel cannot be the sole engine of recovery for the forestry sector in British Columbia. The private sector cannot do all the economic recovery work in Atlantic Canada. The national Government must play a moderating role to ensure that Atlantic Canadians and people from Sudbury have a piece of the economic pie. You cannot simply hive them off and tell them to find a job somewhere in Toronto. Is a 43-year old miner who finds himself unemployed with a young family and a high school education going to be retrained in high tech to find employment in the metropolis of Toronto? The answer is no, and you are wrong if you expect the private sector to play that role.
Every time direct economic programs which abandon commitment to the regions are brought in it facilitates the urbanization of population and abandons the principles that the country was built on 118 years ago. Those are facts which should be borne in mind when discussing the Government's Budget of last evening.
There is another area in which the Government is wrong. It takes great pride in saying that the budget deficit is now below $30 billion. Well, whoopee, Mr. Speaker. Since the Government took office on September 17, 1984, the federal deficit has increased by 23 per cent. Can that be blamed completely on the previous Liberal Government? The answer is no. The Government inherited a budget deficit of $32 billion and it increased it. Now the Government expects Canadians to applaud its efforts to get the deficit below $30 billion.
How was the reduction achieved? Was it achieved through expenditure cuts? The Government is trying to convince the Canadian public that it has done a masterful job on reducing expenditures. Since the Conservatives took office on September 17, 1984, expenditurs have gone up by $7.2 billion. The Government has achieved a projected budgetary deficit in 1986 of below $30 billion by foisting the largest tax increase
on middle-income Canadians in Canadian history. That is the bottom line.
The Government is asking middle-income Canadians, who last year paid $38 billion in personal income taxes, to increase that by $16 billion in one year. These are the figures used by the Finance Minister. At the same time as the Government is asking middle-income Canadians to suffer such a massive tax increase, it is letting corporations get away with paying less and less tax. To me, that is the problem with the Government's Budget. The Government is going to fail in the key area where Canadians will judge the fairness of this Budget because it has placed the whole burden of deficit reduction on the backs of middle and low-income Canadians. It is letting the private sector, free enterprise, and the corporate sector get away scot-free.
Every social policy reform group in the country indicated to the Minister of Finance in December what they felt was wrong with the last Budget and what they felt the next Budget should do to help the poor and middle-income Canadians. They asked for tax relief for low-income Canadians. In this Budget there are tax increases for everyone who has a family income above $18,000 a year. So much for listening to the Canadian public. They indicated that they wanted a tax system which would give personal income tax less of a role and give the corporate sector its fair share of the tax burden. We got the complete opposite in the fiscal policy of the Government. There will be more taxes on middle and low-income Canadians and less taxes on the corporate sector. That is the net effect of the Government's policy.
The social policy reform groups asked the Government to review its decision with regard to the $500,000 lifetime capital gains tax exemption. There is no suggestion in the Budget of even reviewing that. This is the same Government that said it could not find enough money to shield fully low and middle-income Canadians from the devastation of a federal sales tax which everyone in the House agrees is regressive. The level at which low-income Canadians are going to be protected is set at $15,000 a year. The Government cannot find any money from them, but it can afford to give $500,000 worth of capital gains tax free. That is going to be the indictment of the Government that has failed to live up to its commitment of fairness to the Canadian public who will judge it in three years.


David Orlikow: Mr. Speaker, it was interesting to hear the Member of Sudbury (Mr. Frith) remind us that in 1950 corporate and personal income taxes brought approximately equal amounts to the Canadian Treasury. I remind the Hon. Member that for 30 of the 36 years since 1950, Liberal Governments were in office and gave tremendous tax concessions to the corporations.


Some Hon. Members:: Hear, hear!


David Orlikow: Mr. Speaker, the Citizens for Public Justice, an independent Christian public advocacy organization which has received the support of virtually every major church organization for some of the proposals it has made in the last
February 27, 1986

few days, has proposed that the Government change the tax system in the following way:
$2.1 billion would be raised by reducing tax exemptions for corporations, thus yielding 20 per cent more in corporate income taxes;
$1.1 billion would be raised through a special surtax of 7 per cent on the after-tax profits of Canada's 500 leading companies;
$2.9 billion would be raised by eliminating tax exemptions which mainly benefit wealthy Canadians, such as the $500,000 capital gains tax exemption and the expanded tax exemptions for Registered Retirement Plan contributions;
Could the Member for Sudbury support those kinds of proposals? If he can, where was he when the Liberals were in Government?


Douglas Cockburn Frith: Mr. Speaker, I mentioned earlier that a Government is judged on its fairness, on how it treats the less advantaged, the poor, and the elderly in society. The Member conveniently used the figures from 1950 to 1984. I take responsibility because I was a member of the Government of the day and, for a very short period of time, a member of the Cabinet. The answer to that is simple. During the intervening 30 years, Canada had the fastest growing population in the western industrialized countries. We had a tremendous job of ensuring that the young people, the less advantaged, and those coming into the workforce, had an equal opportunity to share in the economic pie. As a result of the tremendous pressure on the system the Government was forced to give away certain concessions to corporations in order for them to have accel-lerated capital depreciations so that equipment and machinery could be brought on and job placements for the young could be made. Not once in those 30 years was there a deliberate social or tax policy to widen the gap between the rich and the poor. The Liberal Party always stood for the poor and the oppressed and every one of the social and fiscal policies introduced during those 30 years went towards making sure the gap narrowed between the rich and the poor in our society. That is what is diametrically wrong with this Budget brought down by the Conservatives. It is the first time in living memory that a Government, by deliberate taxation policy, is going to widen the gap between rich and poor. I will stand by the Liberal record any day of the week.
[ Translation]


Mr. Hamelin:: Mr. Speaker, I am not not a great tax specialist or an expert in taxation and I am relying on simple common sense, but in Charlevoix, common sense tells us that you are rich when you do not have any debt, and I believe that the best way to reduce the gap between the rich and the poor in Canada would be to pay our debts. I did say our debts because their debts have effectively become ours, and we have received a mandate to pay their debts, which are now our debts, to bring about a better distribution of our collective wealth among all Canadians. On the other hand, my learned colleague the tax expert said that a 1 per cent increase of the sales tax would take away $1 billion from the Canadian economy. I would like to ask him this: How much has it cost us
The Budget-Mrs. Collins
to have a debt of $200 billion, which is what he left us, and a deficit of $30 billion, which is what we have this year after bringing down to $33.8 billion what, under his Government, was a deficit of $38 billion? How much does this take away from the Canadian economy? Is this not much more painful than the tax increases which we have had to impose? Naturally, the Opposition must criticize, and I think that the Hon. Member does it quite well, but criticizing is not simply saying anything you like. I believe that we have to pay our debts. The Hon. Member also spoke about outlying regions. I represent such a region myself. Do you think that the Government likes having to take $30 billion from the pockets of Canadians? Do you think that we are inhuman? Very often, the Opposition considers that the world is divided into the wealthy, who are insensitive and cruel, and the poor, who work with their hands to pay for the bare necessities of life. Do you think that we are too insensitive to understand the development needs of our regions? I ask this question with the common sense of the people of Charleboix. In the near future, will being wealthy not mean being able to pay our debts, or rather your debts?


Douglas Cockburn Frith: Mr. Speaker, the answer to that question is this: Why did you, the Government, decide to reduce the deficit on the backs of middle income Canadians and poor families? Why did you choose to do this? You had a choice in the Budget and you decided to reduce the deficit on the backs of poor and middle income families, but not on the backs of small businesses or big corporations. You attack only the poor. You will therefore have a problem in explaining your choice to your constituents next week-end.


An Hon. Member:: Well put!


Mr. Speaker:: Questions and comments are now terminated. Debate.


Mary Collins: Mr. Speaker, it is certainly a privilege for me to enter into the first full day of debate and to be able to express the views from the point of view of a British Columbia Member on the Government side. I would like to use my time today to talk a little bit about the B.C. perspective and some of the tremendous opportunities which this Budget provides for us in British Columbia. I would like to start first by looking at it within the context of what we have heard from the Canadian public and how we have listened and how we have responded.
I find this Budget indicates a Government that, first of all, is firm but is also fair. It shows also a Government that is consistent, but a Government that cares. Those are themes which are indicative of the kind of Progressive Conservative Government that we have in this House. As I went through my riding over the past six months and talked to groups of all kinds from low-cost housing, the business community and the native Indian community, one issue that came up consistently was, "What are you going to do about this deficit that you have inherited?" Most people recognize that it was not this

February 27, 1986
The Budget-Mrs. Collins
Government's fault, that it was the accumulation of years and years of wanton spending, of not considering the real needs of Canadians and their desire to have a Government that was concise and had a streamlined operation.
Because of the situation we were in they were not quite sure what we could do about it. They were not sure if we were prepared to do anything. People would say, "Are you really going to tackle the deficit? Can you do it without hurting people?" They were saying, "You have got to do it". People were speaking from two points of view. First, people from the business community were saying that the impact of the present load of debt that this country is carrying is having an adverse impact in terms of the international investment community. You will not be able to attract those dollars unless you show that you are a Government that is determined to turn the ship around.
I was hearing it from ordinary Canadians who were saying, "What is this debt going to mean to my children or my grandchildren? If it carries on the way it is at astronomical rates, my kids are not going to have any future. They are not going to be able to pay for old age pensions and I am probably not going to have any kind of retirement."
I am so pleased today to be able to tell my constituents and all Canadians that they have a Government that has guts, that is determined to make those changes and is turning the ship around. It is not easy, but with our performance to date and the Budget we put forward, substantial progress has been made.
Let me just draw your attention to some of the facts. We know that this year we had projected a budget deficit of $33.8 billion. A lot of people said, "Ah, you're not going to be able to meet that target. A number of things have happened, it is going to be higher than that". The Minister of Finance (Mr. Wilson) has said, and it was not easy, that with a lot of hard work, and it was not easy, we are going to be able to achieve that objective. We are going to be able to say, "Canadians, you can believe our word. What we say is what we do". That is a very important and strong signal to Canadians.
We have also said in this Budgete for the first time that in the coming year we will reduce that deficit to $29.8 billion on the old accounting system, $29.5 billion on the new accounting system and $23.5 billion on national accounts. It depends which way you want to look at it. No matter how you look at it, that is good news, that is a substantial decrease.
Then you have to look at the forecast, because this Budget should not be viewed in isolation, it is taken together with the November, 1984 Economic Statement, the Budget of last year, today's Budget, and the projections we have put forward, and what we see are really happy news. We see a decrease in that debt down to $22 billion by 1990-91. In terms of Gross National Product, the deficit will fall from what it was last year, 7.7 per cent in 1984-85, down to 3.7 per cent in 1990-91. That means this nation will be $100 billion less in debt than it would have been had the Government not taken the measures it did in the past 18 months. I think it is a remarkable and
extraordinary process which no previous Government could ever have achieved.
The Minister of Finance (Mr. Wilson) said that as well as looking at the debt, we should look at what our financial requirements are, because that is a very important indicator which is looked at very closely by the international community. The news here is even better. Because of the expenditure controls we have put in place and because of the increased revenues from new taxation measures, our financial requirements will fall from $30 billion in 1984-85 to a projected $11 billion in 1990-91. In terms of Gross National Product, that means a fall of from 7.1 per cent this past year to 1.7 per cent in 1990-91. In five years, following on our course of action, we will only have to borrow $11 billion or 1.7 per cent of the GNP. Just think of how that is going to free up opportunities.
I say, therefore, that this Budget is the first step in terms of trying to attain fiscal stability that we have seen in our country for over 20 years. Of course, it also puts to bed all those nay sayers, those doomers and gloomers, who said yesterday: "Oh, geez. The Budget is not going to create any jobs. We are going to lose all those jobs". Some Hon. Members said that last year, but we know now that it is not true. In the past 18 months there have been 580,000 more jobs created, while we have reduced the Budget and curtailed Government expenditures. I am pleased that 51,000 of those jobs are in my own Province of British Columbia.
How have we been able to achieve some of these tremendous objectives? As the Minister of Finance said yesterday, we have started by getting our own House in order. It started right here in Ottawa. We are all prepared to give up $1,000 this year and that is only fair. But we have done so much more. I find that many people have the perception that there is tremendous fat and waste in Government. I think particularly of British Columbia. That province is so far away, but suddenly there are all those billions and billions of dollars just done away with. People might think that there would not be any impact anywhere, but after one has been around here for a while, one realizes that that is not quite the case. Every program has a group which is affected positively by it. If we are going to do away with programs, we have to be quite sure we know what we are doing away with, and we have to do it carefully and humanely or we may institute more pain and grief. So our approach has been one of sound fiscal management.
The Minister of Finance has announced a decrease of
15,000	jobs in the Public Service by the end of the decade. He is eliminating programs which no longer serve a useful public policy purpose. I think of the PIP grants, the CHIP grants and other programs. We have reduced certain subsidies to VIA where they are no longer required. We are selling off Crown corporations which no longer play a vital role in our public policy. Of course, this year, we are announcing another 2 per cent reduction on all Government expenditures, which will mean $500 million out of the discretionary area and an additional $300 million in the reserves. These efforts will bring
February 27, 1986

Government spending down from 26 per cent of the Gross National Product in 1984-85 to 21 percent by 1990-91.
As we all know, Government spending grew at an annual rate of about 13.4 per cent over the past decade. That is far higher than inflation. Inflation was running at an average of around 8.8 per cent. Government spending was just galloping and consuming more and more of our dollars. This year that has been stopped. We have the motors in reverse. Government spending has been brought down to 3.2 per cent in the coming year. In fact, in the discretionary area, as we have heard already this morning from the President of the Treasury Board (Mr. de Cotret), it has been basically stopped entirely at a minimal .2 per cent.
What the President of the Treasury Board announced this morning was one of the most exciting prospects. He said we are going to award productivity. There will be new programs to reward people who have new ideas, who work hard and who are productive. In British Columbia, my industries have had a tough time over the last little while, the forest industry and the mining industry. But they did not give up. They became more productive and now have one of the highest rates of productivity. I think we can do that, too. There is a tremendous challenge out there and I know the President of the Treasury Board is going to work hard in that respect.
This Budget also does some other things. It shows that we are targeting our spending more effectively. We are identifying our priorities and we are building on our strengths. We have identified, I believe, some very important areas about which I, in particular, am concerned. The field of research and development, from the perspective of British Columbia, is terribly important. We have all heard, of course, from the funding councils, NSERC, the Medical Science Council and the Social Sciences Humanities Council, which are putting in place five-year programs. There will be $300 million more for those councils.
There has also been a new and extremely innovative idea which will bring together the business sector, these councils and the universities. We will match dollar for dollar up to $700 million over the next five years with a potential increase of $1 billion for those funding councils, and most of it goes directly into the universities. I am not sure that many people realize the tremendous boost that this is going to give to our research and development activities in our universities. In the Budget last year we introduced our new scientific research program where there are certain deductions. I can see that if we put that together with our new program, it will provide tremendous opportunities for companies in my riding which are involved in R and D to work together with the universities. We will have meaningful, exciting research and development opportunities.
I was really pleased to see the focus on the Atlantic Provinces, because they need it. It is a tremendous program. I am pleased as well at the new steps in agriculture. That is not a major factor in my riding, but in the Province of British Columbia it is. The new commodity bonds will certainly be
The Budget-Mrs. Collins
important there. I was pleased as well to see the social programs, targeted programs to help those most in need.
Mir. Cassidy: What social programs?


Margaret Anne Mitchell: There's no child care. How do you like the day care? What about the day care?


Mary Collins: So many people in the House have brought up the question about programs for older workers. I believe my colleague from Scarborough has brought the subject up a number of times.


Michael Morris Cassidy: What about the older workers?


Margaret Anne Mitchell: What about child care?


The Acting Speaker (Mr. Paproski):: Order, please. There will be a question and comment period, if you would let the Hon. Member speak. Thank you.


Michael Morris Cassidy: We are anticipating, Mr. Speaker.


Margaret Anne Mitchell: What about child care? Be honest. Is there anything there for child care?


The Acting Speaker (Mr. Paproski):: The Hon. Member for Capilano (Mrs. Collins) has the floor.


Mary Collins: We are providing $125 million for an adjustment program for older workers for an adjustment program. We are also providing another program, which I believe my colleague, the Hon. Member for Vancouver East (Ms. Mitchell), will find it difficult to argue with, given her interest in women's issues.


Margaret Anne Mitchell: Child care?


Mary Collins: Not that program. It is the program to increase the opportunities for those on social assistance to find employment. We are targeting special funds for that group. That is $100 million over three years. Just think of the individuals who are going to be helped by that and the tremendous opportunities which will arise for them.


Margaret Anne Mitchell: They need child care in order to get into jobs.


Mary Collins: The refundable sales tax credit for lower income families and, of course, the pre-payment of some of the child tax credits are also very positive features. There is the increase in the deduction for disabled people. There are 185,000 disabled people in this country who will certainly benefit from that. They know the commitment of this Government to the disabled community.
We know, and the figures show, that small business creates the largest number of jobs. We also know that women are creating most of the small businesses, or at least a large number.


Margaret Anne Mitchell: That's right.

February 27, 1986
The Budget-Mrs. Collins


Mary Collins: So we have special measures to help them because we want to encourage them to get established and start those businesses. The reduction in the tax rate, which will come into effect next year, from 15 per cent to 13 per cent; the reduction of the tax rate with respect to manufacturing income from 10 per cent to 8 per cent; and the cancellation of the 12.5 per cent dividend distribution tax, are all measures which are really going to encourage people to start businesses and to expand them. Of course, the improvement of the small business loan, almost doubling at up to $2.5 billion, will make accessible millions of dollars to the small business community. As Hon. Members know, last night John Bulloch said that for small business we are very bullish.
I would now like to tell Hon. Members about some of the reactions to the Budget expressed by people in the West. As reported in The Province of Vancouver, British Columbians are very pleased. The newspaper stated that Ottawa has finally become serious about getting expenditures and revenues in line. The article to which I refer states that the Budget is a credible attempt at financial restraint, but financial restraint with a human face. I think that is an important message. We want to get our house in order. It shows that we want to undertake financial restraint and do things more efficiently but that we will not slash programs that will really hurt people.
I would now like to refer to some of the issues which are of particular excitement to people in the West. I mentioned earlier in the House today one issue about which I am very pleased, that is, the fact that Vancouver has been designated as an international banking centre. We have been looking for a measure of this type for some time. I am glad that my colleagues from Montreal will have the same opportunity in this respect. However, we in Vancouver look to the Pacific, where there are tremendous possibilities in trade. We will be able to develop our whole financial relationship in the Pacific which will give a real leg-up to people in Vancouver in terms of creating excitement and opportunities.
The area of science and technology is a tremendously positive area for British Columbia. In my province we are trying to develop our skills and bring adaptive technology to the province.
There are all sorts of other measures in the Budget about which we are extremely pleased. When one goes through the document quickly one is apt to overlook some of the items which are there. I almost missed the item about the $33 million film program. British Columbia is becoming the home of a burgeoning film industry. This $33 million fund will help Canadian film with cultural content. I particularly liked the caveat which states that film-makers will have to show where the films are actually made and will actually have to identify the place name. That is great because we want Capilano identified in such films. We are certainly open and ready for the film business. It will be profitable for British Columbia.
I would now like to refer to a couple of other areas about which I have received representations. One is with respect to flow-through shares, and the concern that investors in flowthrough shares have a continuing liability. I am pleased to see that the Minister of Finance has made a change with respect to that provision so that investors will no longer have a continuing liability. At the sametime, he closed a loophole, which is only fair. The investors will now only receive a credit up to the amount of money that they have actually invested.
I would now like to talk about the sales tax exemption for tourist literature. That is something for which the tourist industry in British Columbia has been asking for some time. I refer to tourist literature which is prepared and available through chambers of commerce and communities which will now be exempt from sales tax. This a positive step. It is a little thing, but these little things all add up.
I have had a great many letters with respect to Registered Retirement Savings Plans. I am sure that my colleagues have also received many letters from people who are retiring and who want more flexibility with respect to how they deal with their retirement years. The Government has said that it will provide new options for those people in using their RRSPs.
Finally, I would like to deal with the treatment of Canadian dividends and reducing them to one-third. I do not think that will have a dampening effect on the country. However, in responding to some real concerns which I have heard with respect to the minimum tax, Canadian dividends will only be taxed on their actual amount as opposed to the grossed-up amount. In this way there will not be a disincentive to invest in Canadian corporations. That is an important move, and I applaud the Minister of Finance for taking it.
There is so much to talk about. What the whole matter comes down to is that the Budget shows that we are in control. It shows that we are planning and that we are going to stick with our plan. It is a plan that will bring about results. It is working. It shows we are consistent and comprehensive. We have a plan which started back in November and we are following it through with projections. We can show people where it will lead them. I realize that there is some pain involved for everyone, but that is part of what it is all about. In the end we will see a much healthier and dynamic economy.
We have balance because we are reinforcing priorities and strengths. Yet, as I said before, this is restraint with a human face. We are successful, and the record speaks for itself. I hardly need to say more. We have reduced the deficit. We did what we said we would do. We have created jobs. We have a record of success which will carry on for decades to come.
As has been said before, the cumulative effect of all these measures will result in $100 million less indebtedness over the next five years. We have shown leadership. We have listened and acted decisively. That is what the people have asked us to do. We know what has to be done. As the Minister of Finance mentioned yesterday, we have more to do in the future in terms of corporate and personal tax reform.
February 27, 1986

There are a great many challenges that lie ahead of us. We have provided a framework which will enable Canadians to be confident in the Government. It will be a Government to which they can look with confidence. Our children and our grandchildren will inherit a country which is fiscally and humanly well managed.


Some Hon. Members:: Hear, hear!


The Acting Speaker (Mr. Paproski):: Are there questions or comments? The Hon. Member for Vancouver East (Ms. Mitchell).


Margaret Anne Mitchell: Mr. Speaker, I congratulate the Hon. Member for Capilano (Mrs. Collins), my colleague from British Columbia. I recognize her enthusiasm and her excellent speaking qualities. I do not think she will mind if, in friendship, I remind her that it is not too surprising that she is so enthusiastic since she comes from a riding which I believe is the wealthiest in Canada. I know there are many wealthy people in her riding who will be pleased with the Budget. Because I know the Hon. Member is sincerely interested in Canadian women and because she shares my concern that they have more equal opportunities, I would like to appeal to her. Even though the Hon. Member comes from a wealthy riding I know she has a sympathy for those who are not as fortunate.
What I would like to ask the Hon. Member has to do with child care. Since she is a parent she will know how important it is for women to get into the workforce. We know that over 50 per cent of workers in the workforce are from two-parent families in which the mother is working. There has also been a great increase in the number of women who are single parents and who are either working and need child care or who would like to work but cannot. The Hon. Member referred to a program which is targeted to women on welfare. It would be a wonderful thing if they could receive training which is related to them in terms of pre-employment training and the like in order to get into the workforce. However, they cannot do that unless there is a relevant, flexible and affordable child care program available to them.
The Hon. Member also knows that we have a child care task force. The need is there. We all know that it is desperate. The statistics show that there has been a change in Canadian families. Is the Hon. Member not disappointed that there was not something in the way of child care in the Budget? This is something that would pay for itself, since these women could get off a life of welfare and into the workforce. What would the Hon. Member like to see in this area?


Mary Collins: Mr. Speaker, I would like to thank my colleague, the Hon. Member for Vancouver East (Ms. Mitchell), for her question. I know her deep commitment to these issues. I did not expect that the Budget would deal with the issue of child care. I say this because of the all-Party committee which has been set up to look into the issue, a committee on which the Hon. Member sits. I know that the committee will be travelling across the country and examining issues. It will be considering how the matter can be dealt with most effectively.
The Budget-Mrs. Collins
It will be working with the provinces since they bear the greatest responsibility for the delivery of services in this area. I know that the committee will come up with proposals and ideas with respect to the most effective way the federal Government can be involved in helping to support families in a variety of ways. I am looking forward to the report of that committee. As the Minister said on Canada A.M. this morning, this is something with which he hopes to deal in the next Budget.
I appreciate this opportunity to respond generally since the Hon. Member raised the issue of the impact of the Budget on women earlier today. Of course, women account for 50 per cent of the population. They are affected by all the different aspects of the Budget. However, there are some important aspects in the Budget for women. I have already mentioned the refund of the child tax credit, which will help many women in their financial circumstances. Of course, there is the refundable sales tax credit for the lower income families, many of which are headed by women. It will be of particular help to them. As the Hon. Member already mentioned, there is a program designed to help those on social assistance find employment. Again, many of those on social assistance may be single mothers who want to get back into the workforce.
In my own riding, I visited very recently a job re-entry program that was set up under the Canadian Jobs Strategy Program and I met with the women. About half of the women were on social assistance and the other half were interested in going into small businesses and wanted to develop the kinds of skills they had not developed before. I was overhwelmed by the tremendous enthusiasm in that program. The women are learning from each other. It has provided them with a real chance. This Budget will enable more programs like that and will increase emphasis on small business-


Margaret Anne Mitchell: They won't, they're cutting back $100 million.


Mary Collins: No, because there is that special $100 million program for those on social assistance as well. With the emphasis on small business, many of these women who are looking for opportunities, who are trying to get loans and are not quite sure of the financial situation, will be encouraged to go into small businesses and create jobs.
In fact, when I attended the class to which I just referred, 1 said that the half of the class that wanted to start small businesses should hire the other half who wanted to get jobs in the clerical or office area. Then the whole class would have full employment. Perhaps that will work out well.
I see this Budget as being very positive for women and as a growing recognition of the real commitment this Government has to concerns of women across the country.


Robert Nelson David Hicks: Mr. Speaker, I would also like to congratulate my colleague on her outstanding address. I know she is very enthused about the Budget that was presented yesterday.

February 27, 1986
The Budget-Mrs. Collins
I would like to comment on two or three things. First, I must allude to the reference made to the proposal for international banking centres in Vancouver and Montreal. Naturally, being from Metropolitan Toronto, I was extremely surprised because I assumed that an international banking centre would come to Toronto and perhaps even to the City of Scarborough which happens to be the seventh largest city in Canada. However, in the wisdom of the Budget, these proposals were recommended for Vancouver and Montreal, and I heartily applaud that. I am sure they will work out extremely well.
We have heard from previous speakers about reaction across Canada. I would like to cite some comments that were made to my colleague from Scarborough. Today he received one phone call regarding the Budget. That phone call was from a lady and a gentleman who had voted Liberal all their lives. They had voted Liberal in the last election and they said to my friend: "Congratulations, you have done what no other Government has had the intestinal fortitude to do, you are taking firm, decisive steps to reduce the deficit. You have our vote from now on". That is the type of reaction that is coming from across Canada.
In addition, I am sure my colleague might like to comment further on some of the measures that were taken to which she did not refer. For instance, the expenditure on all Government programs being held at 1984-85 levels means a decrease of 4 per cent. The non-statutory programs are to decline by $500 million in the next year, but no reference was made to that. I have to ask my hon. colleague why this is so.
In closing I point out that the impact of expenditure reductions and continued tight management that this Budget has put forward to Canadians will reduce Canada's debt by $78 billion by the end of the next decade. I wonder if my hon. colleague would care to comment on some of those points.


Mary Collins: Mr. Speaker, I am so pleased that my colleague brought those points up. As he knows, there is so much in the Budget that one cannot possibly talk about all of the positive things in it in 20 minutes. Hopefully, he will have the opportunity to do so. I am particularly pleased that he raised the points he did.
Regarding the international banking centre in Vancouver, it was groups from Vancouver that originally proposed the idea, as I understand it. We see Vancouver as being the jewel of the Pacific looking toward Asia which has a tremendous trade potential. We have the desire to get involved in China, Japan and Indonesia and the enormous opportunities that exist there. One of the things that could be terribly important would be to have in Vancouver an international financial centre, a centre linked not only to banking. Banking is one component of it but this centre should attract insurance services, shipping services and a whole range of support services that could be based in Vancouver because of its glorious environment. This would have a cumulative effect and would bring the other small industries that we are trying to develop to British Columbia, industries dealing particularly with what we call the adaptive technology area. There are already some examples of joint ventures with our Asian partners in the health field.
We see this international banking centre as the linchpin, the first step in turning Vancouver into what I would call the financial, trade, and institutional centre of the Pacific. With the experience we will get as we are successful in dealing with the East and as Montreal is successful in dealing with Europe, perhaps Toronto, which is now considered the financial centre of Canada, might have an opportunity to expand its bases as well.


Michael Morris Cassidy: Mr. Speaker, I am delighted with the enthusiasm of the Hon. Member and with the fact that she appears to feel that the problems of her riding have been resolved by the Budget. However, I would like to remind her that the unemployment rate in British Columbia is still at about 13 per cent and that in the areas outside of Vancouver it is a good deal higher than that. Since I am a native British Columbian, born in Victoria, I certainly have a concern which many British Columbians must share when I hear the Hon. Member say that everything is okay, while in fact it is not okay for large parts of British Columbia.
Is the Hon. Member satisfied with the fact that between 1984-85 when the Government came to power and 1987-88, the funding for the economic and regional development envelope will decrease from $14.7 billion to $9 billion? Is she satisfied that the means by which the Government can actually act to get economic activity and jobs going in British Columbia is being thrown away by the Government? The Government no longer feels a commitment to those ridings which do not have the privilege of having the Hon. Member for Capilano (Mrs. Collins) to represent them or the wealth of the residents of the riding of Capilano.


Mary Collins: Mr. Speaker, people have his impression of my riding as being the wealthiest riding in Canada. Yes, the municipality of West Vancouver has the highest income tax returns, but my riding is much more than that. My riding encompasses parts of North Vancouver in which there are many people on social welfare, there are community school programs and a wide variety of social services with which 1 have worked very closely. In my riding, there is one of the largest Indian reserves in the Lower Mainland area. The unemployment rate in my riding runs at about 10 per cent, so it is higher than the national average but not as high as it is in other parts of British Columbia.
Perhaps my colleague was not aware that we signed a $575-million ERDA agreement this year. That agreement is intact and does not change with this Budget. It is the largest ERDA agreement that has ever been signed for British Columbia. There will be over $300 million for forestry alone- silviculture and reforestation, and then mining, small business, tourism and agriculture. The spinoff effects from that tremendous commitment of the Government to British Columbia will be tremendous.
I am not saying that the problems have been solved. We have some real problems in British Columbia in terms of dealing with our economy. We know that in the areas of
February 27, 1986

forestry and mining, the bulwarks of the economy, probably not a great many more people will be hired over the years.


The Acting Speaker (Mr. Paproski):: I regret to inform the Hon. Member that her time has now expired and the time for questions and comments has now expired.


Michael Morris Cassidy: Mr. Speaker, I would like to comment on yesterday's Budget, first in French and then in English. It seems to me that the Conservatives are making the same mistakes as in the Budget of May 1985. They impose severe tax increases to ordinary Canadian families while reducing the tax burden of corporations, and now of the wealthy. They are simply maintaining a pattern which existed under the Liberal administration. For our part, we often think that there is very little difference between the Conservative Party now in power and the Liberal Party which used to form the Government.
In May 1985, Mr. Speaker, the Government attacked mostly pensioners, children, families and the Public Service. This time, the Government has decided to hit mostly ordinary taxpayers and, once again, the Public Service, which is of concern to my constituents.
If I may remind the House, since everyone is now aware of them, the major tax measures in the Budget-there is a 3 per cent surtax hitting all taxpayers, not only those with income above $40,000 a year. There is a 1 per cent sales tax increase, and this is the third sales tax increase since the Tories came to power.
Before the 1984 election, the Conservatives loudly criticized the tax increases imposed by the Liberal Government. But the minute they came to power, they readily introduced the one per cent increase that had been proposed by Mr. Lalonde when he was Minister of Finance. And then, in May, there was a second one per cent increase, and now we have this third one per cent increase. This means that within a period of 18 months, the Conservatives have increased by one-third the federal sales tax. Mr. Speaker, all those increases are directly affecting the average family. And the average family has not yet had an opportunity to answer back, to respond to the Budget.
I was just listening to the Hon. Member for Capilano (Mrs. Collins) who suggested that her constituents were satisfied. She quoted from the Vancouver Province. Today we heard quotes from the president of the stockbrokers, from people in the Stock Exchange, in the banks, and from other businessmen. All the financial communities were very quick to react. They are in a position to react very fast, because of their control, advertising agencies, etc.
The Budget-Mr. Cassidy
I remember very well, Mr. Speaker, the last Budget brought down by this Minister of Finance (Mr. Wilson). Initially, everything seemed to go very well. But within a few days, pensioners, people over 60 years of age started to react. Their reaction continued until the Minister of Finance was forced by his Prime Minister and the whole of the Government to withdraw those key budgetary measures. So much for bad judgment... for he had hit the average people and pensioners in our country. Now he is hitting the average family.
Mr. Speaker, I can quote figures. In the very First Budget, the November 1984 financial statement, tax increases and other charges imposed by the Conservatives on average families totalled $500 a year on average. Then, in May 1984, came another $500 a year increase. And this time, there is an additional increase of $350 a year. All this adds up to $1,350 per average Canadian family. This means that under a Conservative Government, the deficit is fought on the backs of the average Canadian families.
However, Mr. Speaker, if by any chance we look at the Fiscal Plan tabled yesterday by the Minister of Finance, we find that taxes levied on taxpayers are constantly increasing, while big corporations experience practically no tax increases.
In 1984-85, the last year to which the previous Government's tax policy applied, personal income tax went up to $38 billion. Under the former Liberal Minister of Finance, corporations paid $12 billion in corporate income tax.
Personal income tax is increasing from $38 to $44.7 billion in 1985-86 and up to $49.3 billion in 1986-87, and it will go up again, to $54.8 billion in 1987-88. This means that personal income tax will be increased 44 per cent as a result of the tax measures introduced by the Conservatives during their first eighteen months in power.
Mr. Speaker, compare this with the very slight increase in corporate taxes. These taxes will go up by $1.3 billion during the same period, which means 10 per cent, notwithstanding very strong profit increases during the same period as a result of the economic recovery following the recession we had at the beginning of the eighties.
Mr. Speaker, we see that between 1986-87 and 1987-88, there will be a reduction in corporate income tax and of course in the federal Government's revenues from these companies, while tax increases totalling $5.5 billion are being levied on the individual taxpayer. Mr. Speaker, this is not fair at all!
Last year, we on this side of the House criticized the Budget of the Minister of Finance, especially because the Budget was liable to cause the loss of hundreds of thousands of jobs. We do not know exactly what the impact was of that Budget, since most of the tax measures announced in May last year have yet to more an impact since they were not introduced until the beginning of this year.
So what we have are 1985 measures that have just started to have an effect on the economy. At the same time the Budget is

February 27, 1986
The Budget-Mr. Cassidy
introducing new measures, we have had the beginning of a slowdown in economic expansion in the United States since last year, and now there is growing concern, since we have had four years of expansion in Canada, that the economy will start to slow down. The business cycle is going to hurt the Government's expectations that the unemployment rate is going to drop.
We have a Budget in which the Government's priority is not to create jobs but above all to satisfy the business community on Wall Street, in London, Paris and Bay Street and St. James.
Mr. Speaker, in the last few weeks we had a Gallup poll done for the New Democratic Party to find out what Canadians thought about tax reform. Ninety per cent of those surveyed answered that they really wanted tax reform because they wanted to see a fair tax system. And they believed that the existing system was not equitable. Unfortunately, there is no indication in yesterday's Budget of any changes that will make the system more equitable.
Mr. Speaker, I would simply like to recall some of the recommendations made to the Minister of Finance by our finance critic, the Hon. Member for Kamloops-Shuswap (Mr. Riis), as well as by myself and other Members on our Tax Probe 1986. Mr. Speaker, we recommended the adoption of an annual Budget of tax expenditures which would show annual costs, tax rebates and the nature of tax rulings. This has been ignored.
We recommended the establishment of profitability tests with respect to specific tax measures. We said: The public has the right to know if our major tax expenditures are effective, just as it has the right to know the impact of our direct expenditures. This has been ignored.
Mr. Speaker, we recommended the elimination of some of the existing tax measures, for instance the lifetime $500,000 capital gains tax exemption which costs at least $600 million a year. We advocated doing away with the tax exemption on interest costs related to mergers and take-overs since it will cost in excess of $200 million this year. Those two proposals have been ignored.
We proposed that the recent increases in RRSPs which cost $40 million be eliminated or reduced. This proposal has been ignored. We proposed the elimination of abuses with respect to corporate transfer provisions which will cost more than $1.1 billion. A few timid steps have been taken, but nothing more. We proposed doing away with the current dividend tax credit which now costs about $1,016 billion a year. Mr. Speaker, it has been reduced by one-third, but two-thirds of this benefit still remain. We suggested that the provisions governing the minimum income tax be strengthened. Manuals are currently being published teaching people how to avoid paying the minimum income tax. A better legislation would bring in at least an additional $100 million.
Mr. Speaker, we suggested that the personal income tax system should be made more progressive. The simple re-establishment of the maximum income tax rates in force before 1982 would result in more fairness and in $1.7 billion in additional tax revenues.
Mr. Speaker, we suggested also to simplify our tax system to make easier to understand.
And we suggested to abolish the tax on gas for farming purposes.
Unfortunately, almost all our suggestions have been ignored by the Minister of Finance, although these suggestions which I have just described would have resulted in between $3.2 billion and $4 billion in savings each year.
This would have contributed to a reduction of the deficit which is a priority of the Minister of Finance and his Government, while giving the Government more spending flexibility, doing away with some required savings and giving it the capability to invest to create jobs in all the regions which need them so much. I am referring especially to Quebec, Mr. Speaker. We still have in Quebec a truly regional problem. Even outside the Gaspe area, we come across unemployment levels which exceed 16, 17 or 18 per cent. In the Temis-camingue area, or in the Lac-Saint-Jean area, as well as in some communities of the Eastern Townships, there are extremely high unemployment levels; yet, there is absolutely nothing in the Budget to meet the needs of the people living in these areas.
On the other hand, as the Hon. Member for Capilano (Mrs. Collins) has just remarked, the Government has just cut its spending in regional and economic development by $14 million, nearly $15 million in 1984-85 and up to $9 million in 1987-88. Apparently, the Government is not overconcerned about the unemployment situation, as we can see from the cuts in the Canadian job strategy where the credits allocated went down from $900 million per year to $800 million per year.
I want to speak a bit about the impact more particularly in terms of people in my riding and Ottawa because of the Budget which the Government has brought down. As I said in French, the Budget is unjust and it puts the burden of deficit cutting on the backs of ordinary Canadian families in my riding and across the country. It does nothing particularly to bring down the rate of unemployment from levels which continue to be unacceptable in Ottawa and across the country. It cuts back sharply in terms of regional development funds and it does nothing to restore the fairness in the tax system, which nine out of ten Canadians have told us in the Gallup Poll they are looking for.
I find it totally unacceptable that the Government is tolerating a situation in 1987-88 where personal tax contributions by ordinary Canadians will go up by $5.5 billion over the preced-
February 27, 1986

ing year and yet in that year corporate tax receipts will actually come down. The Government says it is simplifying and reforming the corporate tax system. The Government forgot that one portion of that tax reform, which is essential and should not be overlooked, is that a fairer revenue from the corporate tax sector should be collected. We should be taking steps now to recover some of those tax revenues from corporations, which revenues have been handed away on a platter, first by the Liberals and now by the Conservatives, over the course of the last eight or ten years.
People in my riding are telling me that they want to see measures to create jobs in this riding, not to destroy them. People in my riding and in the National Capital Region as a whole are extremely uneasy over the most recent announcements that have taken place in the Budget for a further $500 million in cuts in departmental spending, at least a third of which will be felt in Ottawa because that is where the bulk of the Public Service is concentrated. People in my area are concerned over the fact that train services between Ottawa and Toronto and Ottawa and Montreal are now threatened with being cut back or eliminated within a year or two.
They are concerned about training funds decreasing when many people, particularly women, who are coming back into the labour force are still looking for that kind of assistance from Government. In today's economic times with high unemployment, they do not find employers reaching out to provide that kind of training on the job which they might have been able to get a few years ago when unemployment was at more acceptable levels. People in my riding are saying that even if our unemployment rate has come down a bit, what about relatives in New Brunswick where the rate is 14 per cent? What about friends in Newfoundland where the rate is 20 per cent and what about friends in the Province of Quebec where the unemployment rate is 13 per cent? What about my relatives in inland British Columbia from where 1 originally came where unemployment is running at 16 per cent or 17 per cent? Do we not as a country have some responsibility to those parts of Canada as well ? I think we do, Mr. Speaker. I cannot see how we can have a budgetary policy which is essentially directed at Etobicoke, Capilano, Westmount, Rosedale and a few other prosperous areas-


Robert Nelson David Hicks: Scarborough.


Michael Morris Cassidy: Scarborough, fine-and at a few areas of the country where the financial leader has been telling the Government to cut the deficit and damn the consequences in terms of ordinary Canadians, but that is what we are getting.
In terms of my own riding, the impact of further cuts on top of the 15,000 job cuts already announced in the Public Service is extremely disquieting. 1 fear the cuts are now so severe that Public Service managers will have no choice but to make further job cuts on top of the 15,000 they have been ordered to make. That means more people not just being shuffled around from one job to another, but being thrown out on the street. In my community of Ottawa, it will not be an easy place for people seeking to find employment over the next few years.
The Budget-Mr. Cassidy
Public Service freezes are likely to be the order of the day, not just for a few months but almost continuously. Contract employment is down. Companies that contract with the federal Government will find that the $500 million in cuts will hit them because departments will cut back on spending on those kinds of dicretionary contracts.
The Government is working in cuckoo land if it believes it can make $500 million in cuts and not touch services to the public or not touch the Public Service. I fear that 10,000 more jobs may go. I challenge the President of the Treasury Board (Mr. de Cotret) to deny that and to assure this house that not a single further Public Service job will be cut as a consequence of those $500 million worth of cuts being imposed next year. 1 do not think he can do it.
My numbers would indicate that over the next four years there will be a 5 per cent staff cut. We know about that. Pay rates in the Public Service will go up by 13 per cent of 14 per cent. That has already been agreed to according to the pattern of bargaining over the course of the next few days. That leaves a 9 per cent gap. That gap will not be met by cutting out a few pencils and plane tickets and that kind of thing. You cannot at the same time save Public Service jobs and ensure there is no cut in services to Canadian while still make that degree of cut. You cannot have it that way, Mr. Speaker. I will be watching very carefully, but I am very concerned over what is happening in that area.
The numbers the Government has brought forward indicate quite clearly that the Government could have guaranteed jobs security at the same time it reduced the Public Service by attrition. Seven hundred jobs which the Government says will be lost this year amount to three-tenths of a per cent of the Public Service. If the Government can reach in and find $500 million worth of cuts by means of what it is doing with the cuts announced yesterday, it could find the extra $20 million or $30 million needed to pay for the salaries of three-tenths of a per cent of the Public Service.
If the Government had been prepared and able to negotiate job security with the Public Service and guarantee that no one would be unwillingly deprived of a job, then it would have been able to seek co-operation from the Public Service in terms of getting more effective and efficient management of it. No one who works in Government is opposed to that. People understand the need to make any organizataion work effectively and efficiently. I, as a representative of many people working in the Public Service, support the goal of getting an efficient and effective Public Service of which people who work professionally can be proud.
When you are threatened with cuts, not knowing whether your job is the next on the line, and when the reverse order of merit system is applied so arbitrarily that you cannot be sure that your job will not be chosen regardless of how you have done in the past, the incentive to co-operate disappears entirely. If you co-operate, you might help someone else's merit rating to go up while yours falls, relatively speaking, and you

February 27, 1986
The Budget-Mr. Cassidy
get dumped. If you train someone new on the job, they may keep the job when cuts have to be made-


The Acting Speaker (Mr. Paproski):: I regret that the Hon. Member's time has expired. Are there questions or comments?


Michael Morris Cassidy: Thank you, Mr. Speaker, for this opportunity to address the Government on its unfair, unjust, and inequitable Budget.


Margaret Anne Mitchell: Mr. Speaker, I know that my friend and colleague is very knowledgeable about the Public Service, about jobs, and particularly about some of the proposed cuts. I am, of course, concerned about all cuts, but I am particularly concerned about the disproportionate impact that there will be on women workers within the Public Service through Government policies and also through budget cuts. 1 was at a women's conference sponsored by the Public Service Alliance of B.C. and the Yukon last week. People there were very concerned, anxious, and intimidated. Of course, women in clerical and service jobs within the Public Service were the most worried. They were also concerned about contracting out. Women with children will not have the protections they need. Privatization is forcing women into voluntary jobs which do not have adequate wages or protections. They are also concerned about deregulation, which is pushing women into part-time jobs. What comment does my colleague have on this from his review of the Budget and Government policies generally? I would specifically like to ask him about cuts that I noticed in the Budget Papers in the Department of National Health and Welfare. Over the next four years $4.82 billion will be cut from that Department. I believe this will have a very serious impact on women.


Michael Morris Cassidy: Earlier today when the Estimates were made available and we had a chance to question officials on them, we asked that very question. We asked whether there is any concern within the Government to ensure that, if lay-offs eventually do occur, although I hope they can all be avoided, women will not suffer. Women tend to occupy jobs as clerks and secretaries, and other jobs which may be seen as being easier to cut by Government mandarins than jobs with more professional or technical qualifications. I had expected the Government to have thought that through, but it has not.
In the recent cuts in the Department of Fisheries and Oceans, an above-average number of women were chopped. I think the Government should make a commitment during the budget debate that if cuts have to take place, no higher proportion of women will be cut than the proportion they form of the Public Service of Canada. That is the very least we could get, Mr. Speaker. In fact, I think it should be the other way around because women have been discriminated against in getting decent jobs within the Government. Perhaps some affirmative action in terms of the de-hiring process might take place as well.
I share my hon. friend's concern about the cuts in the Department of Health and Welfare. We do not know exactly what they mean. However, we know that over time the Government is making greater and greater cuts in the area of health and welfare. Many women who have kids, low incomes, or require training, stand to be badly affected.


Clément M. Côté: Mr. Speaker, the more I listen to socialist Members, the more I understand why Canadians do not take them more seriously. First, the Hon. Member for Ottawa Centre (Mr. Cassidy) began by saying that the Minister of Finance (Mr. Wilson) has imposed a surtax of 3 per cent to all income when we know quite well that the surtax does not apply to all income, but only to taxable income, that is to the amount on which individuals or businesses will have to pay taxes. If that is not misleading the public, Mr. Speaker, it certainly shows a deep ignorance of the facts.
Obviously, Mr. Speaker, the words "tax" and "profit" are always bad for the socialists. I am aware of no one in Canada who wants to pay more taxes than is needed. However, if our friends opposite, the socialists, had not been the crutch of the Liberal Party for 20 years, the Canadian people would not be saddled today with an accumulated debt of over $200 billion. Ordinary Canadians, people in the Ottawa Centre constituency, would not see 80 cents on each tax dollar go to pay the interests on this debt. It is obvious, and I have just had another proof of it, that you are only interested in trying to save your jobs. You sound like a broken record when you speak about the interests of ordinary Canadians. You have been saying the same thing for years. Canadians have been listening to you for years. Moreover, ordinary Canadians have not believed you for years.
Fiscal reform. A while ago he referred to the fiscal reform which is nowhere in this Budget and which was nowhere in the previous one, the "fair imposition" Budget as he called it. I do not know, perhaps this is the Government which introduced a minimum income tax for all individuals. Generally, when we speak of "minimum" for everyone, this implies both the rich and the not so rich. Fiscal reform, with a $500,000 capital gain deduction? They always talk about what it costs, never about what it yields. The RRSPs and what they cost, and so forth.
Mr. Speaker, small and medium businesses ... when he referred to the RRSPs, when he referred to capital gains... you know, you referred earlier to the problems in the Province of Quebec, you referred earlier to unemployment problems in areas such as Lac-Saint-Jean, yes, Lac-Saint-Jean.


The Acting Speaker (Mr. Paproski):: I regret that the Hon. Member's time for comments is just about expired. If he would put a question so that the Hon. Member could have the little remaining time for rebuttal, I would appreciate it.
[ Translation]


Clément M. Côté: Go ahead, we are listening!
February 27, 1986


Michael Morris Cassidy: Mr. Speaker, the Hon. Member is charging me with being ignorant. Perhaps he is not aware that socialism has only become that acceptable in Quebec since the 1984 election. We rose, the NDP rose from 9 per cent to 23 per cent in surveys in Quebec, including his own area of Lac-Saint-Jean.
I would like to indicate that in his own area, people will not accept that corporations pay less while people, the taxpayers, the individuals pay more. And not just a little more, but $1,350 per family, since this Government was elected 18 months ago. This is what people are paying in the Saguenay area because of that new Government. Now, have the people in that are a gained anything? The answer is no. I travel very often to that area, and the answer indeed is no, because the actions taken by this Government are not targetted to the needs of his area but to Montreal, Vancouver, Toronto, Central Canada, rather than to underprivileged areas such as his own.


The Acting Speaker (Mr. Paproski):: The period for questions and comments has expired.