1989-05-09

Mr. Nelson A. Riis (Kamloops):: Mr. Speaker, it is my honour and privilege to present a petition on behalf of a number of residents of Kamloops, British Columbia. The petitioners point out that only 2 per cent to 3 per cent of prime time television drama on English language television is Canadian, that 77 per cent of all magazines sold in Canada are foreign, and that 85 per cent of all records and tapes sold in Canada are foreign.
Therefore, the petitioners call upon Parliament to promote and adequately support Canadian cultural agencies to ensure that Canadian cultural institutions remain in Canadian hands, and to ensure fair funding for artists and cultural organizations in every region of the country.


Nelson Andrew Riis: Mr. Speaker, I have another petition on another topic, again certified correct pursuant to Standing Order 36. The petitioners are from Kamloops, British Columbia. They point out that the tax burden on average families is roughly $1,000 greater than it was in 1984. This petition must have been presented prior to the last Budget, because they could have added on another $1,700 on top of that $1,000 if it were more timely. The petitioners point out that there has been a shift in the burden of taxation from corporations to wage-earners.
The petitioners call upon Parliament to establish a minimum tax on profitable corporations, and to ensure
that the burden of taxes is more fairly spread among individual and corporate taxpayers.


Mr. Rod Murphy (Churchill):: Mr. Speaker, today I have the honour to present five petitions. One is from the City of Thompson and the community of Wabowden. Another one is from Winnipeg, Lorette, Dugald, Anola, and Hazel Ridge in Manitoba. Another petition is signed by residents of the Dauphin and Sifton areas of Manitoba. Another petition is signed by residents of Heading-ley, Oakburn, Strathclair, and St. Francois Xavier.
All petitions are on the subject of the Port of Churchill. The petitioners are calling upon the Government to utilize fully the Port of Churchill because it would improve the economies of Canada's prairie provinces. The petitioners believe that there is a need for the federal Government to develop the obvious potential of Canada's only inland seaport.
Therefore, the petitioners humbly call upon Parliament to direct the Minister responsible for the Wheat Board to ensure that, at the very least, 3 per cent of Canada's annual grain shipments be shipped through the Port of Churchill, and that the Government pursue aggressively additional ways to utilize this important seaport and to ship exports other than grain.


Mr. Ian Waddell (Port Moody-Coquitlam):: Mr. Speaker, I have a petition signed by the residents of the Village of Belcarra which is in my riding of Port Moody- Coquitlam. Whereas the federal government funding for the Supernumerary Special Constable Program previously allocated to the Royal Canadian Mounted Police in Coquitlam detachment for policing the rural area where they live has been cancelled, the petitioners call upon the Government to reinstate the funding for the Supernumerary Special Constable Program, thereby alleviating the negative impact on an already intolerable situation. They need the police service, especially when summer arrives.

May 9, 1989
The Budget-Ms. K. Campbell FERMI II NUCLEAR PLANT


Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, the petition which I would like to present this morning, and which has been certified, comes from approximately 500 people in the constituencies throughout Essex County and the City of Windsor.
The petition notes that just a few kilometres from our border the Fermi II nuclear plant is continuing to operate. It continues to pose a clear danger to lives and to property in our part of the country because of the "abysmal record of accidents at the plant".
The petitioners therefore call on our Government to take as strong action as possible to push the United States Government to accept an independent review process which will ensure that this plant is assessed fairly, to see if it is safe for the future.
jjc


QUESTIONS ON THE ORDER PAPER
Mr. Pierre H. Vincent (Trois-Rivieres):: Mr. Speaker, I ask that all questions be allowed to stand.


The Acting Speaker (Mr. Paproski):: Shall all questions stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, May 8, 1989, 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. MacLaren:
That the motion be amended by deleting all the words after the word "that" and substituting the following therefore:
"this House regrets that the Government has imposed unfair taxes and has cut vital programs, including child care, regional development and agriculture, in an effort to reduce its annual deficit, despite the fact that this effort has been rendered futile by the Government's ill-conceived high interest rate policy; and
That this House condemns the Government for pursuing these
policies that fall most onerously upon lower and middle-income
Canadians and that are certain to hinder the further development of
the Canadian economy."
Hon. Kim Campbell (Minister of State (Indian Affairs and Northern Development)):: Mr. Speaker, it is a pleasure to participate in the debate on one of the most important functions of government, that is to create a fiscal plan, a budget whereby the Government can function for the coming year and whereby we can ensure the continued prosperity of all Canadians.
As Canadians, we have a serious problem. It is our large and growing national debt. The national debt is growing by $3 million an hour. By this time tomorrow the debt will be larger by more than $80 million. In just two weeks it will have grown by more than $1 billion.
The interest payments on the debt are also increasing rapidly. Only 20 years ago, just 12 cents of every dollar the taxpayer sent to Ottawa went to interest payments. When this Government came to power four and a half years ago, that figure had already increased to 32 cents. This year it is over 35 cents.
The debt is a major obstacle to building the kind of future we all want for ourselves and for our children. In the House yesterday, the Member for Esquimalt-Juan de Fuca (Mr. Barrett) talked about the Budget and said that it did not say anything about food banks, that the Budget did not say anything about poor people in Canada. I think the Budget deals directly with the problems of poverty and the disadvantaged in Canadian society.
Unlike the New Democratic Party, our Government does not view Canadians as victims and does not see it as being the role of government to perpetuate weakness and dependency. Our Government sees the role of government in Canadian society to strengthen individuals, to strengthen people in their communities, to give them the wherewithal to stand on their own two feet. Without careful fiscal planning that addresses the fundamental problems of poverty, the problems of unemployment, the problems of training, these goals cannot be achieved for Canadian society.
Without addressing the problems of public debt, the Government of Canada cannot address the question of income disparity in Canadian society. The Government of Canada cannot provide training for Canadian workers who are displaced by technological change or other shifts
May 9, 1989

in the economy, and the Government cannot play its role in enabling individual Canadians to stand on their own two feet.
I think the question of the public debt, which is the most important theme addressed by this Budget, is fundamental to all Canadians and fundamental to achieving the social goals we have set for ourselves as a society.
How did Canada acquire its debt? Like any family or individual might have done, Canada acquired its debt by living beyond its means. The national debt is simply all of the yearly deficits added together. The deficits are simply the difference between the amount of revenue the Government receives and what it spends.
Although we now receive as much revenue we need to pay for program expenditures, we have another expenditure which is creating our deficit, that is the cost of interest on the national debt.
Only 20 years ago Canada had no deficit. Our total debt after an entire century of Confederation was only $18 billion. The cost of servicing our debt was well within our means.
During the 1970s and the early 1980s we spent freely. Regardless of the question, the answer was always government. The problem of yearly deficits began in these years. The deficits were relatively small in the beginning, but year after year they grew in size and began to take their toll.
In 1984 when we came to power, the $18 billion debt had risen to nearly $200 billion and the annual deficit, the shortfall between revenues and expenditures, was more than $38 billion. By then Canada had built into its public finances a self-propelling force that threatened to undermine our valued reputation for fiscal prudence and responsibility.
The sad reality of debt is that it feeds on itself. Each year more effort is required from the citizens to produce new revenues that merely go to pay the interest on a growing debt. It places the nation on a treadmill.
We must ask ourselves: Should this enormous debt be our legacy to future generations? Let us be clear about what it means if we continue year after year, government after government, to borrow and borrow just to pay interest on the debt. We could be paying in the years ahead for programs and policies of yesterday.
The Budget-Ms. K. Campbell
Not long ago there was an advertisement in The Globe and Mail by an advertising company that was expressing its particular concern about the national debt. Of course, advertising companies are very skilled at putting forward their views in vivid images. I think the image in this advertisement was extremely effective. It was a picture of a baby with a ball and chain, and that ball and chain are the national debt. Unless we address the national debt, we have put a fiscal ball and chain around the legs not only of today's infants but of infants yet to be born. We would be paying in years ahead for programs and policies of yesterday. Our government resources would be spent to pay the interest on our commitments of the past rather than addressing the problems of today or the challenges of tomorrow.
We live in a very changing world, a world in which the challenges of tomorrow are in many ways unknown to us.
One of the main themes of our Throne Speech was a concern for the environment. More and more industrialized countries are coming to recognize that many of the processes and practices that they rely upon are inconsistent with the survival of the planet. We will have difficult choices to make in the future.
We may have additional environmental catastrophes to deal with in order to clean up the environment. We look at something like the oil spill in Valdez, Alaska and recognize the limitations of our own ability to deal with those situations. We may have to make difficult choices with respect to technologies, with respect to products, with respect to sources of energy. These choices, in order to protect our environment and our planet, may require us as a country to engage in considerable expenditures. How tragic if our children discover that 50 cents or 35 cents of every tax dollar they send to their government to engage in those activities which are part of the national purpose are devalued because most of those tax dollars are required to pay a national debt incurred by their parents and grandparents. That is a legacy we cannot leave to our children.
We have a changing workforce. Although it has been an integral part of our Government's policy to provide training and training opportunities for a changing workforce it has also been an integral part of that policy to call on the private sector to play its role. Nonetheless, opportunities for training and our commitment to education for all our people throughout our lifetime is essential in order for us to be able to meet the challenges of a

May 9, 1989
The Budget-Ms. K. Campbell
changing economy and the demands of a changing workforce.
What a tragedy if we do not have the money to meet those challenges because that money is going to pay interest on the national debt.
Our workforce is changing in other ways. We now hear from many industries in Canada about labour shortages because of a shortage of skills. My generation, the baby-boom generation, perhaps has created a false impression about the availability of labour in Canadian society. However, by the 1990s we will be facing serious labour shortages. For example, we cannot afford to take women out of the workforce. It is with a considerable amount of regret that the Government has deferred the third prong of its child care policy. However, today's demands are very small compared to the demands that we will see 10 years or 20 years down the road for assistance to enable a broad range of Canadian people to remain in the workforce.
What a tragedy if we do not have money to support those social goals because our tax dollars are increasingly going to pay interest on the national debt.
We have an ageing population. I speak particularly of my own generation. I have a strong vested interest in the fiscal health of my country because I am at the cutting edge of the baby boom. When my generation finally retires it will not be at the age of 65. They will not be able to retire at 65 because they will be needed, which is wonderful. We have already opened up opportunities for workers over the age of 65 to remain in the mainstream of our working population. However, the challenges of an ageing population are in many ways as yet unknown. Our elderly are healthier than they used to be. Yet we do not know what the impact on Canadian society will be when that huge demographic bulge, the baby boom, gets into its 80s and 90s.
I can tell you, Mr. Speaker, that I do not want to have to face a young generation who will reproach me with the debt that I have incurred and put on their backs because I was not prepared to take tough decisions to reduce the national debt.
There are many challenges that face the future of Canadian society, challenges that we will not be able to meet successfully if we do not remove that legacy of debt. We would be borrowing from our children and not paying our own bills.
It is easy to borrow from future generations because they have no voice in this debate. They have no vote. Yet it is they who must live with the consequences if we do not act.

The Government therefore acted. The Minister of Finance (Mr. Wilson) presented a budget that helps build our future instead of mortgaging it. We are reducing our expenses and improving our efficiency and our operations. We also call upon all Canadians to play a greater role in solving this national problem.

We recognized the seriousness of the debt problem when we came to office. We have been acting to get it under control. I find it amusing to hear comments in the House that somehow the Government's approach to reducing the deficit is some kind of new departure in policy, that we did not talk about it during the last election campaign, that it was a secret agenda. I tried often to talk about it during the last election but, unfortunately, my opponents were not interested in talking about the deficit.


Some Hon. Members:: Oh, oh!


A. Kim Campbell: They wanted to talk about free trade. We have been talking about the deficit for a long time. We have been doing something about it since 1984. We will continue to do something about it. Not only have we been acting to get it under control but we have succeeded, since 1984, in reducing the growth of the debt from almost 24 per cent a year in 1984 to less than 10 per cent last year. Despite that progress the debt is continuing to grow more rapidly than our national income.
An interesting aspect of public discussion about the national debt is the statement made by some, including some economists, that somehow the national debt is not itself a problem. They say that we owe it to ourselves, so it is not really a problem that should concern us because it is simply the left hand lending to the right one, or it is simply borrowing within our own community.
In an article in yesterday's The Globe and Mail it was stated that as a result of the national debt we have about $150 billion in secure investments that have been available to small businesses throughout Canada. That is only half the national debt.
May 9, 1989

It has also been argued that the national debt is not a problem because, after all, it is secure, we have the value in our economy to support it.
I think all those arguments against concern about the national debt really miss the main point. First, it is not true that we just owe it to ourselves. On the contrary, our rate of foreign borrowing is increasing. This makes us very vulnerable.
Furthermore, with Government being such an important borrower in the financial markets of our society it edges out private borrowers. It reduces the supply of capital available to businesses large and small who want to put that capital to work for economic growth. Therefore, it increases the cost of that capital to Canadian society and has an inflationary impact on interest rates.
Let us say for the sake of argument that all those concerns about the deficit and about the public debt were not serious. Let us suppose that the arguments which state that we only owe it to ourselves, that we have created secure investments for business around the country are true. What is missed is the most fundamental aspect of the national debt, that is to say the question of cash flow.
There are many expensive houses in Vancouver. I could go with a downpayment of $100,000 and make an offer on a house worth $1 million. I do not think I could afford a house for $1 million but perhaps the bank would give me a mortgage for $900,000 because maybe the house is really worth $1.2 million and my debt is secure. The bank knows that, if it has to foreclose on the mortgage, the value will be there. The only problem is that there is no way I could service that debt. It would take every penny I earn and more simply to pay the interest on the debt. It does not matter that the debt is secure. The fact of the matter is that if I cannot afford food, clothing and transportation then I am over my head in debt. That is the point that I think is missed by all the commentators on the national debt.
The problem with the national debt is that it is simply taking too much out of the Government's cash flow to service it. It takes 35 cents from every tax dollar. That is too much. It restricts the flexibility of the Government, and thereby the Canadian people, to reach and meet their common social goals in society. Therefore, all the arguments that suggest that the national debt is some-
The Budget-Ms. K. Campbell
how a figment of the Government's imagination, that it is not important, are spurious. I repeat again that when the Government of Prime Minister Trudeau came into office, the payments on the national debt were about 12 cents on every dollar. When he left office in 1984, they were 32 cents on every dollar. That is more than is healthy for the Government. It is more than is healthy for any individual or family to be paying in interest on its debts.
The recent surge of interest rates in Canada and abroad show us just how our huge debt has left us exposed. In just one year the projected cost of paying the interest on the national debt has risen by more than $6 billion. This year alone interest will cost us $39 billion. That is more than we spend in total on health care, family allowances, old age security and social assistance.
The Minister of Finance (Mr. Wilson) announced a number of expenditure and revenue measures to deal with the debt. These debt control measures will amount to more than $5 billion this year and $9 billion next year. The Budget measures will cut the annual deficit in half by $15 billion by 1993-94. This will restore the flexibility that we need to continue to maintain the programs Canadians value.
In terms of my own Ministry and in terms of Canada's natives these programs are being maintained right now. Hand in hand with fiscal responsibility comes social responsibility. The Government's concern for and commitment to native people is evident from its actions. DIAND, my Ministry, is in a period of transition. It is a facilitator, helping Indians help themselves. What is important to native people is important to the Department, notably aspirations of self-government and economic self-reliance. I mentioned earlier about not borrowing from our children, from the next generation. At DIAND we are investing in the next generation.
The Government remains committed to native economic development. As you will recall, the Throne Speech announced our intention to continue this program. Once decisions have been made, the Ministers of Industry, Science and Technology and Employment and Immigration will join the Minister of Indian Affairs and Northern Development in implementing this important Government priority respecting Canada's first people.

May 9, 1989
The Budget-Ms. K. Campbell
With respect to the area of Established Programs Financing, the federal Government makes these payments to the provinces for both health care and post-secondary education. The responsibility for funding education for Indians on reserves rests with the Ministry of Indian and Northern Affairs and is not affected by this Budget. Furthermore, funding for such items as post-secondary education, housing, and social assistance remain unaffected. Services and funding have in fact been increased.
I have just come back from British Columbia where I met with a number of groups, including non-profit organizations from my riding, as well as business leaders. After a week of meetings in my region, I was struck by how responsible and responsive this Budget in fact is. I can tell you, contrary to the comments made yesterday by the Hon. Member for Esquimalt-Juan de Fuca (Mr. Barrett) the business community was not overjoyed by this Budget.
The challenge of making expenditure reductions often seems very simple to business. It is more complex for those of us trying to do it within Government. Members of the Opposition have tried to paint this Government and this Budget as friendly to big business. I can tell you that the business community had some pretty frank words for this Budget. They did not think we went far enough.
My meeting with the non-profit groups provided me with another vantage point. They were concerned, naturally, with expenditure reductions. I took the time to listen to both of these opposing views, as well as to representations from many other groups. I have come to the conclusion that the approach of the Minister of Finance was both fair and even-handed.
As a national Government, we have an obligation to Canadians to get our fiscal house in order and at the same time to invest in programs and policies that provide a return to our society in general. This is a Budget that does not simply deal with the problems of today. It does not simply deal with the questions and programs the Government has to deal with in today's society. It is a Budget that ensures that we will be able to continue to deal with the issues and the important challenges of Canadian society for the future.


The Acting Speaker (Mr. Paproski):: Questions or comments. The Hon. Member for Broadview-Greenwood.


Mr. Mills:: Mr. Speaker, I have a question for the Hon. Member. I listened with fascination to your concern about the debt. We are all concerned about the debt. However, I would like to ask you a very specific question.


The Acting Speaker (Mr. Paproski):: I would like the Hon. Member to direct the question to me, please.


Dennis Joseph Mills: Mr. Speaker, my question is, on the north shore of Vancouver there is an organization called Ballard Industries. It is a small organization. It employs about 30 or 40 people. It is an environmentally friendly organization. They have clean air technology. They have developed this clean air technology through a solid polymer fuel cell. This industry is looking for support from the national Government to the tune of about $10 million. Their prospectus shows that within 10 years they can create a billion dollar industry in British Columbia alone.
My question is, when the Minister is confronted with a situation like this, what is her reaction and how does she treat an industry like this?


A. Kim Campbell: Mr. Speaker, I thank the Hon. Member for his question. He raised the issue of Ballard Industries with me yesterday outside the House and asked if I was familiar with it. I am not. There are two points I would like to make in response to his question. First, viable technologies which have the kind of potential financial return which the Hon. Member suggests this particular industry has, are technologies that should be invested in by the private sector. If money is scarce in the private sector, it is a reflection of two problems. One, Government edging that money out, Government providing a secure place for people to put their money as opposed to encouraging them to participate in the risk capital enterprises that are so important to the financial health of our society, and second, the cost of money itself, which is a reflection of the scarcity as a result of Government's enormous presence in that financial market. We have as a very important part of our Government policy programs to encourage private enterprise in the way that we believe it should be encouraged, and that is for Government not to take the responsibility of innovation and creating industries, but to provide assistance where necessary.
When I was in Vancouver last week I presided over a series of announcements on behalf of my hon. colleague the Minister responsible for the Western Diversification Fund. Our Government has in fact provided very important assistance to many innovative business people in the Vancouver area who are seeking assistance and
May 9, 1989

seeking markets to establish their foothold, often in competition with larger companies from the United States and elsewhere. I think that is an important and appropriate role for Government, but it is characteristic, I regret to say, of the outlook of that Member's Party that somehow when you have a good idea which appears to have the potential for very serious economic return, the first place you look at is Government.
We cannot continue to have Government trying to play the role of risk capitalists, venture capitalists, and entrepreneurs. We have serious problems in parts of our country where there are not any natural markets, where there is difficulty in attracting business. That is why our funds for regional economic development are so important.
The question that the Hon. Member asked is a complex one. Is he suggesting that Government should take the whole responsibility? We have programs and we are quite willing to play a role to encourage local technologies. We have many programs throughout Government, including through the Ministry of the Environment, to encourage a development of new environmental technologies. In fact, that was one of the themes that was discussed in the Throne Speech.
However, what I am talking about today, the problem of the debt and the presence of the Government as a major borrower in capital markets, relates directly to the issue that the Hon. Member raises, that people look to Government to resolve the problem that Government in its indebtedness has created. That is, a scarcity of capital available for private industry in this country.


Ms. Langan:: Mr. Speaker, I thank the Hon. Member for her speech. I was quite heartened when she noted at the beginning of her speech that this Budget deals with poverty. I was waiting to hear just how this Budget deals with poverty in a positive way. She related the sad reality of the new deficit in the treadmill we are in, and asked whether this enormous debt should be our legacy to future generations. She discussed a baby with a ball and chain in a Globe and Mail ad, and referred to it as the fiscal ball and chain, which suggests that maybe the attitude of this Government is one that children should indeed shoulder the burden of the debt today and not worry about the future.
The Budget-Ms. K. Campbell
I would like to ask several questions. The Hon. Member referred to training programs and said that we cannot afford to take women out of the workforce. In the same breath she said the third prong of child care is on hold. My question is, can we afford to take the risk with the lack of good child care, the cutting back of social programs, and the impact that those will have as we go through the next number of years, as these children work their way through their childhood and early adulthood and are faced with lack of supervision, lack of social support, and for example, a tax increase including matters like family counselling, when we are talking about taxing back.
I ask the Hon. Member, what will be the impact on society of those program cuts. She talked about removing the legacy of debt and said that it is easy to borrow from our children's future because they have no voice in vote. I have said in this House and I raise it again that it is always easy to steal from today's children and their programs because they have no voice in vote.
I would like to ask the Hon. Member why the choice was social programs, not corporate tax programs that will affect all profit making companies, all 89,000 of them, I might add, including the banks.


A. Kim Campbell: Mr. Speaker, there were a lot of questions in the Hon. Member's comment. I will try to deal with the ones that I think are most crucial. As to the last comment about corporate taxation, I am curious to know whether the Member's Party takes the view that there should not be the loss carry-overs allowed for corporations. That is another question.
In the Budget Speech, the Minister of Finance (Mr. Wilson) indicated very clearly that the Government will act to meet its objectives in child care by the end of this mandate. As the Prime Minister (Mr. Mulroney) said when he introduced the child care bill in the last Parliament, which was not acted on by the Senate, we cannot do in four years what has not been done in 20 years. The federal Government's financial commitment to child care remains quite considerable, remembering that all of the child care subsidies existing throughout the country are shared 50-50 with the federal Government. Enormous amounts of federal money go into child care.

May 9. 1989
The Budget-Mrs. Maheu
We have continued with our program to put $2.3 billion over seven years in both tax credits and tax deductions. It is often said: "Well, those tax deductions only help people with higher incomes". That is a very short-sighted view. When we are living in a society where there is a limited number of child care spaces, it is very important to provide incentives to reduce the demand on those spaces until we can increase the number.
We also have our $100 million program of which, I think, 77 projects have been approved. This is designed to find new innovations for child care.
It is easy for people to sort of throw off as a comment, "Well, why aren't we doing more for child care?" It is important and it will become increasingly important in Canadian society. Our Government has recognized that. But there is not a country in the world which meets its child care objectives. Sweden, which is often referred to as a great leader in this area, has child care spaces for only one-third of its demand and has a two year waiting list. All of the industrialized countries are scrambling to catch up with this question. It is very important that we have taken an approach, not only that we want to provide financial support for child care-we do now in considerable amounts-but also that we want to give some serious thought to how best we can do that. The area of institutionalized child care is still relatively new and there is a great deal that we do not know. The 77 projects that we have currently approved under the innovations fund and more which will be done will help us very much in determining where those financial priorities should go-
I would like to point out, once again, when the Hon. Member makes, I suppose, a predictable comment about poverty that since we came into power in 1984, 1.5 million new jobs have been created in Canada and those were by policies that the Hon. Member's Party denounced in this House and predicted would result in a net loss of 200,000 jobs to Canadian society. A half million fewer Canadians live under the poverty line than did when we came into power in 1984.


The Acting Speaker (Mr. Paproski):: I regret that the Hon. Minister's time has expired. The questions and comments period has expired. If the Member would wind up, I would appreciate it.


A. Kim Campbell: Mr. Speaker, this debate will continue, not just through this particular Budget, but I think for all time in Canada because it is a
very important, philosophical debate in Canadian society and I am pleased to have had the opportunity to participate in it.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated. Debate. The Hon. Member for Saint-Laurent.


Mrs. Shirley Maheu (Saint-Laurent):: Mr. Speaker, I am honoured to take part in the Budget debate today. I would like to point out to the House and to you that this is much more than a debate about budgetary choices. Indeed, it is a debate about the very nature of our country. We are faced with two visions. The first is the one that my party and I defend, one of a Canada that cares about social justice and fairness and that is sensitive to the less fortunate. The second is the one advocated by the Government and directly inspired by Darwin's "survival of the fittest" philosophy, resulting in a complete laisser-faire approach by the Government and a feeling of indifference to the least fortunate in our society.
Mr. Speaker, I am proud to represent my constituents from Saint-Laurent. This riding includes the City of Saint-Laurent, Quebec's second largest industrial city, and two residential districts of northern Montreal: Car-tierville and Saraguay. Unfortunately, Mr. Speaker, this Budget will be a disaster for my constituents-for the 42,000 workers and 5,000 people desperately seeking employment. I will also have to tell more than 12,000 seniors in my riding that the Prime Minister has gone back on his election promises at their expense, in order to favour his Bay Street friends.
Moreover, the most unfortunate thing is that more than 50 per cent of the families in my riding earn less than $33,000 and they will be subject to drastic income tax increases, not to mention gasoline tax increases and cuts to child care, another "sacred trust" election promise the Prime Minister made! In fact, it just adds to the long list of commitments the Prime Minister has not kept.

What will happen to the 13,000 home owners who will face increases in their mortgage payments as a result of this Minister of Linance's perceived inflationary threat? Tenants will also see their rents increase because of the cost incurred by landlords. No one escapes from the ravages of this Budget except, of course, friends of the Prime Minister (Mr. Mulroney), the men of the Cana-
May 9, 1989

dian establishment. This is an anti-people Budget, Mr. Speaker.

After making all kinds of promises, after promising us that ordinary Canadians would never bear the brunt of measures to reduce the deficit, that social programs were a sacred trust, and so forth, the Conservative Government has once again shown its true colours.
In 1984, it tried to deindex old age security pensions, and now, Mr. Speaker, despite the fact that its attack on senior citizens backfired, the Government is trying once again to reduce the deficit at the expense of the poorest in this country, the unemployed.
Mr. Speaker, I can assure you that the Liberal Opposition will fight as hard as it did when the Tory Government made its abortive attempt to deindex old age security pensions.
We can hardly expect a more sensitive approach this year, from a Government that announces cuts in unemployment insurance and says that the unemployed will have to pay for new training programs.
On April 11, the Minister of Employment and Immigration (Mrs. McDougall) announced changes in the Unemployment Insurance Program. Typically, the Tory Government will make the unemployed pay for the new training programs introduced as a result of this reform.
Mr. Speaker, this Government seems to think Canadian workers don't have enough troubles as it is. The Government has increased the period of employment required to be eligible for benefits and at the same time, it has the nerve to reduce the number of weeks during which a worker may receive benefits.
But the Government didn't stop there. The Americans, or should I say the bosses of the Prime Minister (Mr. Mulroney), let him know that unemployment insurance was considered to be a hidden subsidy.
Instead of standing firm during the negotiations on what constitutes a subsidy, this Government goes weak-kneed as soon as it hears from our neighbours to the South. The result? The Government has entirely withdrawn from financing the Unemployment Insurance
The Budget-Mrs. Maheu
Fund, so that workers and employers will have to pay the whole shot.
Mr. Speaker, remember when the Prime Minister said during the televised debate between the Leaders that social programs were not threatened? He even went so far as to say that the Leader of the Opposition was using scare tactics. Well, let me tell you that the Leader of the Opposition was right and that the Prime Minister of Canada has deceived Canadians once again. Canadians have had enough of this Government's broken promises!
Mr. Speaker, in connection with the unemployment insurance reform, I would like to quote Michel Vastel, a reporter with Le Devoir, from his article published on April 12 this year:
It all boils down to making the unemployed pay part of the cost of
adjusting to free trade.
That is Tory social justice for you!
This is indeed a heartless Government. I believe that it is showing its true colours now that the election is over. It has hit Canadian families through the postponement in the delivery of the $4 billion worth of child care spaces. It has decided not to go ahead with its own program for budgetary reasons. I would have understood the elimination of this program had it been replaced with ones that Canadians really want and need, but to eliminate it outright simply shows that the Government has no commitment to Canadian families. The Budget killed any hope for immediate relief in the child care crisis despite the Government's election promise and its commitment in the Throne Speech.
The Government must put into place some capital funding to facilitate the creation of desperately needed child care spaces throughout Canada. It is obvious that the Tory Government and this Minister of Finance (Mr. Wilson) are more concerned with their ideological propensity to slash government spending and increase taxes than the provision of adequate and essential services to all Canadians. The $4 billion cut over six years in transfer payments to the provinces will hit Canadians where government assistance is a must. The Established Programs Financing transfer payments are once again affected by substantial reductions. The Government first cut money transfer payments by 2 per cent in 1986. Now, an additional 1 per cent cut will have a profound impact on those provincial programs which depend on federal financing to provide adequate services to all Canadians.
The services that these cuts affect are the most important elements of our society. The cut in EPF transfer payments will affect the ability of the provinces

May 9, 1989
The Budget-Mrs. Maheu
to provide good health care to Canadians. Cuts in transfer payments will also affect the ability of the provinces to provide proper post-secondary education. In other words, the Government is cutting back on the fundamental services that make Canada a strong nation.
As we all know, the level of medical services has at times been lacking. Throughout Canada, nursing staffs have voiced their frustration with the health care system by walking off the job. In Quebec, interns have expressed their frustration with the system by staging protests and work-to-rule campaigns.
I ask the Government, how does it expect the status of our health care system to improve if it is only concerned with cutting back on expenditures? It seems to me that the Prime Minister wants to eliminate all aspects of our social fabric before his friends to the south define them as subsidies.
The Government has in the past expressed a concern for post-secondary education. It has said that the intelligence and competitiveness of our youth is what will help Canada compete internationally. How does the Minister of Finance and the Prime Minister expect Canada to remain competitive internationally if our university and college systems deteriorate as a result of budgetary cut-backs in the form of reduced transfer payments to the provinces?
It seems obvious that the Government expects Canadians to pay more taxes for fewer and fewer Government services. It seems that taxpayers will have to absorb tax increases at the provincial level in order to maintain the health care and education that they have come to expect and deserve. One must question the equality of services that will prevail in the various provinces. How will the people in less prosperous regions be able to pay for the cuts in federal funding for health care and education without in some way compromising the quality of these essential services?

Cutting services to Canadians was not enough. Now the Government is announcing tax increases. Canadians are going to pay more for less. That is Tory social justice, a kind of Tory inflation which means that the purchasing power of our tax dollars will go down as a result of cutbacks in government services.
Between 1984 and 1989, revenues from personal income tax rose 33 per cent but revenues from corporate income tax rose only 17 per cent, even during your so-called economic prosperity. Some social justice!
Always as a result of this policy of social injustice, low income families will be paying $2,050 more in 1991, and this does not include your new 2 per cent surtax.
It should raise the average family's tax burden by about $2,000 a year. On the other hand, well-off families paid 6.4 per cent less taxes over the past five years. Those figures come from the National Council of Welfare, a federal government agency. Let me quote from page 6 of their report: "Thx reform is deceptive- Taxes will march ever upward and more and more working poor Canadians will have to pay income tax."
But it is not enough. In addition, Canadian taxpayers will soon have to face a new tax on goods and services. To add insult to injury while waiting for that regressive and unilateral tax to be implemented, this Government is increasing the present sales tax by 1.5 per cent. This increase will bring in close to $2 billion.
This tax will also severely harm municipalities since they buy a lot of goods and services. And who will pay the bill in the end? Municipal taxpayers, of course! But all the Government tells us about this tax is: "Don't worry, be happy!"
What takes the cake, Mr. Speaker, is that despite all those drastic measures, the Government can barely maintain the deficit at around $30 billion in a period of economic prosperity. Why? Because of its mismanagement of public funds and its obsession with maintaining high interest rates to fight the threat of inflation!

I would like to talk a bit about multiculturalism. [Translation]
It is a fundamental characteristic of our country. In the 1986 census, 38 per cent of Canadians described their ethnic background as other than English or French. Once again, Mr. Speaker, I am amazed by this Government's total inconsistency. It creates a separate Ministry of State for Multiculturalism while reducing by $2 million the funds available for various programs required to achieve the objectives underlying the establishment of
May 9, 1989

The Budget-Mrs. Maheu
that Ministry. The Government will spend more on multiculturalism but will cut related programs.
In conclusion, if you allow me, this Government, shut in its ivory tower, blinded by right-wing conservatism, is insensitive to Canadians' aspirations and continues to turn a deaf ear to Canadians' legitimate demands. This Government has abdicated its responsibilities in all fields: withdrawal from unemployment insurance, child care, regional development, transfer payments to the provinces, universality of social programs.
Mr. Speaker, the people will judge this Government severely for its complete laisser-faire attitude and flagrant lack of social justice!


Mr. Tremblay (Lotbiniere):: Mr. Speaker, the Hon. Member for Saint-Laurent (Mrs. Maheu) talks about a just society. Finally, she concludes that the people will be severe with the Government. That reminds me of 1984, Mr. Speaker, and speaking of a just society, we also remember that time, and I would first ask the Hon. Member for Saint-Laurent simply whether she remembers the size of the deficit the Liberal Government left us in 1984. Secondly, speaking of the sacrosanct principles of social programs, I would ask the Hon. Member how this Budget violates the principle of universality, and also, if this principle is so sacrosanct, as she maintains and claims, how does one reconcile the statement by her finance critic and her own party president? These two individuals strongly question the universality of social programs in order to reduce the deficit which her own party left us in 1984.


Shirley Maheu: Mr. Speaker, I in turn would like to ask the Hon. Member on the other side of the House a question. The deficit has doubled since you have been there. Speaking of the universality of social programs, you know as well as I do that the Government to the south of us, during the free trade debates, was really very concerned about our social programs and the possibility- We have proof, Mr. Speaker: unemployment insurance has already been cut! Employees and employers will pay the cost of it.


Mr. Jordan:: Mr. Speaker, I would like to congratulate my colleague on a very succinct and clear summary on a Budget that is going to come down hard on lower and middle-income people in this country. I wonder if she would agree with me that there seems to be a lapse of time here. We hear the Opposition recalling a time when Mr. Trudeau left a legacy, and to a time five years ago when another legacy was left. Then there seems to be a lapse of about five years in which they do not want to discuss anything. Could someone explain to me, and I wonder if my colleague would agree, why there is a lapse in there of five years. No one seems to be able to justify why the cumulative debt doubled in those five years. It did not seem to be a problem when we were going through the last election. At that time, they were announcing new programs, depending on which part of the country you were in.
If you happened to be in Winnipeg last October, you heard a new program being announced that there would be 200,000 day care spaces. They did not say, as I recall, "If we have the money, we are going to do this". There was no mention of that. People assumed that there was money for the program , because the Finance Minister had said so, that the debt was under control. Does my colleague agree that that lapse of time of five years, in which the cumulative debt doubled, seems to be a period that the Opposition does not want to describe or discuss or for us to try to penetrate in any way? They would like us to forget about that five-year period. We have seen that they now consider it to be a disaster period. But seemingly it wasn't a disaster through the election. Can my colleague comment on this?


The Acting Speaker (Mr. Paproski):: Before the Hon. Member answers the Hon. Member for Leeds-Grenville (Mr. Jordan), if there was a misunderstanding as to the amount of time that the Hon. Member had, if she still has two or three minutes left to complete her speech, I will let her complete it, and then answer the question of the Hon. Member.


Shirley Maheu: Thank you, Mr. Speaker. There obviously was a misunderstanding.
The next subject that I wanted to touch upon was international development. Canada has developed a reputation as a nation that cares for the needy and demoralized people of this earth. The way that we have demonstrated our concern has been through a generous

May 9, 1989
The Budget-Mrs. Maheu
program of official development assistance to needy Third World countries. In 1969, former Prime Minister Lester Pearson recommended that development assistance reach 0.7 per cent of an industrialized nation's GDP. Most countries recognize that this is a goal for all states. In 1984, the President of the Treasury Board announced that Canada's official development assistance would reach this target by 1995.
What we are witnessing now is the Government's complete abandonment of its commitment to development assistance. With the figures in the Minister of Finance's Budget, Canada would not reach this 0.7 per cent target until the year 2040, a full 45 year delay in the fulfilment of this Tory promise. This Government has called for a $1.8 billion reduction in official development assistance over the next five years, including a reduction of $400 million in the development budget for 1989-1990 which represents a full 12.2 per cent decrease in Canada's commitment to international development. This means that the Conservatives are abandoning their own commitment to put poverty first as outlined in the International Development Charter signed by our Prime Minister in 1988. Surely this Government recognizes the significant impact this huge reduction will have on the absolute poor of this world. Instead of helping to break the cycle of poverty in developing countries, this country has shifted away from its commitment, and in effect, has broken promises to both Canadians and the international community.
It seems that the international community will learn the same lesson as have Canadians from this Government. They will learn not to judge by the words, but rather by the actions of the Conservatives. It seems very odd indeed that the Prime Minister (Mr. Mulroney) has managed to find the funds to pay the $90 million price tag for our new embassy in Washington when he asked Canadians and the world's debt-ridden countries to tighten their belts. With this Government, Canadians and the Third World have been singing a requiem, while the Prime Minister and the President have been serenading themselves to the tune of "Don't Worry, Be Happy".
Fully 79 per cent of Canadians feel that our foreign assistance programs are either just right or not enough. This budgetary attack on our development assistance programs is morally wrong. While we may have certain fiscal difficulties in Canada, it is reprehensible for this Government to make the most needy in the world pay with their lives for our problems.
Another key area of development responsibility affected by this Budget is passenger rail service in Canada.
According to Lawrence Hannigan, chairman of the board of VIA Rail, 1988 was the best year in the corporation's history. After two successive years of failing ridership and revenues, VIA has managed to turn itself around. Five hundred thousand more people used VIA this year than last. This 9.4 increase in ridership, as well as the 12.9 per cent increase in revenue, fly in the face of the Prime Minister's comments that Canadians are not using the railway as a means of transportation. It is clear that the cut-back in subsidies will jeopardize a service that 6.5 million Canadians use. Why is this Government pulling the rug out from under VIA Rail when the annual report for the corporation states that the operating subsidy level for 1988 is actually 8 per cent lower than in 1982? It seems that in the name of deficit reduction, the catalyst of Canadian Confederation is being sacrificed. The $100 million reduction in subsidies over the next year represents a 13 per cent cut in VIA's total revenue.
No corporation can absorb such a massive reduction without cutting expenditures that, in VIA's case, are vital to its continued growth. Instead of building toward VIA's prosperity and financial independence, this Government is tearing this country's passenger rail service apart and wasting the public's valuable tax contribution that, if not sustained at an appropriate level, will lead to VIA's demise.
Cuts in VIA's service are imminent. Not only will they have a devastating effect on rural communities that rely on this essential service, but on urban ridings as well. This cut in financing of VIA Rail's services will result in an over-all increase in both air and automotive traffic. With the already over-burdened air traffic control and highway systems, we will have to re-examine the question of travel safety in Canada.
As outlined by the Minister of Finance (Mr. Wilson) in the Budget, the cuts to VIA Rail are too harsh and have come at a time when the corporation is turning itself around. The Government should have continued its commitment to VIA Rail in order to ensure adequate transportation services to all communities, and to facilitate VIA's emergence as a viable and eventually profitable Crown corporation.
May 9, 1989


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated. On debate, the Hon. Member for Lotbiniere.


Maurice Tremblay: Mr. Speaker, I too want to express my views, not so much to echo the many arguments made in support of or against the budgetary policy, but simply to shed more light on these economic measures which are designed to serve the best interests of Canadians. All Members will agree with that, Mr. Speaker, regardless of their political persuasion.
When the Progressive Conservative Party came into office in 1984, Mr. Speaker, Canada had just pulled through the worst economic crisis of its history, given the means or economic levers it had developed at the time.
We had unprecedented unemployment, interest rates were so high that we start shaking just thinking they might again soar to similar levels, and our indebtedness was beyond imagination.
From Confederation to its centennial, Mr. Speaker, Canada managed to build a railroad from coast to coast, live through two world wars, keep the armed forces abroad with its allies, provide generous financial assistance to developing nations, and set up a network of social programs which are the envy of other industrialized countries. Despite so many advantages, Mr. Speaker, and despite the cost Canadians had to pay to acquire them, our national debt at the time-100 years after Confederation-was under $20-odd billion and debt service charges were less than 5 cents out of every dollar.
Mr. Speaker, Canadians were then known as credible and trustworthy people, and a great many nations enthusiastically chose our country as their meeting place, Montreal's Man and His World, to mark the 100th year of our Confederation at Expo 67.
We were facing a challenging future, Mr. Speaker, and even more prosperous times still lay ahead.
And of course we had a new leader, Mr. Speaker, a man who entertained fresh ideas and came up with a new slogan: The Just Society! That was our challenge to forge ahead. The Liberal Party was euphoric. Nothing was too good.
Mr. Speaker, the first years following 1967 did nothing but give the Liberal Party a few opportunities to show their ability to govern the country, what with the emergence of Quebec's separatism and the energy crisis
The Budget-Mr. Tremblay (Lotbiniere)
which shook the industrialized world during the first years of the Liberal Trudeau government.
Already at that time, Mr. Speaker, it was clear the Liberal Party was not going to be impressed with such trifles. Proud of their century-old history, they owed it to themselves to overcome what could then be viewed as hickups from a handful of intellectuals trying to get attention. Rapidly arrogance set in, and it fueled the rise of Quebec nationalism which almost led to this country's break up during the 1980 referendum. What happened on the constitutional level also happened on the economic level. After a very bad reaction to the first oil crisis, the then Government was about to do the same thing when the second came, so that in the space of 10 years rather than 100, Mr. Speaker, that is from 1975 to 1984, the national debt grew at an appalling rate to nearly $200 billion. The inflation rate clearly showed the then Government lost control of the economy. The unemployment rate reached an all-time high, and even the computers refused to believe we could have such interest rates! That was the legacy left by the Liberal Party!
During those ten years, Mr. Speaker, from 1974 to 1984, the Liberal Government was literally bent on destroying, to put it mildly, what had been built by our ancestors over the previous 110 years. In those ten years, we went through a period of federal-provincial fighting and as you will remember, Mr. Speaker, Quebec even came close to leaving Confederation. We experienced a worsening of the international political climate, first with France which severed most of its economic relations with Canada. And because of France's leadership in Europe, that dispute with France caused a general slowing down of European investment in general.
On the military level, we experienced a period of stagnation that caused us to seriously lag behind in our commitments to the North Atlantic Treaty Organization, NATO, so that today the effort needed to fill that gap has become phenomenal if not impossible.
Similarly, following repeated confrontations, our relations with the United States which are our most important economic partner had so soured that we had become increasingly concerned about relying on this vital market for our economy. Such is the legacy of the Liberal Party, Mr. Speaker! In 1974, we were faced with a yearly budgetary surplus of nearly $700 million-imagine that!-which in 1984, some ten years later, had turned

May 9, 1989
The Budget-Mr. Tremblay (Lotbiniere)
into a yearly budgetary deficit of $38.3 billion. What a change, Mr. Speaker!
The economic situation we inherited at the time from the Liberal Party was in such a state of degradation that even the Liberal Party would not and could not govern this country any longer, Mr. Speaker. Our first real challenge was to try and govern this country while trying to curb the deficit, a challenge we have met head-on. Not only have we managed to curb the deficit four years in a row, but at the same time we have used economic leverage to make sure that Canada would enjoy the highest economic growth rate of all the industralized nations except Japan. That is extraordinary too!
During these past four years, we have created over
1,300,000	jobs. Yet, Mr. Speaker, we have not had an easy time. Unfortunately, in spite of our performance, the burden resulting from the debt legacy of 1984 was such that we would have needed all the conditions which would have made favourable and perfectly coordinated economic policies possible.
As we know and as you know, Mr. Speaker, inflation has always been and remains one of the most extremely unpredictable and sensitive factors whose quickly growing pressures can soon cancel out all the benefits resulting from economic growth.
The only true and efficient way to control short term and medium term inflation is through an interest rate policy.
On the other hand, it was clear that maintaining high interest levels would reduce proportionately the Government's margin of operation which was extremely limited, in view of the historic past and the legacy left to us. That is precisely the problem which the current Budget is addressing, Mr. Speaker. This Budget has been put together in such a way as to bring down interest rates to more acceptable levels. And one the cornerstones of this Budget is the sales tax reform.
The existing sales tax which is levied at the manufacturing level is one of the key elements of our strategy aimed at preserving our social programs so important to Canadian men and women and guaranteeing once and for all a sustainable economic growth. The current sales tax produces the revenues needed by the government to finance its essential programs.
This tax has serious flaws. It is hidden from consumer, unfair and damaging to our economy. That's how! Moreover, it's the only tax in industrialized countries which favours imports over domestically produced goods. Think about it. This tax is a total nonsense. In fact, the tax levied on goods produced in Canada is, on average, a third higher than the tax on competitive imported goods. That makes no sense at all! That tax is penalizing Canadians. It represents a significant handicap to our Canadians producers, on the domestic market of course, but also on international markets. That is so obvious!
Right now, the federal sales tax is directly levied on only one third of all goods and services consumed by Canadians. In most instances, services are tax-free, which is advantageous to the well-off Canadians, Mr. Speaker, since those are the people who consume relatively more services.
Again, the existing sales tax is not such a reliable source of revenue for the government. Over the years, the tax system was the subject of many tax avoidance provisions, an assortment of special provisions and administrative interpretations, as well as an increasing number of legal actions by the taxpayers. So, the tax system being a major investment to economic growth, Mr. Speaker, the present government has decided to give this problem top priority and will try to resolve the matter through a sales tax reform. The existing sales tax will be replaced by the Goods and Services Tax on January 1, 1991. The new tax, at a rate of 9 per cent, will be applied on the vast majority of goods and services consumed in Canada.
However, and that is particularly important, basic groceries, prescription drugs and medical devices will not be taxed. Similarly, Mr. Speaker, residential rents, child care services, legal aid and most health, dental and educational services will be exempt as well as loans, mortgages and life insurance premiums. Special steps will be taken to minimize compliance costs for small businesses since, as we all know, small- and mediumsized businesses are the key sector in our economy.
Mr. Speaker, at 9 percent, the new tax will generate enough revenues to replace, not "add to", the present federal sales tax, including the additional revenue it will produce pursuant to the budget. The new tax will also allow further income tax reductions for average households. Finally, it will fund a new sales tax credit which will be considerably more generous than the present one. This refundable credit will be paid out quarterly,
May 9, 1989

the first payment to be made before the coming into effect of the new tax. The government's aim is to ensure that families who earn less than $30,000 a year will be better off after the sales tax reform than before.
Mr. Speaker, help will also be given to home buyers, since this too is a key sector of our economy. As is often said, when construction is booming, so is the economy. In fact, homebuyers who may have trouble finding an affordable house as a result of the tax reform will receive assistance.
At the present time, the consumer has no way of knowing whether the price of the item he buys includes or not a hidden federal sales tax. With the new tax, the consumer will know exactly how much goods and services tax he is paying, which means that it will be easier for him to buy sensibly. In this respect, the goods and services tax is similar to the provincial retail sales tax.
The sales tax reform will provide major economic benefits for Canada. By removing the federal sales tax from the production of goods and services, it will lead to higher investment and improved productivity. There will be greater domestic output and higher real incomes for Canadians.
Strengthening Canada's international competitiveness and eliminating existing biases in favour of imports will encourage Canadian production and help create jobs for Canadians.
Mr. Speaker, the estimated economic gains as a result of federal sales tax reform will be around $9 billion annually, gains that will be enjoyed by all sectors of the economy and all regions of this country. Sales tax reform will also bring more fairness, a more equitable sharing of the tax burden. It will make federal sales tax fairer and more visible to consumers. It will establish a more stable foundation upon which the Government can maintain essential public services and manage effectively the problem of Canada's debt.
I was listening to the previous speakers who said that in four years we had almost doubled or at least substantially increased the deficit the Liberal Government had left us in 1984. That is what I call irresponsible, Mr. Speaker.
I referred earlier to the state of euphoria in the Liberal Party when they came back in 1967, but now they
The Budget-Mr. Tremblay (Lotbiniere)
are being totally irresponsible. Mr. Speaker, with a population of about 26 million, how do we reduce an annual debt of $ 38.3 billion? How do we do that without touching the sancrosanct principle of universality of our social programs and without cutting into any of the expenditures initiated by the Liberal Party? No, no cut backs! We had to accept the deficit because a Government has no choice but to accept the economic situation it is left by its predecessor. But that isn't what the Liberal Party wanted.
They consider it their prerogative to create debt, but we Conservatives are not allowed to do that. We can't touch anything! That is the legacy they left us. As I said earlier. Mr. Speaker, four consecutive years of reducing the debt is a first in Canada's history. And I may recall that when the Liberals came to power, with the advent of the Just Society, less than 5 cents of every dollar was spent to pay the interest on the debt. Today it is 35 cents and in 1984 it was 31 cents. Once again, all the decisions we have made have an impact on various sectors, and the problem is how to manage debt reduction.
With this Budget's help, however, we will not only maintain our credibility as a Government that manages the interests of this country as they should be managed, we will also be able to bring interest rates down, which is perhaps the most crucial problem today, and thus accelerate reduction of the debt.


Mr. Flis:: Mr. Speaker, I respect the hon. gentleman's position in this House as a Member of Parliament since he was put here by a majority of the constituents in his riding. However, if his constituents heard what he was saying this afternoon in the House, I think that they would be very ashamed of his representation.
The debate before us concerns the Budget. Yet in his remarks he pulled out the problems of separatism and the problems concerning the referendum. He ran down the former Prime Minister, the greatest Prime Minister in the history of Canada, who is not here to defend himself. He talked about former Prime Minister Trudeau being bent on destroying the country.
In my riding I have constituents from over 50 different countries. Practically every one of them says what a great

May 9, 1989
The Budget-Mr, Tremblay (Lotbiniere)
country Canada is. They say: "We are so pleased that we have found ourselves in this country".
Who built the country to that stage if not previous Liberal Governments and previous Prime Ministers such as Pierre Elliott Trudeau?
The Hon. Member talked about the former Prime Minister's reputation. When I was a Member here previously for five years, I had the pleasure of representing Canada in Madrid at the Human Rights Conference, in England and other countries. Members of Parliament would come to me and say: "Mr. Flis, you people are so lucky to have a Prime Minister such as Mr. Trudeau".
The Hon. Member has stood up and in his remarks on the Budget lowered the greatness of our former Prime Minister. I am sure that his constituents will be quite ashamed of his representation.
The Hon. Member talked about the differences among the provinces. Pierre Elliott Trudeau believed in a strong central Government. He did not give in to the whims of every little region in the country. He believed in what was good for the country as a whole.
If the Government of the Hon. Member has such a great rapport with all the provinces why are not most of the provinces supporting the federal sales tax brought in by the Minister of Finance (Mr. Wilson)? Why are three provinces objecting to the Meech Lake Accord if his Prime Minister (Mr. Mulroney) and his Government have such a great rapport with the provinces?
I am trying to bring the hon. gentleman back to the debate before us and not have him talk about separatism and the referendum. It was thanks to the former Prime Minister Pierre Elliott Trudeau that we have today a united Canada.


Maurice Tremblay: Mr. Speaker, first I understand that members of the Liberal Party praise former Prime Minister Trudeau and will continue to do so because he is indeed the one who made it possible for that bunch of nincompoops to sit with him for more than sixteen years. Obviously, Mr. Speaker, they will glorify him.
Now, I personally would not wish to denigrate him, because we must render unto Caesar the things which are Caesar's. But what do you want, politics is also part of government, and the Budget is also part of politics. So
in that way, it is a whole and all those policies had an effect, unfortunately a harmful effect on Canada's development. It is true that Canada remains a country with some credibility because the people see to it every four years. At some point, they had enough and made a radical change because we were literally headed for bankruptcy. The Hon. Member says, "Look, Mr. Trudeau still believes in a strong Canada-" We certainly know that; he even took the trouble to travel here from Montreal, to go to the Senate Chamber and again give his vision of Canada-an outdated vision. How can one support such a former Prime Minister who to boost his ego-imagine-repatriates the Constitution without the agreement of the Province of Quebec, one of this country's founding nations? Why do you want to pay tribute to such a Prime Minister! And when you say that in fact there are three provinces opposed to the Meech Lake Accord, that is wrong, unless you are a Liberal, perhaps!
None of the Premiers is intelligently opposed to the Accord. They are for the Accord but want it improved. That is the reason for their opposition, because they want to repair not just a mistake but an aberration in Canadian history. Imagine! What province do you come from? From an English-speaking province. If your province had not signed the agreement in 1982, would you be so proud of the man who was then your Prime Minister? Well, I am from the Province of Quebec and I feel that our rights were violated and ridiculed to satisfy the Liberal Party's own ego so that it could continue to spend and leave us a $38-billion debt, not in 100 years but in one year, twice as much as in the previous 100 years. That is what your former Prime Minister and your Liberal Party did!
Yes, you may well leave this House, this honourable Chamber which is entitled to honourable remarks.


Pierre H. Vincent: Mr. Speaker, allow me first to commend the Hon. Member for Lotbiniere (Mr. Tremblay), an outspoken member who is expressing the beliefs of Canadians and his constituents. The Hon. Member for Lotbiniere was re-elected with a five-fold majority, and this is quite an achievement we recognize.
The Hon. Member opposite suggests his constituents were not proud of him, but I rather believe the Hon. Member for Lotbiniere has been active enough during these last four years to get re-elected by five times his previous majority.
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The Budget-Ms. Phinney
Mr. Speaker, I was listening to his speech on the federal sales tax. Although I am in total agreement with him, I know the Hon. Member for Lotbiniere emphasized the antiquity of the federal sales tax. As you know, Mr. Speaker, the federal sales tax is entitled to its old age security pension because it is turning 65 this year.
We also know the new tax proposed for 1991 is already in place in 48 nations around the world and it works very well.
I would like to ask the Hon. Member for Lotbiniere, in view of our antiquated federal sales tax system and the example set in 48 nations, doesn't he feel that indeed, here in Canada, that new tax will be most valuable not only to the country as a whole but to every Canadian?


Maurice Tremblay: Mr. Speaker, I thank and I commend the Hon. Member for Trois-Rivieres (Mr. Vincent) who, in his capacity as Parliamentary Secretary to the Minister of Finance, ensured that this Budget is in line with realities Mr. Speaker, because we have international economic relations as well as political ones. Canada must consider adjusting to what is going on around us.
As I said, Mr. Speaker we are essentially an exporting nation. We export some 85 per cent of almost everything we produce. It is therefore vital to look at what is going on around us. The current sales tax is recessive, hidden, unfair, and it does not bring the Government adequate support.
With this new type of tax on the other hand, and as I said this is a replacement rather than something added-on to what already exists, we are going to do-away with the old tax and are going to tax at a much more normal and fairer rate. But now Canadians will know what they are buying, and also a widened tax base will allow the Government much more sustained revenues, as I said earlier to the Hon. Member from the English speaking provinces, so that Canada may maintain its vital economic credibility.


The Deputy Speaker (Mr. Paproski):: Questions and comments are now over. The Hon. Member for Hamilton Mountain (Ms. Phinney) for debate.


Ms. Beth Phinney (Hamilton Mountain):: Mr. Speaker, this Budget has deeply shaken my faith. I always believed in Canada as the tomorrow land, a golden land, a gift to an inherently decent people: Canadians. A gift of abundance that needed only to be administered by a fair and hopefully wise group of legislators. But this Budget is a parody of fairness. It panders to and protects the privileged and the profit takers and hurts those who are struggling to make a decent living. It abandons the needy and misdirects the public with its bafflegab.
What is most frustrating is to see the Hon. Minister introduce the Budget with the same amount of dignity one would accord to a new brand of toothpaste or mouth wash entering the market-place. After introducing his Budget at the press conference, he has launched a crass media blitz. A silver dollar rolling on to the screen should be the first signal that Canadians are about to get the run- around from this Government once again.
Thirty seconds later we are no wiser about the content of the Budget than we are about the contents of toothpaste. Once again, our pockets are lighter as we are made to pay for this ridiculous exercise.
What is truly galling about these commercials is the implied threat that if we do not deal with the debt now we risk losing our social programs in the near future.
The Finance Minister has already attacked those social programs by completely stopping the federal Government's support to the unemployment insurance program, and with the claw- back clause on senior pensions and family allowances. He is fighting the deficit by broadening the taxation, rather than trimming the operation costs and eliminating unnecessary expenditures.
It adds up to a trim in spending of $3.5 billion, new taxes and assorted other measures of extracting funds from the people of $10.6 billion. It is the Government versus the Canadian people and as the score indicates, in this Budget the people are clearly losing.
The UIC rolls will shrink, the Minister tells us, and the funds will be earmarked for retraining. What are we training them for? Where are the jobs? The Minister cannot predict that there will be jobs. He cannot predict where those jobs will be. If he does not know what and where, then how will he know what they need to be trained for? Providing Canadians with sketchy, questionable training and not providing jobs, dumping them from the UIC rolls straight on to the welfare line, is this the present Government's idea of progress?

May 9, 1989
The Budget-Ms. Phinney
This country has been built on the free enterprise system. The people I represent on Elamilton Mountain believe in a strong private sector and jobs, good jobs. They want to see us using our resources wisely, creating jobs through research and marketing, not squandering our precious resources on whoever wants them for a quick buck. Canada spends less on research and development than almost any western country. That is a scandal. We have an embarrassment of riches and all this Government does is give them away. What about creating wealth? What about focusing those resources and encouraging the growth of industry that our children will benefit from. Where are the guidelines that demand a partnership with Canadians? It should be considered a privilege to do business in Canada. There is a skilled labour force, an abundance of resources and access to transportation.
We have a stable democracy. We are next door to one of the largest, most lucrative markets in the world. Yet foreign investors dump large chunks of capital into real estate and commercial development in this country. They sit and wait for the equity to build and their money is as safe as it would be in a bank, reducing Canadians to the status of tenants in their own land.
Where are the jobs that are created from this type of investment? When did obligation and accountability go out of vogue? Why have we not learned from the economic initiatives of European and Pacific Rim countries, which have learned that research gives a country a competitive edge and that aggressive market strategies provide the mission statement for a healthy nation. We are faced in this country with a gap between the haves and the have nots that is accelerating at an unnerving rate. Witness the need for food banks in our major cities, a need that hardly existed five years ago. The victims, single parent families, usually headed by women, and the casualties of plant shutdowns, where is the hope for them?
The Budget is not solely an administrative tool any longer. Today, more than ever, it should be a tool for social justice. Skilfully wielded by a person with vision, it has the power to achieve greatness, to create wealth and opportunity and the social justice that Canadians demand. However, in the hands of a Government with no social conscience, the Budget also has the power to create despair. For the single mother in Toronto, the fisherman in the Atlantic provinces, the smoke stack
industries in our cities, the underfunded research centres and universities, where is the thoughtful consideration of their future? They are the heart and the essence of Canada.
I remember when Canadians talked about a just society, when we were admired for our quality of life and of opportunity, and not solely for our viability as an economic unit. Canadians have a sense of fairness that extends far beyond our borders. According to a recent poll, 86 per cent of Canadians believe Canada has a moral duty to assist the developing world. In the Third World, Canada means hope. Canada is a helping hand in times of crisis, a partner in long-term programs that help people help themselves.
With this Budget I fear Canada will be known instead for hypocrisy. While the globe-trotting Prime Minister (Mr. Mulroney) pretends to be a friend of the developing world, this Government has cut the foreign aid budget by $1.8 billion. It has turned its back on the most vulnerable people on earth, on those who go hungry, who have no access to basic medical care, no roof over their heads and no school for their children. Is this what Canada stands for? Is this the uncaring face we show the rest of the world?
Let us not forget the economic cost of these vicious cuts in foreign aid. Canada relies on its export markets. By turning our backs on the developing world, we throw Canadians out of work. I quote from a speech by Ivan Head, the President of the International Development Research Centre to the Canadian Club of Hamilton recently: "The economic downturn in the southern hemisphere in the past seven years has led to the loss of
130,000	Canadian jobs and at least $24 billion in export revenues".
This Government must pull its head out of the sand. The world is becoming more interdependent every day. By slashing foreign aid, we reduce Canada's stature in the world community. We undermine the goodwill that is so important in expanding our export markets. We ignore the threat to the planet's environment. Worst of all, we ignore the suffering of millions of our fellow human beings. The cost of progress must always be balanced against the quality of life. Canadians recognize this. We have always paid the premium. Historically, we have always decided that the cost of being Canadian is not too high but, indeed, a bargain for the freedoms and privileges we have enjoyed.
May 9, 1989

We Liberals measure our success much differently than do Tories, that much is evident. The Tories look for comparisons with the giant economic unit to the south. We Liberals, on the other hand, measure success by finding ways to meet the needs of Canadians now and in the future.


The Acting Speaker (Mr. Paproski):: Questions or comments? the Hon. Member for Swift Current-Maple Creek.


Mr. Wilson (Swift Current-Maple Creek):: Mr. Speaker, I listened with some interest to the comments of the Hon. Member for Hamilton Mountain (Ms. Phinney) and felt compelled to make a couple of comments and ask her a question.
The Hon. Member's speech contained the mandatory criticism, of course, criticizing the expenditure reductions in the Budget and criticizing the tax increases. She went on to accuse the Government of hypocrisy and, yet, in the Hon. Member's speech she criticized the Government for expenditure reductions. At the same time, she suggested the Government has not gone far enough in chopping the fat out and in reducing expenditures. I find the Hon. Member's message rather contradictory.
I believe she went on to say that we paid a premium for being Canadians. I think, if anything, what we have done is mortgaged the future in order to pay for the programs of the past and that is what has led us into this debt problem that we have today, the interest charges on which are consuming so much of our national revenue and which threaten the social programs of tomorrow and, indeed, the future of our children.
I heard the Hon. Member criticize tax increases on the one hand, criticize expenditure reductions on the other. I would like the Hon. Member to say here today what she and her Party would do to meet the problem that we have out there. We will not even bother getting into recriminations about how that debt arose, but let us just talk about addressing the problem today. What would the Hon. Member and her Party do in place of the measures which the Hon. Minister of Finance (Mr. Wilson) has put forward?


Elizabeth  (Beth) Phinney: Mr. Speaker, I do not think the Liberals have to take any lessons from the Conservatives about the way the Budget has been run. The Conservative Party, our present Government, has doubled the debt in
The Budget-Mr. G. Wilson
the last four years. We have a Budget now that will not cut the deficit and will not cut down on the debt.
I think one thing is apparent to the public, and I have probably 40 or 50 letters from my riding coming in every day explaining how people feel about the Budget. It is the people who have to pay for these cuts, the same people over and over again, those people who can least afford them. I think an example in the Minister's Budget in Brief that we saw the night before the Budget was brought down in the House. It explains the philosophy of this Government when it is talking about the cut in foreign aid and considers it a saving. Savings will amount to $1.8 billion. When we cut the budget to foreign aid, the present Government is calling that a saving. Our Party would not consider it a saving to cut foreign aid by $1.8 billion.


Mr. Harvard:: I have a question, Mr. Speaker. I would like to ask the Hon. Member for Hamilton Mountain (Ms. Phinney) whether she feels this Government has the mandate to do some of the things that it proposes to do in the current Budget. For example, does the Government have the mandate to privatize unemployment insurance? The Tories certainly did not talk about privatizing unemployment insurance during the election campaign. Does this Government have the mandate to bring an end to universality? There was no discussion in the campaign about bringing universality to an end. There was no discussion about further severe cuts to the CBC. There is talk now, for example, of perhaps changing the mandate of the CBC as a result of cuts, closing down stations, for example, at Sydney, in Labrador, in Saskatchewan.
Given the rhetoric from this Government during the election campaign, does the Hon. Member feel that this Government has the mandate to do what it is proposing to do?


Elizabeth  (Beth) Phinney: Mr. Speaker, I think probably it could be argued that the Government does not have the mandate to do what it is proposing. The Government discussed before the election that the Party which managed this country should be given the mandate and the power for another four or five years because they, the Tories, had done such a good job managing the economy over the last five years. As I have already mentioned, that management consisted of doubling the debt over the past four years. The Government asked us to give it the mandate for another five years but unfortunately, as

May 9, 1989
Canadians are learning, the Tories do not deserve this mandate.


Mr. Blackburn (Brant):: Mr. Speaker, I have a question for the Hon. Member for Hamilton Mountain (Ms. Phinney). It has to do with this very, very important area of universality which is pretty basic to the social programs in this country. The Conservative Government will argue that the claw-back of old age security is not an assault on universality. But, in fact, it is.


Mr. Dick:: You are wrong.


Derek Nigel Ernest Blackburn: I do not think there is any doubt that once the Government introduces legislation in a Budget allowing a total claw-back of a social service-


Paul Wyatt Dick: From the rich.


Derek Nigel Ernest Blackburn: -then you have, in fact, the termination of the application of universality.


Paul Wyatt Dick: No, they all get a cheque.


Derek Nigel Ernest Blackburn: It may be $50,000 now but the Finance Minister may decide next year he will reduce that amount to $40,000 or $30,000 or $25,000. Then the old age security becomes a government hand-out or a social welfare payment to the elderly who are retired. That is then the end of universality.


Paul Wyatt Dick: Is this a question?


Derek Nigel Ernest Blackburn: The question I want to put to the Hon. Member for Hamilton Mountain-and I thank her for her maiden speech if it was her maiden speech. It was her first speech I have listened to in this House. I congratulate her on that and on her election. I want to know whether or not her Party would restore full universality if they were elected at the next election.


Elizabeth  (Beth) Phinney: Mr. Speaker, universality is the basic right of all Canadians. At what point will it stop? The Government is saying now $50,000. Next year that amount may be $40,000 and the next year $30,000. It is a basic right of every Canadian to receive their pension and their family allowance.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated. Debate. The Hon. Member for Fredericton (Mr. Bird) will be the first speaker at three o'clock.
It being one o'clock I do now leave the chair until 2 p.m.
At 12.59 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Mr. Bill Attewell (Markham):: Mr. Speaker, the 166-member assembly, the World Health Organization's governing body, began its annual two-week session yesterday. The organization may be taking a very important but divisive vote today. The vote is whether or not to grant full membership to the Palestine Liberation Organization.
Full membership in WHO would automatically allow the PLO to join several other agencies such as the UN Conference on Trade and Development. The United States, which contributes 25 per cent of WHO's yearly budget of $73.8 million, is expected to vote against the PLO because it is not a legitimate state in control of a territory, borders or a government. Admittance to full membership is therefore both undeserved and premature. I am pleased to say that for the same reasons, Canada will also be voting against any move to grant full membership to the PLO.



ENVIRONMENTAL AFFAIRS


Mr. Rex Crawford (Kent):: Mr. Speaker, something is rotten in the State of Michigan. The Detroit garbage incinerator will be completed this month without state-of-the-art pollution controls. The Government has not even lifted a finger to stop or to delay the world's largest incinerator.
This garbage-burning monster is only three miles from the Canadian border but the impact area extends well into Ontario. Sailing in the breeze every year will be sulphur oxides, hydrogen chlorides, arsenic, chromium, mercury, dioxins and furans which could be reduced by imposing the necessary controls. The incinerator will burn 2,000 tonnes of trash each and every day.
May 9, 1989

The Americans say it is too expensive to install better anti-pollution equipment. I say it is much more expensive to affect the health of residents downwind.
The Government should follow the lead of Ontario's Environment Minister. He is showing guts and real commitment by taking the Yankees to court. He is defending our interests. Where is the Government of Canada on this matter?



ENTREPRENEURSHIP


Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, women entrepreneurs have finally come of age in Abitibi-Temiscamingue. And to emphasize this fact, the Abitibi-Temiscamingue Chambers of Commerce every year give an award to five women who have made their mark in the business world through their dynamism and outstanding achievements.
I should like to congragulate Diane Raymond, from Ville-Marie, Lise Gendron, from La Sarre, Helene Lagrange, from Rouyn-Noranda, Dolly Lepack, from Val d'Or, and Jocelyne Deshaies, from Amos, the five award winners for 1989 for their tremendous success in the business world. Through these women, Mr. Speaker, I wish to congragulate and thank all the women who are continuously working for the development of our Abitibi-Temiscamingue region.



FISHERIES


Ms. Catherine Callbeck (Malpeque):: Mr. Speaker, this past weekend in my riding, two lobster boats became caught in excess silt and were forced to wait until the tide came in before they could come ashore. Events like this should never happen and would never happen if the ports of Prince Edward Island were properly dredged.
The recent Budget is inadequate. It is unacceptable because it does not have sufficient money to keep our harbours safe and our wharfs properly maintained.
The fishery is one of the most important industries in Prince Edward Island. It means approximately $80 million in landed value to the fishermen and totals about $200 million to the Prince Edward Island economy. I urge the Minister of Finance (Mr. Wilson) to think again and to evaluate the effects of his budget on the safety and future of the fishery in Prince Edward Island.



MUNICIPAL AFFAIRS


Mr. Steve Butland (Sault Ste. Marie):: Mr. Speaker, I rise today to draw the attention of the Government once again to the crisis of deteriorating roadways, bridges and sewer systems across Canada. One example that portrays this crisis is the fact that more than eight million Canadians live in municipalities that provide no sewage treatment whatsoever.
Municipalities do not have the tax base to address this issue alone but are willing to raise their share of one-third of the cost as are all provincial Governments. The federal Government is not, despite veiled promises made from time to time before the Budget. In the meantime, both the deterioration and the price escalates. It is now $15 billion.
The Federation of Canadian Municipalities has a concrete proposal endorsed by its 1,200-plus members which would help clean up our environment, create
60,000	good paying jobs, reduce the deficit through tax revenue and rebuild the infrastructure of Canada. I call on the Government to enact one positive initiative out of a totally negative and regressive Budget and allocate the $600 million generated from tax increases on gasoline to this plan. It would be a small step toward addressing the issue, but at least it would be a positive step which would improve the quality of life of all Canadians.



FORESTRY


Mr. Jean-Luc Joncas (Matapedia-Matane):: Mr. Speaker, the Lower St. Lawrence Gaspe Forest Association has just held in the Matapedia Valley its annual convention which had brought together under the same roof some 200 groups more or less directly involved in forestry and the important roles it plays in our daily lives.

May 9, 1989
This year, during the Week of the Tree which will be held between May 7 to 13, each Canadian man and woman should plant a tree and use this period to reflect on the impact forests have on our economy, environment, our health generally, as well as on the conservation of our fauna and water resources.
Contrary to an opinion held much too long, Mr. Speaker, this wealth is not inexhaustible and should be preserved through a well thought out forestry policy so that future generations can enjoy healthy and luxuriant forests.
Today, Mr. Speaker, we are no longer referring to lumbermen but forestry workers who fully deserved admiration and to whom I wish to pay here a special tribute. They are the gardeners who through their professional dedication, will deliver the forests of tomorrow.
Finally, I want to pay a special tribute to the late J. Donat Brule, a great forestry engineer who founded the "Club 4H" on February 20, 1940, in an effort to teach young men and young women the desire to protect trees.



FREE TRADE AGREEMENT


Mr. Jack Whittaker (Okanagan -Similkameen-Merritt):: Mr. Speaker, once again we have evidence of the Government being less than candid and indeed untruthful with the Canadian people in respect of the real effects of the trade deal. In today's issue of The Globe and Mail, Galen Weston, food conglomerate chairman and president of Loblaws, says that Canadians should not expect any kind of break at the supermarkets as a result of the Free Trade Agreement.
During the election campaign, the Government promised Canadian families that $85 to $130 would be saved annually by a family of four on their supermarket bills due to cheaper imports as a result of the free trade deal. Instead, we have seen over the last year a 4 per cent hike in grocery prices, the largest increase since the summer of 1987. As a result of the 1989 Budget tax grab, we can expect further food price increases.
Again, we have seen the Government mislead the Canadian consumer and have evidenced the Government's lack of credibility in keeping election promises. Even the corporate friends of the Prime Minister such as Galen Weston are now saying that the Government has misled the people of Canada on the Free Trade Agreement.



TELECOMMUNICATIONS


M. Mark Assad (Gatineau-La Lievre):: Mr. Speaker, a decision rendered by the CRTC concerning an aspect of telecommunications in Western Quebec does not reflect the reality of the Ottawa area and the services that its people want.
The proposal by Bell Canada is the result of several years of consultations with all the municipalities and local agencies. Bell Canada's proposal, in conjunction with the municipalities, is fair and equitable since it gives Western Quebec the same services as are found on the Ontario side.
We ask, Mr. Speaker, that the CRTC review the proposals and render a decision which truly reflects the situation in Western Quebec.



AGRICULTURE


Mr. Ross Stevenson (Durham):: Mr. Speaker, the number of farm bankruptcies declined by 8.2 per cent in 1988, continuing the downward trend established in 1984. Of course, there are many reasons for this positive trend. Ever-improving fiscal management and improvements in prices of some agricultural commodities are two major factors. Major financial support by the federal Government, through stabilization, special grains and drought assistance programs, has also been a major contributor to the improved economic outlook on many of our farms. The economic well-being of our farm families is a concern of all of us. Leadership by the federal Government has and will continue to assist in the continued evolution of a strong agricultural industry in Canada.
May 9, 1989



THE HOUSE OF COMMONS


Mr. Gabriel Fontaine (Levis):: Mr. Speaker, the star athletes of the parliamentary media and the ordinary sportsmen of the House of Commons have just held their Seventh Squash Tournament.
Although our opponents had obviously been training hard for a long time, they barely held on to the cup in this tournament between the media people and the elected representatives.
Since 1984, the tally is: MP's 5, Media 2.
I congratulate them, but our day will come. See you next time.


REGIONAL ECONOMIC DEVELOPMENT
Mr. Gilles Rocheleau (Hull-Aylmer):: Mr. Speaker, I want to talk about the financial contribution of the federal government to the proposed tourist train between Hull and Wakefield.
As a result of unrelenting efforts on the part of the community, particularly representatives of the three city involved, Hull, Hull-Ouest and La Peche, which have bought the railway infrastructure between Hull and Wakefield, Quebec has granted $1.4 million to this project which will bring in $17 million in revenue and create about 124 jobs.
Unfortunately, Mr. Speaker, the federal and provincial governments have been playing ping-pong with the tourist train proposal, and that unwarranted delay could jeopardize the project scheduled to start in May 1990.
Consequently, I insist that the Minister of Regional Economic Expansion speed up the analysis so that the project sponsors can get an answer before the end of May of this year, of course, Mr. Speaker. I do hope the Hon. Member for Pontiac-Gatineau-Labelle will support my request.


THE ECONOMY
Mr. Lee Richardson (Calgary Southeast):: Mr. Speaker, my constituents are upset about high interest rates that are a result of government debt and inflation. Our Government has attacked this debt. We are told interest rates are high to fight the ravages of inflation. Westerners ask, what inflation? Inflation in Alberta is not out of control, but it is in Toronto, and we are all paying for it. Another irresponsible Liberal Government is spending like a drunken sailor at a time when its economy is booming. Its excessive government spending and deficit financing is fueling inflation and driving up interest rates to the detriment of Canadians in western Canada and in other regions.
Our Government is taking bold initiatives to fight the debt. What is the Peterson Government doing? While we trimmed 10,000 civil service jobs, Ontario has increased its civil service by 7,000. While we cut salaries and spending by 25 per cent, the Ontario Government increased spending by 24 per cent. When we cut administrative costs by 48.3 per cent, the Ontario Government's comparable costs increased by 25 per cent. Westerners are saying, enough is enough.


SPACE RESEARCH
Rodney Edward Murphy: Mr. Speaker, for years now Canadians have known that the ozone layer, sheltering the earth from the sun's harmful rays, is at risk. Canadians should also know that we have one of the finest research stations for monitoring that ozone layer right here in Canada. In Churchill, Manitoba, we have what is considered the finest northern rocket range station in the free world for studying the ozone layer. The Manitoba launcher is praised by American and Canadian scientists alike. I quote one American scientist who has said:
It is the best location for such research.
In addition, Churchill's launching pads are indoors and heated, essential for winter launching. However, in 1985, the Canadian Government decided to shut down the Churchill rocket range by 1992.

May 9, 1989
Oral Questions
Since 1985, however, we have discovered the need for rocket research in order to better understand and monitor the ozone layer. Since 1985, the United States itself has doubled its annual number of rocket launches. This year there have been four NASA launches in Churchill. Given the renewed interest by the North American scientific community in the use of rocket launchers, I would call upon the Government to reconsider its decision to close down the Churchill rocket range.


NEW DEMOCRATIC PARTY
M. Yvon Cote (Richmond-Wolfe):: Mr. Speaker, today I would like to salute Mr. Roger Lagasse and to wish him success on the bicycle tour he plans to do across Canada. As you know, Mr. Lagasse, a long-standing member of the New Democratic Party, wants to succeed Mr. Broad-bent. It was reported today in The Citizen that Mr. Lagasse is planning this cross-Canada bicycle tour to make himself known and to collect funds for his campaign. Himself and his NDP colleagues are strong supporters of development and environmental issues as well as other issues. I hope Mr. Lagasse will complete his tour on time and will give an example of courage, honesty and professional ethics to all other candidates who, like him, wish to participate in the leadership campaign.


AIR TRANSPORT
Mr. Howard Crosby (Halifax West):: Mr. Speaker, over the next few weeks, thousands of Canadian university students will criss-cross this vast country in search of summer employment opportunities. All Members of this House are well aware of the cost of travel in Canada and should ask, how can university students carry this burden of travel expense? The student stand-by fare to travel from Nova Scotia to British Columbia is $460, $50 more than the seat-sale price. Surely, Canada's major airlines can give students a better deal on empty seats. I call upon Air Canada and Canadian International Airlines to give students a break.


EXTERNAL AFFAIRS
Jesse Philip Flis: Mr. Speaker, recently the Paris Club, of which Canada is a member, held a special session on Poland's substantial foreign debt. For over seven years, the western world has been using economic sanctions to push for reforms that they believed would enable Poland to salvage its own economy independently. The legalization of Solidarity has motivated the United States, France and Germany to accept in principle some of the responsibility for trying to ease the burden of debt that has crippled Poland for so long.
We are pleased to have the Minister of Foreign Affairs of Poland's People's Republic, Mr. Olechowski, with us in Canada to discuss the developments that have occurred in his country and the ways and means in which we can facilitate freer trade between our countries. Poland is seeking to reschedule its foreign debt, and we should be generous in our approach by encouraging joint ventures, promoting investment and increasing Polish imports to Canada. We look forward to the elections in June as a symbol that Poland is moving in the right direction towards economic stability and greater freedom for the people of Poland.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is for the Minister of Finance. It used to be that Canadians in this country who worked for 45 years and helped build our country were entitled as a matter of citizenship to the old age pension. But now more and more Canadians are telling Members of Parliament, why bother planning for retirement when the Conservative Party can change the rules at any time? To show the injustice of the Minister's proposals on old age pensions, I want to use his formula, which he cutely calls CPI-3. Using his formula, will the Minister confirm that 55 year-old Canadians whose incomes are currently $25,000, as a result of inflation will have their old-age pension taxed back at age 80? Will he confirm that 45 year-old Canadians whose incomes are $18,000 will, as a
May 9, 1989

result of the same formula, have their old age pension taxed back at age 80?
What is that, Mr. Speaker, if not the end of universality of our social programs?


Geoff Wilson: Mr. Speaker, I think Canadians know from the many improvements that we have brought into the retirement savings system over the last four years that we are veiy, very much committed to a very responsible and broad retirement savings system in Canada. We have improved the Canada pension plan system. We have improved the rules on vesting and on portability and part-time pensions so that many more people can be eligible for pensions. They can also move those pensions and take them with them when they change jobs.
We have changed the rules on Registered Retirement Income Funds, again to give people more flexibility on the investment of their retirement savings when they reach age 71. Our commitment is very clear.
What the Hon. Member is attempting to do with his question is to draw very unfair conclusions. He knows that we made changes when we brought in the CPI-mi-nus-three formula in 1985. In 1987 we proposed changes that raised thresholds for people who were affected by that through an increase in the low-income threshold. This is something that we have committed ourselves to do in this Budget and to monitor on a regular basis.


John Napier Turner: Mr.Speaker, the formula I am basing my questions on is found at page 9 of the Minister's own Budget Papers. What he has really done is admitted the weakness of his proposal in that the old age pension is now discretionary on the whim of a Government. It is no longer statutory. It is no longer a formula upon which Canadians can plan throughout their working lifetime.


RETIREMENT PLANNING
John Napier Turner: Mr. Speaker, still referring to the Budget papers and the Minister's own calculations, figures and formula, in 20 years, over 2 million seniors will have to pay tax on their old age pensions. According to the Minister's formula and calculations, a 45-year-old couple who now earns $28,000 a year will have to pay tax on their old age pensions when they retire. Like everybody else, that
Oral Questions
couple is now planning for their retirement. How can they plan for the future when the Conservative Government has promised to review income level from time to time over the next few years?


Geoff Wilson: Mr. Speaker, the Leader of the Opposition has said things that are false. We have introduced many changes in the pension plan system that are very beneficial to Canadians. In response to the first question, I also said that many changes were good for pension plans. I said it is very important to understand that 4 per cent of Canadians are affected by changes in the rules and I think it is very equitable. We have a debt problem and all Canadians must work on it.


John Napier Turner: Mr. Speaker, the Minister has said that the figures I quoted in this House are false, but they are based on his own formula in his own Budget Papers. If the Minister can produce a document proving me wrong, let him do it! Otherwise, he has to start telling Canadians the truth.


Some Hon. Members:: Right on!


FAMILY ALLOWANCES TAX-BACK
Right Hon. John N. Dimer@Leader of the Opposition: If we could turn to the family allowance, under the plan announced by the Minister of Finance, and again based on the formula in his Budget Papers, in 20-years' time a family now living at the poverty line and earning $23,600 a year will have their family allowance taxed back. That relates to a family now living at the poverty line and based on the Minister's formula. The Minister shakes his head. Let me give him another figure.
Will the Minister explain why today, even without the use of his formula, a yuppie couple living on a joint income of $99,000 will not have their family allowance taxed back, while a single earner with only half that income will have his or her family allowance taxed back? What type of a scheme is that?


Geoff Wilson: Mr. Speaker, the Hon. Member is drawing all sorts of conclusions which have no basis whatsoever in reality.
Let me draw the Hon. Member's attention to the summary for taxpayers on tax reform which was brought out two years after we made an adjustment to the indexation formula. That change clearly demonstrates that we are going to review these things and, where it is appropriate, we are going to make changes, as we did two

May 9, 1989
Oral Questions
years after we made the adjustment in the indexation formula.
Let me also draw the Hon. Member's attention to the change. For a married one-earner couple we raised the low-income threshold at which individuals start paying federal tax from $16,770 to $18,890. For a married couple aged 65 and over, we increased the threshold from $16,945 to $19,010.
It is clear that when we say we are going to review those matters, we have demonstrated in the past that we are going to review those matters. Those particular statistics that the Hon. Member is using are pure scare tactics, and the Hon. Member knows it.


DANGEROUS PRODUCTS
Ms. Sheila Copps (Hamilton East):: Mr. Speaker, my question is for the Minister of the Environment. Over the past 24 hours Canadians have become increasingly concerned about the absolute negligence of the federal Government in relation to the scandal of PCB-laced fuel oil being imported from the United States.
Last night we learned that the Minister's office was first informed of the possibility of this scam last March. I learned this morning that the Minister of State for Transport was personally informed while at a conference in Switzerland last March.
Can the Minister of the Environment explain why, after his office had been personally informed of a potential scam, he refused to participate in a border investigation of a criminal nature which took place in the Province of Ontario involving the seizure of 113 samples, the stopping of 383 trucks, and the laying of 18 charges over six days in April?
Can the Minister explain why his Department chose to send one observer, instead of sending in government inspectors and the RCMP, as he should have done when he had the facts already before him?


Hon. Lucien Bouchard (Minister of the Environment):: Mr. Speaker, while in Switzerland two months ago one of my aides received a general hint from an environmentalist from Montreal on possible illegal toxic waste commerce crossing the border between Canada and the United States. It was a general allegation with no specific possibilities involving, for example, tainted fuel.
When my aide returned to Canada, he gave the information to the officials in my Department. Last month a joint operation was conducted between Ontario and Canada to check the borders. A charge has been laid, and it was in the general scope of the transportation of dangerous goods under an Act of Canada and the accord between the United States and Canada.
No one in my Department, or in any federal government Department has been told that there was a specific allegation of tainted fuel.
As soon as we were made aware of this yesterday we took immediate action. As of now the Solicitor General has instructed the RCMP to conduct a full investigation into the question. This investigation will be conducted in cooperation with seven federal Departments.
We have now begun blitz inspections at the border between Ontario, Quebec, and the United States. My officials are now in contact with Governments all over Canada to do the same. I have just spoken to Ministers Bacon and Bradley. They are conducting a joint operation. I can tell the Government that industry has also been contacted. A full review is being conducted of the inspection systems, and steps will be taken to ensure that Canadians are protected.


SEIZURE OF CONTAMINATED OIL-GOVERNMENT POSITION
Sheila Maureen Copps: Mr. Speaker, his negligence and the negligence of the Minister of State (Transport) has put the health of thousands in jeopardy. I have the following question: If it is true, as he said today in the House, that he received some notification in March, why wasn't he there in April when 113 samples of oil were seized from 383 trucks, an operation that was not carried out by the federal Government which did not want to get involved, saying it did not have the money to carry out such an operation? Why didn't he ask his Department and the RCMP to join forces with the Government of Ontario? Why?
May 9, 1989


Lucien Bouchard: Mr. Speaker, I am afraid I will have to disappoint the Hon. Member for Hamilton East. The federal Government, through Environment Canada, participated in the operation that helped to detect these violations at the border. I just spoke to the Ontario Environment Minister who told me that he appreciated the federal Government's co-operation in this operation which was launched after we passed on some information to Ontario. I think this is an entirely unjustified attempt to smear a Government that has done, and will continue to do, everything to protect the public interest.


ILLICIT TRANSPORT OF TOXIC MATERIAL-GOVERNMENT POSITION
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, my question is also directed to the Minister of the Environment. The Minister is of course aware that Mr. Green, an environmentalist from Montreal and a responsible person, was a member of the Canadian delegation to a conference on the environment in Switzerland. Mr. Green informed my office this morning that he told someone at the Minister's office a month ago that toxic substances were being shipped unlawfully between Canada and the United States. Why didn't the Minister's office inform the Solicitor General or the Minister of National Health and Welfare immediately to protect the health of Canadians and take legal steps?


Lucien Bouchard: Mr. Speaker, I know Mr. Daniel Green, whose name was just mentioned by the leader of the New Democratic Party, and I can confirm that Mr. Green, who was in Switzerland recently to attend an international conference on the transportation of toxic substances, informed one of my assistants that there were claims of widespread transportation of toxic substances across the Canada-U.S. border. As soon as he came back to Canada, my assistant informed the authorities concerned, including the Ontario Government, which led to a special surveillance operation at the U.S. border last month and subsequently to charges being laid against individuals whose trucks were seized at the border. Mr. Speaker, there never were any specific allegations concerning the unlawful transportation of tainted fuel. Never!


TRANSPORTATION OF ILLEGAL SUBSTANCES
John Edward Broadbent: Mr. Speaker, the Minister of the Environment said that he learned of it just yesterday, not a month ago when someone in his office was told. The Solicitor General said yesterday that
Oral Questions
the investigation by the RCMP would not start likely until today.
My supplementary question is directed to the Minister of State for Transport. The same Mr. Green was at a conference with the Minister in Switzerland during the period March 20 to March 22, during which time, he has informed my staff, he told the Minister directly that the transportation of illicit substances illegally was taking place across the Canadian border. Is this true? Was she informed at that time? If so, why did she not do something about it until it appeared in the press yesterday?


Lucien Bouchard: Mr. Speaker, I will repeat the facts. The facts are that people were informed in Switzerland that there was a possibility of a general traffic of toxic waste between Canada and the United States. We immediately acted on this information and triggered an inspection blitz at the border. That was done properly. There was no specific allegation until yesterday about tainted fuel crossing the border.


RCMP INVESTIGATION-DELAY IN ACTING
John Edward Broadbent: Mr. Speaker, since the Minister has decided to answer all the questions on this subject, I will direct my supplementary question to him. Mr. Green, who is acknowledged as a responsible man, has said there was information passed to the Minister to the effect that there was an illegal transportation across the border of these substances, and furthermore, that The Globe and Mail was conducting at that time a series of investigations that it would be publishing soon. Will the Minister tell us why the RCMP did not get in touch with The Globe and Mail reporter? Why did the Government, on the whole, not act more thoroughly, until it found out about it in yesterday's headlines?


Lucien Bouchard: Mr. Speaker, the healthy and normal reaction of a Government hearing information of this kind is not to get in touch with a newspaper.


Some Hon. Members:: Hear, hear!


Lucien Bouchard: It is to do what we did, inform the Governments involved through regular channels to set up a special border check. That is what we did.


PRESENCE IN THE GALLERY OF ALBERTA MINISTER OF LABOUR
Mr. Speaker:: I wish to draw the attention of Members to the presence in the gallery of the Hon. Elaine McCoy,

May 9, 1989
Oral Questions
Minister of Labour responsible for the Human Rights Commission Personnel Administration of the Government of Alberta.


Some Hon. Members:: Hear, hear!


NATIONAL REVENUE
Mr. George S. Baker (Gander-Grand Falls):: Mr. Speaker, the new sales tax announced in the Budget, to be brought in at the end of next year, is perhaps the most unfair and unequal tax ever foisted on Canadians.
In Alberta it will mean a new 9 per cent retail sales tax. In British Columbia it means a 9.5 per cent increase, in Ontario a 9.7 per cent increase, in Prince Edward Island and the Maritimes a 9.9 per cent increase and in Newfoundland an increase of over 10 per cent. It is called double dipping.
If the Government is going to bring in this unfair tax, then will the Minister now say that the Government will adjust it so that it is equal in every province in Canada? The Minister asks us to deal with the deficit, but surely Canadians deserve a fair deal. This is a double deal.


Geoff Wilson: Mr. Speaker, possibly the Hon. Member might slip into the empty seat next to his finance critic and ask him why he supports the very actions that we are taking in introducing a new sales tax.


Some Hon. Members:: Hear, hear!


Mr. Wilson (Etobicoke Centre):: If I understood the convoluted nature of his question, the Hon. Member just said that he wants us to have a federal sales tax which is different in different provinces.


Some Hon. Members:: No.


Michael Holcombe Wilson: That is one rate in one province and another rate in another province. I do not know where he finds the fairness in that. Surely if that is what he is proposing, the provinces will be up in arms at the unfairness of that sort of approach.


George Baker: Mr. Speaker, the Minister is not only good at double dealing, he is a master of double talk.


REFUNDABLE SALES TAX CREDIT
George Baker: Mr. Speaker, the Minister knows that every province in Canada has a different retail sales tax. The Government has no right to impose a new tax on all goods and services in such a way that there will be a different increase in different provinces in Canada. Heaven help you if you are in Newfoundland. It is an increase of over 10 per cent. We will be paying over 22 per cent retail sales tax.
I want to ask the Minister about his cash advance rebate of this tax. Will Canadians who live the furthest away from the manufacturing plants in Canada receive a higher advance tax rebate before the end of next year because of where they live, or will the rebate be the same no matter where one lives in Canada?
This rebate is only tax bait, and Canadians are not going to swallow it.


Geoff Wilson: Mr. Speaker, I still cannot get it through my head-


Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: -how the Hon. Member is suggesting that some provinces should have a federal sales tax which is different from another province. Surely, the Hon. Member understands that the retail sales taxes to which he just referred are applied by the provinces, not by the federal Government. If we are to be fair we should have the same rate across the country. That is fairness.
The other element of fairness to which the Hon. Member alluded is the refundable sales tax credit. It is a major step forward. I want to refer the Hon. Member to page 22 of the book entitled Goods and Services Tax.


Mr. Crosbie:: He doesn't read.


Michael Holcombe Wilson: I do not think I should repeat that, Mr. Speaker.
It sets out very clearly that the new system will be much more fair. It will be a progressive tax system that will help the people in his province-
May 9, 1989


Some Hon. Members:: Oh, oh!


Michael Holcombe Wilson: Members opposite do not understand that.


Rex Crawford: They do not believe it.


Michael Holcombe Wilson: It demonstrates very clearly that people in provinces like Newfoundland, his own province, will be much better off as a result of this new sales tax.


NATIONAL DEFENCE
Mr. Joe McGuire (Egmont):: Mr. Speaker, my question is for the Minister of National Defence. Yesterday, a spokesman for DND, Captain Rick Jones, said that the tracker aircraft had a military role in that: "They were doing coastal surveillance with a particular effort for the Department of Fisheries on fisheries patrols".
How does the Department of National Defence intend to provide this military role if the trackers are taken out of service? Can the Minister assure the fishermen in the Gulf of St. Lawrence that the industry will be protected, especially in view of the fact that France is now robbing us blind in that area?


Some Hon. Members:: Hear, hear!


Hon. Bill McKnight (Minister of National Defence):: Mr. Speaker, the Hon. Member knows, as would the captain if he had been asked, that the tracker aircraft will have to be retrofitted within the next 18 months to 20 months. Right now the engines and the fuel needed are very scarce and hard to acquire.
With a $2.74 billion reduction in the budget of the Department of National Defence, the money is not available to retrofit the tracker aircraft. Therefore, the two squadrons which are based in Summerside will be phased out.


Ms. Clancy:: So much for the fishermen!


CLOSURE OF CFB SUMMERSIDE
Joseph Blair (Joe) McGuire: Mr. Speaker, there is a need for a fisheries patrol off the Atlantic Coast. There is a need for patrols of the drug smuggling that goes through eastern Canada. If Search and Rescue remains in RE.I. new facilities will have to be built.
Oral Questions
The Minister knows he will not save one red cent by closing CFB Summerside. Why is the Government blindly going ahead in closing the base at Summerside?


William Hunter (Bill) McKnight: Mr. Speaker, I can again inform the Hon. Member about the advice I received when I found the reduction of $2.74 billion in the budget of National Defence as to the economies that could be made without jeopardizing defence efficiency and defence readiness. Those decisions were made by my military advisers. I believe that they are good advisers. I believe they know their job. I believe they are competent.
The Hon. Member should be aware that the Aurora aircraft that DND has continues to fly out of Maritime Command.


DANGEROUS PRODUCTS
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is directed to the Minister of the Environment who said a few moments ago that the Government does not contact newspapers to get information, that that is not the general practice of Government. The Government knew, had some hint, of the movement of tainted toxic products across the Canada-U.S. border a month ago.
Would the Minister of the Environment explain why then under the jurisdiction of the Solicitor General yesterday morning after The Globe and Mail came out with the banner headline the Government through the RCMP contacted Jock Ferguson from The Globe and Mail to get information?


Some Hon. Members:: Hear, hear!


Lucien Bouchard: Mr. Speaker, I want the Hon. Member to read my lips. We did not receive specific allegations, nor any hint of illegal crossing of tainted fuel from the States.
I want to take advantage of this occasion to clear up some information I just gave. It was not one of my aides but a civil servant from my Department who received the general information from Mr. Green.


TIMING OF NOTICE RESPECTING TAINTED FUELS
James Ross Fulton: Mr. Speaker, could the Minister of the Environment be somewhat more clear with the House of Commons and the people of Canada? When exactly did the Minister know that there was a possibility of toxic materials coming across the border

May 9, 1989
Oral Questions
from the United States into Canada? When did he know and what precise steps were taken to test those tankers coming from the United States into Canada? Could the Minister be precise?


Lucien Bouchard: Mr. Speaker, I have always been straightforward with this House. I always will be, like any Member on this side of the House.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


Lucien Bouchard: The Hon. Member knows perfectly well that we were made aware yesterday of existing allegations of tainted fuel crossing the border. Only yesterday were there specific allegations of the crossing of tainted fuel from the States.


STATEMENT OF MR. GREEN-GOVERNMENT POSITION
Mr. Jean-CIaude Malepart (Laurier-Sainte-Marie):: Mr. Speaker, my question is for the Minister of State for Transport, since the Minister of the Environment does not want to tell us the truth.


Some Hon. Members:: Order!


Mr. Malepart:: But Mr. Daniel Green, an official with the Society To Overcome Pollution, said that he told the Minister of State for Transport in Switzerland that PCBs mixed with gasoline and heating oil were being imported into Canada from the United States.
Can the Minister tell us when she passed on to the Minister of the Environment the information received by the Minister of State for Transport from Mr. Green?


Lucien Bouchard: Mr. Speaker, the facts are very simple. An international conference to sign an agreement on the transportation of dangerous goods was held in Basel, Switzerland. Canada was represented at that conference by a delegation. In that delegation was an Environment Department official who happened to meet Daniel Green, a well-known Quebec enviornmentalist, by chance-that is quite normal. Mr. Green told my departmental official, 'We are hearing stories, rumours, about illegal traffic in toxic substances between the United States and Canada'. Such information had already been going around-I believe there were even projects and plans for stricter inspection at the border.
When this official returned to Ottawa, the information he obtained made it possible to accelerate and intensify the police operation, which successfully accomplished its mission at the American border.


Jean-Claude Malépart: Mr. Speaker, what the Minister does not want to say is what Mr. Green told the Minister of State for Transport who was there. Mr. Green will tell the truth and he is confronted.


GOVERNMENT POSITION
Ian Deans: Mr. Speaker, my supplementary question is for the Minister responsible for National Health and Welfare.
I spoke to Mr. Tobin, the Health Department toxicology official, and he told me that the Health Department, which is also responsible for the environment, had not been informed and that he too knew that the Environment Department had previously been notified.
Can the Minister tell us how come his Department did not conduct a thorough study of the health consequences for people who may have used (contaminated) gasoline or heating oil, advising them of the potential dangers of cancer and liver disease?
Is the Minister of National Health and Welfare able to reassure the people on that?
Hon. Perrin Beatty (Minister of National Health and
Welfare): Mr. Speaker, my Department does regular samplings of foods from across the country to look for contaminants that may be in the food chain. Never at any time have we found excess amounts of PCBs, dioxins or furans in the last several years. In addition, the Ontario Ministry of the Environment has monitored some 60 water treatment plants for PCBs since 1987 and have found no excess PCBs in water around Ontario during that time.


Some Hon. Members:: Oh, oh!


TRANSPORT
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is to the Minister of Transport. It concerns the Transport Canada headquarters tender cancellation and the subsequent sweetheart deal with Campeau Corporation. I would like to ask-wasting
May 9, 1989

taxpayers' dollars is not funny, I tell the Minister of Consumer and Corporate Affairs. I have a question for the Minister of Transport. I would like to ask him the following: I have in hand a copy of an internal memo signed by Mr. Glen Shortliffe, whom I believe to be a deputy minister, dated April 28, the day after the Budget, which says:
Agreement in principle has been reached with Campeau Corporation to renew the current leasing agreement for our Tower C premises -
Given that this document was sent the morning after the Budget, can the Minister of Transport tell us how it is that it could renew the lease for 560,000 square feet of office space overnight? Is that not a bit much, even for the Tory Party rewarding its friends?


Hon. Elmer MacKay (Minister of Public Works):: Mr. Speaker, I can assure my colleague that this particular lease that he refers to as being renewed overnight was not renewed overnight. There were negotiations late in April which resulted in considerable savings for this particular building.


An Hon. Member:: For the Budget.


REQUEST FOR EXPLANATIONS
Don Boudria: Mr. Speaker, I have a supplementary for the Minister of Finance. In light of the answer we were just given by his colleague the Minister of Public Works to the effect that his department had begun negotiations with Campeau Corporation even before the Budget was printed and before it was announced, how are Canadians to know whether Mr. Campeau or the Minister of Public Works had prior knowledge? In addition, can the Minister of Finance tell the House why, referring to restraints on page 26 of his Budget Papers, he states that the project was cancelled to save $200 million? How can he save $200 million, as he suggests, when the proposed building costs more than the new lease. Why claim he is saving money when he actually spends more?


Elmer MacIntosh MacKay: Mr. Speaker, I am surprised to see my colleague drawing such unwarranted conclusions from this particular-


Don Boudria: It was your answer.
Oral Questions


Elmer MacIntosh MacKay: Mr. Speaker, my colleague has been around this House long enough to know, surely, that when negotiations are going on they are always subject to approval by Treasury Board. This particular matter does not involve, as he is trying to suggest, any sort of budgetary leak or any of these wild conclusions. This is just simply normal negotiations with respect to the Department of Public Works.


EXTERNAL AFFAIRS
Mr. David D. Stupich (Nanaimo-Cowichan):: Mr. Speaker, I have a question for the Right Hon. Secretary of State for External Affairs. Canadians know the damage caused by drift-net fishery. In 1987, we cancelled our own experimental drift-net fishery because it proved to be an environmental disaster.
In spite of that, Canada has entered into an agreement with Japan that provides for the expansion northward of the drift-net fishing. Does the Minister agree that this will mean an increased interception of Canadian origin salmon and steelhead?
Hon. John C. Crosbie (Minister for International
Trade): Mr. Speaker, the Hon. gentleman has his facts completely wrong. Canada has not agreed to any expansion of the Japanese squid drift-net fishery. In fact, we have objected to any expansion of the Japanese squid drift-net fishery. What we have achieved with the United States is an agreement to put observers on these Japanese vessels so we will be able to get part-time scientific information on the effect of the Japanese drift-net fishing on other marine life. The Japanese are operating in international waters, they are not operating in Canadian waters. We have no control in these waters. This is a significant advance. Certainly, we have not agreed and do not intend to agree to any extension of Japanese drift-net fishing. In fact, we have objected time after time.


Some Hon. Members:: Hear, hear!


OBSERVERS ON FISHING VESSELS
David Stupich: Mr. Speaker, I have a question to the same Minister. The Minister may be right in saying we have not agreed to an expansion, but we have agreed to the border moving one degree north in July and two degrees north in August.

May 9, 1989
Oral Questions


Some Hon. Members:: Right on.


David Stupich: The Minister talks of a significant advantage. We are getting five observers on 1,000 vessels. There are 30,000 miles of these curtains of death in the ocean, and we are going to be allowed to put five people on 1,000 vessels. How can the Minister describe that as an advantage? Let him tell me why it is an advantage.


Some Hon. Members:: Hear, hear!


John Carnell Crosbie: Mr. Speaker, the Hon. Member is such an expert at exaggeration that I imagine he will be a candidate-


Some Hon. Members:: Oh, oh!


John Carnell Crosbie: -for the leadership before he is finished.
Japan unilaterally extended the northern boundary for July and August, while remaining within the over-all boundary of 46 degrees north set in 1981 by Japanese domestic regulations. We are going to have 14 North American observers on 32-not 1,000, Mr. Speaker, not 900, not 800, not 500-on 32 Japanese squid drift-net fishing vessels for the 1989 fishing season. Try to be a little less exaggerated in your question, please.


TOURISM
Mr. Ken Atkinson (St. Catharines):: Mr. Speaker, my question is for the Minister responsible for tourism. Tourism is of course important to Canada and particularly to the Niagara area. Each year the highest volume of tourists into Canada are from the northern U.S. states. In light of the $5 million cut in tourism advertising for next year, as shown in the Estimates, can the Minister assure this House and the tourism operators that Canada's advertising campaign in these border states will continue?


Some Hon. Members:: Hear, hear!


Don Boudria: Yes or no?


Hon. Tom Hockin (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I am pleased to assure the Hon. Member that I share his emphasis on the northern border states. If you take a look at American tourism, they are having more trips and they are having shorter trips which makes Canada the best market for American tourists. We do not want to cut back on the possibilities in that market, so what we are going to do in the year
when the budget is cut by $5 million is elicit more joint advertising, more co-operative advertising and the result will probably be more advertising expenditure and exposure, not less.
* *


CULTURE
Mrs. Sheila Finestone (Mount Royal):: My question is directed to the Minister of Communications. Between 1984 and 1994 we will have witnessed a series of cumulative cut-backs along with non-indexed CBC budgets-not to mention additional corporate taxes-which amount to an over-all budgetary reduction of close to $400 million out of approximately $915 million in parliamentary appropriations. Does the Minister not realize that he would be responsible for the utter destruction of Canadian culture and of the CBC which, as a cultural institution, is essential to Canada? Mr. Speaker, we have no Oscar to award him for that! Is he not ashamed of his policies?


Hon. Marcel Masse (Minister of Communications):: Mr. Speaker, I want to point out that as Minister of Communications I am not on the lookout for Oscar or Juno awards.
The CBC has been given a wide-ranging and very important mandate for which Canadians, through their Government, contribute roughly $1 billion.
It stands to reason that with a wide-ranging mandate it will always be possible to earmark additional funds for more programs or improved performance. On the other hand, the Government's top priority is to reduce the deficit lest our cultural and social programs be curtailed even more drastically. With that in mind, Mr. Speaker, the Government has urged the CBC management to support the effort made by Canadians, Crown corporations and the Government and cut their budget by an estimated 2 per cent.


Sheila Finestone: You know, with all that sophistry, Mr. Speaker, perhaps he is standing in line for a second nomination as an Oscar winner.


Some Hon. Members:: Oh, oh!
May 9, 1989


EFFECT OF BUDGET CUTS TO THE CBC
Sheila Finestone: Mr. Speaker, as these savage cuts to the CBC will affect services to the regions, services to English and French language minorities, service in terms of the Canadianization of our airwaves and services to ensure that the French language stations have equivalent production funds, isn't this Minister ashamed of the cuts that he has allowed to CBC? Doesn't he recognize the seriousness of the devastation to the Canadian network? Aren't you ashamed of yourself, Mr. Minister?


Some Hon. Members:: Hear, hear!


Marcel Masse: Mr. Speaker, as Minister of Communications I can tell my colleague that I am particularly proud to have managed to increase my department's budget for cultural endeavours, with the co-operation of the Prime Minister and my Cabinet colleagues.


Mr. Speaker:: The Hon. Member for Trinity-Spadina, a single question, please.


IMMIGRATION
Mr. Dan Heap (TYinity-Spadina):: Mr. Speaker, my question is for the Minister of Employment and Immigration. As she knows, her officials' report shows that in the new refugee determination system a new backlog is growing. This is equal to about half the number of the 4,500 new refugee claimants who came in this year. About 1,700 have not started on their preliminary hearing and there are more than 900 others who have not finished their formal hearing. Will the Minister admit that the new system will break down if she continues with a double hearing in which 93 per cent of those who go to the first hearing are sent on to the second hearing?


Hon. Barbara McDougall (Minister of Employment and Immigration):: Mr. Speaker, no, I would not admit such a thing. There are a couple of points I would like to make in connection with this.
First, when the new system was established it took a while to make it operational. We were not fully staffed or
trained at the beginning but we certainly are now. We have put more people to work in the system. The Immigration Refugee Board and the Department of Immigration are working together to make the system as effective as possible.
Let me say as well that the first hearing is an important stage in the process. We have only had the system running for about three and a half months and I think all Members of the House should be proud of the fact that it is working well, with credibility and compassion. We will continue to ensure that there are enough resources available so the system will work well.


MOTION TO ADJOURN UNDER S.O. 52 SPEAKER'S RULING
Mr. Speaker:: Before proceeding to Orders of the Day,
I wish to give a ruling as a consequence of argument of Thursday, April 6, by way of an application for an emergency debate under Standing Order 52. At that time, the Hon. Minister of Justice (Mr. Lewis) raised a point of order concerning guidelines that exist for the statement which can be made in support of such an application. For the benefit of Hon. Members, I will read Standing Orders 52(2) and 52(3). Standing Order 52(2) reads:
A Member wishing to move, "That this House do now adjourn"-
Because that is what is moved when one wants an emergency debate.
- under the provisions of this Standing Order shall give to the Speaker, at least one hour prior to raising it in the House, a written statement of the matter proposed to be discussed.
Standing Order 52(3) reads:
When requesting leave to propose such a motion, the Member shall
rise in his or her place and present without argument the statement
referred to in section (2) of this Standing Order.
A strict interpretation of these two subsections could lead one to suppose that the written application was to be read to the House by the Member requesting leave for an emergency debate and that the Member would not be allowed to deviate from this prepared text. This interpretation is in general the correct one, as I said on September 30, 1987 in response to a very similar point of order raised by the then Hon. Minister of Justice. That point of order and my response to it may be found on page 9498 of the Debates. It is also interesting to note that this interpretation is supported by the annotated Standing Orders at page 175.

May 9, 1989
The Budget-Mr. Bird
[Translation\
However, on occasion there may be mitigating circumstances which I feel, as your Speaker, I should take into account in order to respect the spirit of this Standing Order as well as its most literal interpretation.
In my ruling of September 30, 1987 I said:
The Chair has allowed and may well continue to allow sufficient
comment when the application is made so that the position of the
member is clear.
Some written applications do not provide enough detail for the Speaker to know precisely what the member wants to raise and why. Others are too long and detailed and the member, rather than reading, should give only a concise summary.
As Speaker, I feel it is important to reiterate that no argument or discussion is allowed in presenting the statement.

I can certainly understand that Hon. Members care deeply about these requests and may from time to time stray beyond what the rules envision. In the interests of fairness, particularly since the Government does not have an opportunity to present any counter arguments during an application for an emergency debate, I will, of course, use this opportunity to again remind Members of the rule and will be vigilant in ensuring that Members do not stray from these guidelines.
I thank the Hon. Minister of Justice for raising this matter and thereby allowing me to bring this issue to the attention of Members. I hope that I can count upon the support of all Hon. Members in this matter.



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 of the amendment of Mr. MacLaren (p. 1095).
Mr. J. W. Bud Bird (Fredericton):: Mr. Speaker, I feel sure that it is clear to all Hon. Members that a strong
economy is fundamental and paramount to the kind of country and quality of life which Canadians desire to build and sustain.
Both history and current events present clear evidence that economic strength is the key to high standards of living, to political stability and to peace, whereas economic weakness is the prelude to poverty, oppression, political chaos and even war.
There are two pillars to a strong economy for which firm foundations must be laid. The first is a dynamic, creative and competitive productivity led by our traditional skills as a world trading nation, and our move into the free trade environment with the United States is a major step in that direction.
The second pillar is a disciplined control of the government deficit and debt. Mr. Speaker, I wish to speak about this second subject today.
Over the past 20 years, as we in Canada have increasingly lived at a standard beyond our means and as we have watched the relentless process of deficit financing borrow from our future, a great many Canadians have truly begun to fear that we are on a path toward financial self-destruction. One of those concerned Canadians has been the Minister of Finance (Mr. Wilson) who will earn and deserve the historical credit for being the first Finance Minister to confront those disastrous directions and to start to turn them around.
This 1989 Budget, which we are now debating, is not the beginning of the Government's resolve toward financial responsibility, rather it is a continuation. Indeed, Mr. Speaker, an intensification of the new directions which were expressed in the Minister's first Budget in November, 1984. At that time, with the Conservative Government just newly elected, he reported to Canadians the state of the country's financial affairs, a deficit inherited from the previous administration of $38 billion, a total net national debt of $199 billion and interest payments that year of $22 billion. The Minister of Finance warned Canadians at that time that unless we began to put our fiscal house in order the burden of debt would continue to mount rapidly in the future. We are on a very dangerous treadmill.
Just over six months later, in May, 1985 the Government announced in its first full Budget plans to cut that deficit by nearly $4 billion, reducing it to $34 billion. That was the beginning of Conservative policies for financial
May 9, 1989

responsibility, and they have been continued ever since in a consistent and progressive direction.
In 1986 the deficit was cut by $4 billion again to less than $31 billion. In 1987 it was reduced by $3 billion more to $28 billion, a decrease of over $10 billion in the deficit in a three-year period.

Mr. Speaker, before getting any further, I must perhaps underline that $10 billion reduction because it is an important achievement. A decade ago, in 1978 for example, that amount was equal to the total debt of the Canadian government. From that day until the Liberals were defeated in 1984, the deficit inflated by almost 400 per cent. Our success in reducing it by over a fourth or $10 billion signals an evolution in the management of Canadian which gives us some hope for the future.

Now, as we stand on the threshold of the 1990s, despite the dramatic turn in direction over the past four years, we are faced with the compounding impact of 20 years of deficit financing. The steamroller of total net debt of the country has grown by 12 times, from about $30 billion in 1968 to $360 billion in 1988. That avalanche of debt cannot be stopped easily and was certainly not caused by the Conservative Government or by the Minister of Finance. In fact, they have been the only ones even able to slow it down.
The momentum of growing debt was caused by living beyond our means for 20 years with deficits rising almost without interruption. Complex developments in the world of finance now have caused one dramatic new factor to be added in recent months, that being rapidly rising market interest rates which have severely intensified government expenditures for interest on the debt. In the current Budget these interest charges are up $6.4 billion over last year, totalling almost $40 billion in 1989-90, which will be 27 per cent of total government spending.
That interest cost is by far the largest item in the Budget, and by comparison, the next two largest items are transfers to other Governments at $24 billion and transfers to citizens at $23.5 billion. The arithmetic is simple but stark to behold. It clearly means that our growing interest expense is eroding the two most significant programs of government spending-support to
The Budget-Mr. Bird
provinces for health, education and regional development, and support to citizens for social security.
Unless we can stop the growing rate of debt service charges each year and turn that rate around so that it begins to reduce, sooner or later we shall face the reality of becoming financially insolvent as a country, unable to afford the basic programs on which our Confederation exists and our quality of life depends. It is not difficult for average Canadians to understand these circumstances, and they certainly have every right to ask how we got into this mess. The clear answer is that it is much like a family spending out of control. We have been living at costs which exceed our income. As with a family, the only real solution is a twofold one-to lower spending until we can afford to pay our way and to raise new income wherever we can realistically earn it. It is exactly that kind of policy direction which the Government has been pursuing and which the new Budget continues and intensifies.
This Budget is a message of responsibility and determination, but it is also a message of hope because it has been introduced with the vision of a fiscal plan that points us toward real progress over the next five years, a plan that directs us toward the threshold of a balanced Budget, a plan that permits us to see the real possibility of starting to pay down our debts in the mid-1990s, a feat that presently seems beyond imagination.
Those are the real foundations for economic stability in Canada, simple phrases that we all understand, to balance our budget and to pay our debts. These are national goals of financial responsibility to be shared by every Canadian except those most needy or incapable among us, until we have our fiscal house in order, until the mountain of debt can be reduced, until our prosperity can be sustained, and until our economic future is secure.
If there is another thing this Budget contains besides responsibility and determination, it is the rare quality of political courage, a quality exemplified by the Minister of Finance and by the Government. Political courage is very evident in the difficult decisions which have been taken to divert this Budget into a plan for positive action. I would like to speak briefly about three of these tough decisions to try to put them in perspective with the compelling priorities of deficit control and debt reduction which I have previously mentioned. Those three are

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VIA Rail, regional economic development in the Atlantic region, and defence reductions.
It has been announced that subsidies for passenger rail service will be reduced substantially over the next five years, eventually resulting in savings of $.5 billion in government spending on VIA Rail each year. This decision will impose severe constraints on VIA and will cause its management to reorganize the business plan. VIA must become a self-supporting passenger service company. There is no doubt that this will cause major changes in services, routes and fares. Where it may ultimately lead is uncertain. VIA's future will depend on the innovative skills of its management to make it a profitable business enterprise.
In the past another Crown agency has demonstrated the conversion of profitability, and Canada Post has been able to accomplish that over the past few years.
Whatever the outcome to VIA's future may be, the stark reality of its financial implications to the Government's deficit and debt can no longer be ignored. Since 1984 the Government has provided $3 billion of total assistance to VIA, along with major political initiatives and commitments to help make it work. The results have admittedly increased fare revenues by $15 million over the past two years, but to earn that increase it required additional federal assistance over the same period of $84 million.
Despite the short-term increase in ridership in actual fact over the past eight years, VIA passenger utilization has declined by 20 per cent. It now represents less than 5 per cent of the total passenger transport market, perhaps even as low as 3 per cent. There is not a single Canadian family or a single Canadian business that could tolerate that kind of arithmetic in its financial affairs.
Today in Canada VIA is truly the kind of program that we must examine with clear heads and tough minds. We must accept the grim reality that it is a service we can no longer afford from the public purse and that its future must be built on providing value and service to those customers who are willing to pay, with government help for certain locations and to those citizens who have no other way of travel.
[Translation\
Mr. Speaker, my remarks on regional development will focus on the situation in Atlantic Canada. The
federal government's special assistance has been a great help in funding our economic infrastructure and in increasing economic growth opportunities. The region has been the beneficiary of a vast range of programs over the years. But two initiatives now stand out: the economic and regional development agreements and the Atlantic Canada Opportunities Agency's action plan.
The Budget clearly shows that the present high levels of funding for regional development cannot be maintained and that cuts will be introduced in the short term to be gradually reduced in the course of the five-year fiscal plan. To keep things in perspective, Mr. Speaker, since a large part of current year expenditures result from commitments made or agreements signed in the past, by setting at $500 million special assitance to Atlantic Canada, expenditures planned for 1990 in this Budget will reach a new high.
To even more graphically demonstrate the priority which this Government has given to regional economic assistance in Atlantic Canada, it is significant to note the following comparisons: the average of these funds for the last five years of the Liberal Government was $185 million; for the first five years of the Conservative Government, it was $282 million, and for the next five years of the fiscal plan introduced with this Budget, it will be an average of $425 million.
What all this means to Atlantic Canada is this: under the Conservative Government and Finance Minister Michael Wilson, regional economic assistance to us has increased more than 55 per cent on average between 1984 and 1989 and it is projected to increase another 50 per cent between 1989 and 1994.
With respect to the defence cuts that have been made, some people may find these reductions easier to accept than most of those contained in the Budget. For example, some citizens are quick to agree with the decision to cancel the purchase of nuclear submarines. That one is a matter of choice. Conversely, Mr. Speaker, some of the other defence cuts, such as the proposed closings of CFB Summerside and CFB Portage la Prairie, are among the most difficult, indeed perhaps tragic in potential impact on those communities, of all the results from the entire Budget.
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Because we are fortunate in my own riding to have Canada's largest military establishment, CFB Gagetown. our citizens can easily understand the frustration and discouragement which must surely exist at Summerside, Portage la Prairie and those 14 other areas where bases will be reduced or closed. Although there will undoubtedly be effects as a result of these cuts on the Gagetown base, both favourable and unfavourable, we do know how fortunate we are to remain a high priority in the military plan and in the Budget. While we take some relief from that knowledge, I say sincerely that along with other Hon. Members, I am sure, I express compassion and understanding for those at other locations who now face major changes and adjustments in their lives. We must strive to help them in every possible way.
Those subjects upon which I have touched briefly do reflect financial responsibility, government determination and political courage. The main thrust of this Budget in a five-year fiscal plan is to demonstrate to Canadians and to the world that this Government is financially responsible. Its direction is to continue the headings which were started in 1984 and to eventually stop the annual growth of deficit and debt and to start to pay them down. This Budget is another milestone in the challenging economic mission of our Government and our country, a mission of financial responsibility toward a balanced budget and beyond.


Mr. Milliken:: Mr. Speaker, the Hon. Member in his speech spoke about VIA Rail and the effects of the recent cuts. I do not agree with the comments he made and I would invite him to express perhaps some corrections in his answer to my comments and questions on his speech.
Mr. Speaker, he will recall that in the 1984 election, the Party which he now supports in this House made certain promises. He will recall that the previous Liberal administration had proposed certain cuts in VIA Rail. In fact, the cuts had gone into place and the front bench members of the Conservative Government advocated the reinstatement of all those cut railway lines. In fact, they proceeded with that reinstatement at some cost to VIA, a cost that is obviously reflected in the increased operating grants that are made by the Government to VIA. The Government promised that, in addition to reinstating all those cuts, it would turn VIA into a
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national rail service of which we could be proud. But in the present Budget, the Government is reneging on that promise.
It is cutting VIA's subsidy substantially over the next few years. Obviously there are going to be cuts in service. Obviously it cannot pay its own way. No other railway in the world, that we know of, is paying its own way. Yet the Government is saying to VIA, "You do it". In this huge country, with huge spaces between our cities and where transportation is a major expense, it is saying VIA will have to pay its own way. I ask the Hon. Member, does he not think that the suggestion that VIA pay its own way is absolute nonsense? Does he also not think it is simply disgraceful that the Government in the course of the 1984 election campaign, the same group that is still here, was saying that it wanted to turn this into a national service of which we could be proud? Yet now it is trying to reduce, cut and slash the service and close it down.


John Williston (Bud) Bird: Mr. Speaker, in response to the Hon. Member, the Government position was clear back in 1984 and 1985 when it presented a renewed opportunity to VIA Rail to demonstrate its viability. I believe the phrase, "Use it or lose it", was clearly conveyed and expressed to the citizens of this country with respect to VIA Rail. I tend to share the view that a passenger rail service is almost like a constitutional right. It is hard to imagine this country without such a service, but we are now facing priorities of a much higher order. We are literally talking about the fiscal solvency of our country. What has emerged since those days in 1984 is, first, as I said in my remarks, the compounding almost incestuous growth of the debt resulting from the cancerous deficit process that was established by the Liberal Government back in the early 1970s and 1980s.
Also, the rise of interest rates in the past 12 months of almost 30 per cent would alone cause any government that is financially responsible for the over-all good of the country to face the difficult assessment of services such as VIA Rail and to come to the conclusion that after eight years of decreasing transportation utilization by 20 per cent, now representing less than 5 per cent, or even just 3 per cent of the transportation market, that some reassessment is needed. This is simply the kind of arithmetic that no family nor any company in Canada could tolerate, and the Government had to face that and

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act on it. I think, Mr. Speaker, that has taken political courage and responsibility.


Joseph Blair (Joe) McGuire: Mr. Speaker, obviously the Hon. Member agrees with the Department of National Defence cut-backs in his own province and in the rest of the Atlantic area along with VIA Rail cut-backs and changes in UIC. I would like to ask him about the veterans and the people in his province who volunteered in the first and second world wars, especially from Prince Edward Island. After their sacrifices made during wartime, does he not think they deserve, or the province that they served deserve to have some share in the spending of defence dollars?


John Williston (Bud) Bird: Mr. Speaker, I do not believe there is any Hon. Member in this House who relishes or receives with any sense of satisfaction the cuts in defence spending or VIA Rail or any other cuts. It would be nice to be able to afford to continue with everything we have on the go and then some, but as I stated earlier, the order of priority of our financial position is paramount. So cuts had to be made. As I said in my remarks, there is nothing in my heart, nor in the hearts of my constituents, but compassion and understanding for the citizens of Sum-merside and Portage la Prairie. I certainly do not like the defence cuts, but as the higher order of priority, I do support the Budget. I do support the direction of fiscal responsibility that we are pursuing. I do believe that we must do everything we can to assist those people in Summerside with the adjustment. I do not know what that will take, but I believe we will find a way to ease the pain as much as we possibly can.


The Acting Speaker (Mr. Paproski):: Since there are no more questions or comments, the Hon. Member for Essex-Windsor (Mr. Langdon) on debate.


Steven W. Langdon: Mr. Speaker, at the start of speeches it is customary to make some comments which are a little lighter than those that follow. I am especially concerned about doing that because recently I have been accused of having too much gravitas. I must say that I have been desperately looking for something which one could joke about with respect to the Budget. It is difficult, but I did come across a comment which sums up reasonably well my approach to this speech and to the Budget. It is from Will Rogers. He stated: "I don't make jokes. I just watch the Government and report the facts".
It becomes a source of immense amusement, I am
afraid, to those of us who watch the Government and report the facts to our constituents and to the rest of the country, to see a Government which consistently does the same misguided things over and over again, and a Government, faced with the choice between something sensible and something foolish, inevitably and consistently opts for something foolish.
For instance, as we look at the Budget we see certain realities with respect to employment, realities which have marked the Government's approach right from its election in 1984. With its first economic statement, the Government effectively said to Canadians that it would not put the emphasis on what it promised during the 1984 election campaign, reaching full employment in this country. Instead it would put the emphasis on helping those wealthy corporations and rich individuals who provided the cash to get the Government into office. That approach persisted in 1985 in the first major Budget brought forward by the Government. That Budget took the approach of attacking old age pensioners, rather than attempting to do something about achieving real fairness.
Close to five years after the election of 1984 as we look at the realities with respect to employment, what do we see? For the first time in the past three years we see an increase in unemployment and, for the first time in the past three years, we see a decrease in full-time jobs for the prime labour force. The Government likes to refer to those who are 25 years of age and over. In fact, if we look at the entire workforce we see a decrease in employment, comparing March 1989 to April 1989, of 54,000 people whose jobs have been lost.
This is the same Government that promised that the Free Trade Agreement would bring us new jobs, extra jobs, and expansion in terms of employment. The Government now has to face the reality that the number of jobs is shrinking, employment is decreasing, and the consequences are appearing of those 30,000 job losses which can be traced directly to free trade. There have been shutdowns at Northern Telecom and shutdowns at Inglis in the constituency of my seat-mate, the Hon. Member from Spadina. There have been cut-backs in my constituency at places such as Arnold Manufacturing and Helin Tackle. In each case those cut-backs can be associated with jobs being shifted from this country to the United States.
May 9, 1989

That is precisely what we predicted would happen with the Free Trade Deal, and it is precisely what is happening as the Government leads us further and further down that economic dead-end.
It is not only us who have started to notice that the Government is very much on the wrong track. Even the Conference Board of Canada has stated that the Budget will take us into a recession. When even Conservative think-tanks like the Conference Board of Canada start to see that reality, unless we are blinded as the Minister of Finance seems to be, we have to recognize that severe damage is being done to our country and to the men and women who work and who want to work within our country.
All this is being justified in terms of the deficit. The great cut-backs that are occurring across the entire face of Government, and the massive tax increases being put into effect, are all being justified because, as the television ads tell us, 36 cents out of every dollar that the Government collects has to go to pay back debts.
Unfortunately, those advertisements do not tell us the other side of the coin. First, they do not tell us that the reason 36 cents of every dollar raised in taxes goes to pay back debts and to pay interest on the national debt is that the Government has permitted interest rates to go up to a level where they are three percentage points above those in the United States. That is an unprecedented differential in the modem economic history of our country. The ads do not tell us either that by running deficits this country has succeeded, as Clarence Barber of the University of Manitoba has estimated, in generating another $150 billion of extra growth each year.
I have collected some statistics that deal with what has happened to long-term debt of large corporations. Of course, it is the large corporations which are telling us that it is necessary to make these changes that are being put into effect in this country. When we examine the long-term debt of companies in Canada we see that the long-term debt in a period of four years has gone up by close to 50 per cent in most of the large corporations. Nobody worries about that. The reason they do not worry about it is because that debt is being used to generate growth within those corporations. Precisely the same thing is taking place in our country, by undertaking to keep people at work, by undertaking to see to it that development projects go forward, by seeing to it that
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there is expansion in the activities in terms of the government sector.
These are not my calculations. They are those of Clarence Barber, one of the most noted economists in this country. We have succeeded in generating $150 billion in extra growth and, consequently, the thousands of extra jobs that come with that growth. That is the other side of the coin. It is far more important than the simple statistics the Government throws out about 36 cents of every tax dollar going to pay interest on the public debt. It is far more important to recognize that by taking a creative approach, an expansionary approach, it is possible to create more growth, more tax revenue and to have fewer unemployed in this country. Consequently there are more benefits for Canadians.
I just returned from Summerside where the consequence of this Budget is especially clear. Last night I spoke to people in Summerside who are devastated by what has been done to their community by a government which is unthinking, uncaring and unaware of the human consequences of the unemployment which it will create if it proceeds to shut down the base in Summerside.
That base is very important, not just to the economic development of Prince Edward Island but to the economic growth and well-being of Atlantic Canada. That base is the place from which search and rescue operations take place. These are important to the fishing fleet in Atlantic Canada. It is also the place from which flights take off to ensure that our exclusive economic zone off the coast of Atlantic Canada is carefully monitored so that Canadians have the chance to benefit from the resources that exist there. This base is important, not to the military might of Canada but to the economic prospects on the Atlantic coast.
It is also crucially important to the economic development of Summerside and Prince Edward Island because 2.2 per cent of the jobs in Prince Edward Island are associated with the base in Summerside. Taking the base out of that community is like the Government deciding to take the auto industry out of my community of Windsor. It is as if the Government decided to take the shipping industry out of Saint John, New Brunswick.
I remind the Government that in the past when economic survival was threatened in communities like mine and Saint John, the Government saw its responsibility and acted. In the case of my community, $150 million in loan guarantees was provided to Chrysler Corporation to ensure that the auto industry in my community survived. In the case of Saint John, there

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were frigate contracts given to the shipyard there which saw to it that that city also survived.
Why should the Government be so heartless, so unthinking and so uncaring with respect to Summerside and Prince Edward Island? Is it because the Government, instead of thinking about the country, is thinking about the politics which saw four opposition Members elected in Prince Edward Island? Is it trying to punish the people of that part of Canada?
How can it possibly make sense to have our forces retreat from Canada at a time when the Government is spending $1.2 billion to keep troops in Europe? It does not make sense. The Budget does not make sense. The unemployment which it will create does not make sense. The unfairness and its tax measures do not make sense.
The result will be a great deal of anger, a great deal of passion, and a great deal of opposition to a Budget that does not serve the interests of the people of Canada. [ Translation ]


Mr. DeBlois:: Mr. Speaker, I listened with interest to the Hon. Member opposite. What bothers me a bit is the Opposition's apparent insensitivity to the huge national debt problem. The Hon. Member made some fun of government advertising to show Canadians the importance of this debt and the national effort asked of all Canadians, beginning with the richest. In this regard, I am somewhat disappointed that the Opposition has no constructive criticisms because we have a balanced Budget. We are spending no more than we take in. The deficit problem is due to the debts accumulated by former governments. So I am rather frustrated to hear a fellow Member of Parliament not offer positive criticism. I understand that the Budget has some tough aspects, but it seems to me that we are asking all Canadians to make an effort, especially those who are better off, and it seems to me that a Member of the New Democratic Party, which insists so much that wealthier individuals can contribute more, should be the first to encourage us in that direction!


Steven W. Langdon: Mr. Speaker, it is not a question of whether or not the debt exists, for all we have to do is read the budget documents to see that it does. In fact, all we have to do is see that it is this Government which has doubled the national debt during its period in office from 1984 to 1988. The debt is there. The question is: What do we do about it? Do we cut and slash?
Let us say that one is the chief executive officer of a large corporation which has built up a considerable debt. Does that person decide that the way to deal with the debt is to shut down half the company's factories, throw one-half the people out of work and go to one-half the previous size of the company? Or, does that person decide instead that it is important for the company to expand, to offer more services, to be more efficient, and to make more revenue? As a consequence of that the person comes to a position where, out of the profits being made from the company, he can pay off the debt.
Campeau Corporation saw its debt blossom incredibly. If it took the philosophy that the Government takes then it would be back operating flower stands on Bank Street. The approach the Government seems to suggest is to cut things back, to tax people and to reduce consumer expenditure.
Back in 1984 when the Government first came to office I said that the cut-back approach which had started at that point in time would end up with us having a larger deficit by the end of the term of this Government than at the start. That is what has happened. The deficit now is $36 billion as compared to $29 billion, which is where it started.
The way one has to get things going is to get people back to work, get production in the country, achieve exports and create jobs which will give us in the future a rate of growth, a rate of investment and a rate of expansion that will provide us with a balanced Budget which will be fair to everybody since everybody will be working. That is something which is not happening under this Government.


Mr. Friesen:: Mr. Speaker, I take it that the Hon. Member supports a balanced Budget. Will he tell us if that is the case?
May 9, 1989


Steven W. Langdon: Mr. Speaker, I should say that contrary to the Government I believe that it is important to reach a position in which we have full employment. I do not mean zero per cent unemployment but 3.5 per cent unemployment which means a straightforward shift from job to job. When we reach that position there is no question that we should have a balanced Budget.
In fact, it is quite possible, if the unemployment rate were to be pushed below those figures, that we might have to look seriously at running a surplus. I know it is heresy for the Government to think that we might possibly have a surplus, that we might have so much growth and so much potential that there is a budget surplus. However, these things used to happen in Canada before this Government took over.
Of course it makes sense at some stage to have a balanced Budget, but that is not the goal in itself. The goal is to see to it that full employment is reached in our economy, just as the goal within a corporation is to see to it that the capital structure is worked out in such a way as to expand the corporation in the most sensible way possible.
[Translation}


The Acting Speaker (Mr. Paproski):: Questions and comments are over. On debate, the Hon. Member for Joliette (Mr. Larrivee).


Mr. Gaby Larrivee (Joliette):: Mr. Speaker, this is the first time I have the opportunity to address this House and if you allow me, I would like to take a moment to thank most sincerely the people in my riding of Joliette for the confidence they placed in me last November.
I can assure them that I shall represent them with dignity and that I shall defend their interests with as much determination as my predecessor, the Hon. Roch La Salle, did for over twenty years.
My statement on the Budget tabled recently in the House will enable me to share with you the reactions of my constituents. First, all are aware of the huge debt we have to deal with and also agree that courageous but fair measures must be taken to solve the problem. They feel that the Budget meets these criteria.
In his May 8 editorial entitled "The Budget-A Good Step", Jean-Pierre Malo of the Joliette Journal reflects very well the comments that I was able to pick up in the past few days from my constituents.
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He wrote: "Liberals and New Democrats may shout as much as they want, the federal Budget tabled urgently is a good step towards getting public finances back on an even keel." "We had been waiting with impatience and we were rewarded: the Conservative Government has decided to face the music and break the vicious circle of uncontrolled expenditures." He goes on to point out that the Minister of Finance slashed hard where Canadians have least to fear, National Defence. The elimination of 80,000 government jobs, the privatization of Air Canada, and the lighter VIA Rail burden all make sense.
"We do not believe that Canada is headed for a financial crisis with this kind of Budget", he said. "Quite the contrary. Minister Wilson intends to reduce interest rates thanks to his cut-backs which will dampen inflation. In short, the Minister said quite clearly that he is seeking to slow down the rate of expenditures and reduce their uncontrolled growth by a notch.
If the Minister is right, the national debt will melt like snow under the sun. Interests on the debt account for almost one third plus of forecast deficits." He concluded: "The future will tell whether inflation is here to stay or not and thus contribute to increase or decrease our debt. Be that as it may, Minister Wilson will have introduced better management in public finances."
Mr. Speaker, I would suggest that we can bank on the competence of our Minister of Finance and that we can look to the future with optimism if we are prepared to accept short-term sacrifices.
The Budget is a turning point in Canada's future, underscoring as it does the fact that as a nation we have become aware of the threat to our way of life and that we have resolutely launched a counter-offensive. It is telling us that we have decided to act as a Government and as a nation to maintain our standard of living and our social programs, not only for ourselves but especially for our children. This threat is neither new nor unknown. Every Canadian knows how the debt can threaten his or her way of life. We all know what happens to someone who gets buried under debts, who stretches credit to its limit, who skips a few car payments just to make ends meet, and who has to borrow to pay off a loan, paying interest on interest and sinking ever deeper into debt. Every ones knows that people like that are in deep trouble.

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Countries are like people. In Canada, we have a cumulative debt that is absolutely astronomical. Today, the debt is $320 billion or about $34,000 per Canadian family. Because of interest charges, the debt increases $80 million each day and every day. Last year, 31 cents of every tax dollar was spent to pay the interest on the debt. This year, it will be 35 cents.
We cannot go on like this. We are mortgaging our children's is future by leaving them this legacy. We are weakening our own capacity to cope with changes in the world economy, such as the recent upsurge in interest rates.
Unless we act, we will no longer be able to afford the major programs that make Canada a generous country. We must act now to be able to control our future.
The Progressive Conservative Government has been working on debt control since 1984. To do so, it had to introduce vigorous measures, manage the economy intelligently, and keep a close rein on public spending. We have succeeded in reducing the deficit by $9.5 billion and reducing the growth of the debt from 24 per cent per year to less than 10 per cent last year.
Despite that progress, the debt is continuing to grow more rapidly than our national income. That is why the Budget proposes drastic measures that will enable us to deal with the debt. We must now build for our future, not borrow from it.
Our task will not be easy. Some programs will be cut, and some taxes will be increased. Every Canadian who is able to do so will be asked to help shoulder the burden.
The Government will introduce the measures that are necessary to maintain a healthy and strong economy. By reducing the debt, by reducing the deficit and by making Government operations more efficient, we can help lower interest rates, keep Canadians at work and take care of those members of our society who need our help. To lower interest rates, we will continue to fight inflationary pressures on our economy. Rising inflation and interest rates have increased the burden of servicing the public debt. The best way to bring interest rates down and keep them at manageable levels is to take the measures that are necessaiy to create a healthier economy and put our finances in order. To achieve this, we have made some difficult choices. In fact, that is why we were elected. We have worked to ensure that the total package of measures is balanced, reflecting regional circumstances and placing the greater burden on those who are better able to carry it.
As far as spending is concerned, the work done by the Expenditure Review Committee of Cabinet is reflected in major reductions in government spending that will total about $2.5 billion this year. These measures are in addition to the action we have taken during the past four years to reduce program spending which, in relation to the economy, has declined from 19.5 per cent when we came to power to 16 per cent this year and will fall to 15 per cent by 1993-94.
The reduction in defence expenditures is a major component of that effort. The cancellation or postponement of certain staffing projects, the closing or scaling down of certain Canadian Forces bases and the decision not to proceed with the purchase of nuclear submarines will allow for a $2.7 billion saving over the next five years. However, overall defence expenditures will grow. And this Progressive Conservative Government is more than ever committed to defending our sovereignty and security.
The Government also reassessed its external aid program. Our contribution to public development assistance is one of the most generous in the industrialized world, and it will remain so. The one- year reduction of the aid, and the slowing down of its growth rate will allow for some $1.8 billion deficit reductions over the next five years.
The Government also will review subsidies to VIA Rail, with a view to making substantial cuts. We simply cannot afford to spend that much money on a passenger rail service used by so few people. The Government will examine various options, including rate increases, service reductions except in remote areas, and the closing down, sale or transfer of major components of the system.
The Government also will reduce the growth of transfers to provincial Governments. Transfers under established program financing this year total $34 billion and will continue to grow from year to year at least at the rate of inflation. On the other hand, transfer payments to low-income provinces will remain unchanged. This Government remains committed to reaching the goals of our national child care strategy. Tax assistance measures to some 1.4 million families of presschool age or children with special needs already are in place, as well as a special fund to promote new initiatives to improve child care services. However, because of the financial situation, the Government has decided not to go ahead for the time being with the third prong of its strategy to accelerate the creation of extra child care spaces. It will continue however sharing the cost of provincial child care services under the Canada Assistance Plan, and will
May 9, 1989

continue however sharing the cost of provincial child care services under the Canada Assistance Plan, and will take any action needed during its term to reach its child care goals.
A number of other cuts were announced in the Budget. They deal with the machinery of state, corporate subsidies and payments to Crown corporations. Altogether, these reductions, once implemented, will contribute some $2.5 billion to our debt control program. Finally, our expenditure review committee will continue to sit to make sure that the Government keeps its expenditures well under control.
Our careful management of Government resources, which are your resources, will also apply to other sectors. Regional development expenditures will remain a Government priority. In fact, they will be increased by as much as 35 per cent over the next five years compared to the past five years. The increase, however, will vary from one year to the next, in order to make possible long-term sustainable development financing.
Moreover, the Government will continue its privatization program by selling its remaining interest in Air Canada, by selling two former divisions of Atomic Energy of Canada Limited and by reviewing more actively the case of some corporations which could be turned over to the private sector.

Our earlier efforts to make Canada Post self-sufficient have succeeded. Not only did it make a profit last year, it will start paying dividends to the Government, and the scheduled two-cent increase next January in the price of a first-class stamp will be reduced to one cent. These efforts to make sure tax dollars are spent wisely would not be complete unless transfers to individuals were also examined. Canada's social safety net is important to all of us. It must be preserved and made secure for now and the future. This means that the priority purpose of programs like Old Age Security and family allowance must be to assist lower and middle income Canadians, not subsidize those with higher incomes. This is why the Budget proposed to use a tax system to recover these payments from high income taxpayers. Those with individual net incomes greater than $50,000 will repay these benefits at the rate of 15 per cent. This measure will only affect about four per cent of those who receive old age
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pensions and about 14 per cent of those who receive the family allowance, and it will be phased in over three years.

Whoever is eligible will continue to receive a cheque. With this payback mechanism, the needy will keep all their benefits, while the affluent will reimburse part of them depending upon their income.
On the other hand, this Budget will increase some taxes. High income taxpayers will help correct the imbalance between the Government's revenues and its expenditures, so that the present generation will finance today's programs and help bring the debt under control. Altogether, these measures will make it possible for total revenues to reach levels attained prior to the 1970's when Finance Minister John Turner lost control of the deficit.
The revenue increases provided for in the Budget will help more than expenditure reductions bring the debt under control. Expenditure restraints by themselves could not lessen a debt threat which is much too important and serious. The new tax measures are designed to get more out of affluent taxpayers who have the means to pay more.
A new tax will be levied on major corporations in Canada with capital in excess of $10 million. This new tax will ensure that all large corporations will pay at least a minimum tax every year. This new tax will not apply to small-and-medium-sized businesses, but an amendment to the corporate income surtax will increase their tax rate to 12.8 per cent. These two measures will increase revenues from corporate tax by more than 7 per cent, which will represent nearly one billion over the first year.
faxes and duties on cigarettes will be increased by $4 a carton, with proportional increases on other tobacco products, as suggested by a number of health organizations. The excise tax on gasoline will be increased by lc. a litre, and then by another cent in January 1990.

On the personal tax side, the existing surtax will be increased by two percentage points starting July 1. An additional three per cent surtax will be applied to high income taxpayers with incomes in excess of $70,000. These measures ask those who can to contribute more.

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The Budget-Mr. Larrivee
They will increase personal income tax revenues by 2.3 per cent or about $1.2 billion in the first full year.
Federal sales tax rates will be increased in advance of sales tax reform. The general rate will rise 1.5 per cent and the rate in telecommunications, construction materials, alcohol and tobacco by 1 per cent. The increase for construction materials will not go into effect until January 1990.

The refundable sales tax credit for adults and children will be doubled to protect low-income Canadians. The income threshold will also be raised to $18,000. That means a single person earning less than $18,000 will get a $140 credit next year, while a family of four will get a $420 credit. That measure will be of substantial benefit to the most needy.
Another facet of our strategy to control the debt concerns the Unemployment Insurance Program. Changes announced recently, which will enhance the Program, increase training activities and improve equity, as well as the incentive provisions are designed to allow a reallocation of resources within the Program. At the same time, we will introduce changes to ensure that the financing of the Program supports our efforts to control the debt. Starting in 1990, the Unemployment Insurance Program will be totally financed by premiums paid by employers and employees. But the Government will continue to contribute to the unemployment insurance account if it runs a deficit in difficult economic times. The contribution rate will be set at $2.25 per $100 of insurable earnings for the next three years, higher than this year's rate but lower than those of the last four years.
Taken together, these measures represent over $5 billion this year and $9 billion next year. This year, they will compensate almost entirely for the rise in interest rates and maintain the deficit at $30.5 billion. Next year, the size of the debt in relation to the economy will stabilize and the deficit will slide to $28 billion. We will take up the challenge and, by following the financial strategy in the Budget, we will halve the deficit in five years.
A fundamental element of that strategy is the federal sales tax reform. A new tax on goods and services will replace the present system on January 1, 1991. Its base
will be wider and its implementation rate will be set at 9 per cent.
Reforming the federal sales tax has been discussed for a long time. The present tax is hidden, unfair and harmful to our economy. Although it has not been possible for the time being to implement a joint federal-provincial reform of the system, the importance of reform persuaded the federal Government to act.
At 9 per cent, the new tax will generate enough revenue to replace the present federal sales tax, reduce income tax for average-income households and finance new refundable sales tax credits. This credit will be paid four times a year, even before the new sales tax takes effect, and will leave families earning less than $30,000 better off after sales tax reform.
The expenditure reductions and tax increases announced today and the sales tax reform to take effect in 1991 enable us to attack the debt problem with determination. The challenge is to stay the course year after year until the problem is eliminated. The Budget puts us on the right track by improving the nation's ability to bear its debt burden and by strengthening our ability to preserve essential social and cultural programs as well as other important public services.
That is why the Budget is intended to guarantee the future and not to mortgage it. That is why the Budget is tackling head-on a major obstacle that is keeping us from a better future: the growing debt problem. The Budget is meant to overcome this obstacle. The measures it contains are rigorous, because the challenge facing us demands it.


Mr. Assad:: First of all, Mr. Speaker, I would be remiss if I did not commend the Hon. Member for Joliette (Mr. Larrivee) for his maiden speech. However a question popped into my mind during his speech. The Hon. Member mentioned the transfer payments to other provinces, so I would refer him to the remarks made yesterday by Quebec Premier Bourassa who was in our region and said he is strongly opposed to the tax increases announced by the Government. He expressed the hope that the other provinces, particularly Ontario, will form a common front with Quebec to argue against the new sales tax, the value added tax if you will. I believe the Quebec Premier was an ardent supporter of the Hon. Member's political formation during the last
May 9, 1989

The Budget-Mr Larrivee
election campaign, and every time he spoke he was absolutely right. Does my Hon. colleague opposite me think he may be right again this time?


Gaby Larrivée: Mr. Speaker, first I want to say to my colleague that Quebec Premier Bourassa agreed with us during the election campaign because what we advocated at the time was going to benefit all Canadians, and Quebecers in particular.
I would suggest that any provincial Premier who feels that an additional tax might strike his province can be expected to react strongly. We did not expect Premier Bourassa to get in touch with us to express his thanks.
However, the way I interpret the remarks of Mr. Bourassa does not lead me to conclude that he is categorically opposed to the federal tax advocated by the Minister of Finance. I think he was somewhat more flexible and that he thought the discussions with the federal Government should continue.
I made a comment along that line and I believe One thing for sure is that I agree with my colleague: Mr. Bourassa did not applaud and was not overwhelmed when he heard about the new measure the federal Government intends to implement.


Mr. Comuzzi:: Mr. Speaker, I join with my colleague in congratulating the Hon. Member for Joliette (Mr. Larrivee) on his first speech in the House. However, I have a question with respect to the earlier part of his address. He stated that the deficit is rising by $80 million each day, that 35 cents out of every dollar collected must go to pay the interests costs, that we, and I assume the "we" he refers to is the Government, cannot carry on this way to deal with the deficit, and as a result of the deficit the debt. I agree. We on this side of the House cannot cany on this way nor can Canadians cany on with that type of Budget.
The Hon. Member went on to explain in capsule form all the remedies the Minister of Finance (Mr. Wilson) brought forward in his Budget with all the tax increases and cuts. However, there is still a greater deficit today than there was last year, a deficit projected at $30.5 billion. We cannot carry on this way. How does the Hon. Member anticipate coming up with a debt of $30.5 billion while still reducing the deficit? There is something here that I do not understand. We cannot keep raising the deficit while dealing with the debt. Perhaps the Hon. Member could comment on that.


Gaby Larrivée: Mr. Speaker, I have some difficulty understanding the Hon. Member's question. It is easy to understand that when we have the kind of debt load we now have, we must both reduce our expenditures and get extra taxes. Nothing could be simpler.
There is one very important fact, which I think has been repeated a number of times in this House and the Hon. Member from the Socialist Party who left earlier made no reference to it. We not only have a debt problem but an inflation one as well. We have to act on two levels. Certainly if we had no inflation problem interest rates would not have gone up as high as they did, and the deficit would have been as forecasted by the Minister of Finance, around $25 billion. Unfortunately, because of inflation, higher interest rates have led to an extra $6 billion in interests costs.
Since we have to deal on both planes, surely, with the proposals put forward by the Minister of Finance, this might slow down the economy to some extent. By slowing down the economy somewhat, inflation will come down, which in turn will lead to lower interest rates. This is the strategy, the plan followed by the Minister of Finance to reduce the interest load on the national debt.


Mr. Althouse:: Mr. Speaker, perhaps the Hon. Member could expand a bit on his statement that the problem is not necessarily the debt but is inflation and that this is the reason the Government is running up such big deficits. If the Government is serious about the problem of inflation, why did it not choose to return to a system of taxation in which the corporate sector is taxed at approximately the same rate as the private sector? That situation obtained in the 1950s when about 75 per cent of Government revenues were taken from income taxes on corporations and private citizens and the tax load was balanced approximately 50:50. Since that time, we have moved far from that situation. Had that situation persisted, instead of having a deficit this year of $30.5 billion, according to the Budget, we would instead have a surplus of $18.5 billion.
It seems to me that when corporations are given more of a free ride on the tax side, they have used their extra money to create the inflation that the Hon. Member says the Government is trying to fight. How else can we analyse a situation in which one corporation with too much money, because we have not taxed it, decides to

May 9, 1989
The Budget-Mr. Rocheleau
buy out its nearest neighbour and bids the stocks up to three, four and five times the realistic price? Is that not inflation? Does that not create inflation? I could go on to point out numerous other examples of how the current tax policy creates inflation by permitting one group, in this case rich citizens and the corporate sector, to bid too much for goods and services, something which is inflationary.
I wonder why the Government did not choose to begin using a more equitable tax system so that I, as a small businessman who has paid 30 per cent on my tax earnings and invest my 70 cent dollar in a new business, will not face unnecessary competition from a big multi-national that has not paid any taxes even though it has been very profitable and is sitting there with 100-cent dollars. A 70-cent dollar just cannot compete with a 100-cent dollar. It is not fair. It ends up skewing the business climate as well as being inflationary. I wonder if the Hon. Member could tell us why the Government has refused for these many years to shift back to a more equitable taxation system that would in fact fight that inflation.


Gaby Larrivée: Mr. Speaker, the Hon. Member opposite asked why the Government dit not years ago change its method for taxing corporations. I must tell him right now that I have only been here for six months, so I am hardly in a position to know why previous Governments did not make that change. New Democratic speeches, Mr. Speaker, always try to make the point that we could solve all our problems if we taxed industry, the multinational corporations, while spending more. There is something I find a little amazing in this debate. Everyone is aware that we have a difficult debt to manage at $320 billion, everyone knows. Everyone recognizes we have a debt, so everyone must realize it. But since we came back here in the beginning of April, I have not witnessed a single instance where either the Liberal Opposition or the New Democratic Opposition did not blame the Government for not putting enough money into programs. They never have enough. Even where programs were left untouched, there is never enough. Every single day they ask that we put back millions and billions of dollars, that we hire more staff. They suggest there is not enough for the
environment. They suggest there is not enough for transport. Nowhere is there enough, although we have that $320 billion debt. Not being an economist, I cannot easily explain why industry is not taxed at par with individuals. But one thing is sure, the Budget that just came down ensures that industry, the multinational corporations pay a minimum tax.
This might not be high enough Mr. Speaker, but it is a beginning, and if the Hon. New Democratic Member recognized this so much the better. But it is not enough. On the one side those taxes are not enough, and on the other they want to have more. Perhaps I would have a question for the Member, where would we end up with all he has to propose?


Gilles Rocheleau: Mr. Speaker, I welcome this opportunity to speak to all Canadians and especially to my constituents in the riding of Hull- Aylmer, which is located in the National Capital region. Mr. Speaker, only a few days ago the Conservative Government brought down its Budget, or rather leaked its Budget the day before, as a diversion, since it is a Budget that was very difficult to explain, and Government preferred to have questions about the leak itself instead of about the real reasons behind the new taxes and cuts in program spending we have seen.
Mr. Speaker, the Official Opposition has some important questions. Before November 21, Canada was in good shape. Not a cloud on the horizon And now, hardly six months later, we have total disaster. We have the worst debt and the worst deficit Canada has ever had, and we are now seeing major cutbacks in social programs, although the Government promised Canadians before the election on November 21 there would be no cuts. Before November 21, Canadians were deceived by this Government's promises, and today we have to pay the consequences.
I will comment very briefly on free trade. In my riding, especially in the Municipality of Aylmer, Northern Telecom is scheduled to close down in a few months: 624 jobs.
There have been several mergers recently. For instance, E.B. Eddy in Hull was acquired by Scott Paper, and a number of foremen lost their jobs. The Gillette plant closed in Montreal. And all because of free trade.
May 9, 1989

Mr. Speaker, is there any indication that free trade has done anything for Canada except cutting employment? No Mr. Speaker.
About unemployment insurance. We have every reason to talk about it, because the Government just made major cuts in this important program, after signing the Free Trade Agreement without making any provisions for an adjustment program or for retraining. Today, the Government transfers the funding of the Unemployment Insurance Program to employers and employees.
A cut in Government spending worth $2.9 billion means the same amount in additional expenditures for Canadian citizens and for Canadian companies.
And what about old age security pensions? Last week, we were told that old age security pensions for rich people would have to be cut. Mr. Speaker, I think you will agree that old age security was a universal program that applied to all Canadians, whatever their income or lack of it. And when a Government like this one starts cutting old age security at the top, next year or the year after we can expect the Government to lower the ceiling, and finally, we will have old age security pensions as a substitute for welfare, payable only to people living at the poverty line.
Mr. Speaker, we could also talk about a program in Quebec which the Government was expected to support, and I am referring to day care. In July 1988, a few months before the election, the Minister of Health announced that $1 billion or a thousand million more would be earmarked for day care. We are told the Budget provides for a $4 billion cut in funding. Is this Government conservative or progressive? Is this a Government that helps Canadian families? No, Mr. Speaker, it is not.
Yesterday Premier Bourassa was just across the river in the Ottawa Valley, in Hull to be exact, criticizing the federal government for forcing Quebec and the other provinces to make up for its budget cuts in the field of education.
All these cuts, Mr. Speaker, let alone the tax increases- And what about the latest scheme of this government, the value-added tax, or as my colleague called it a while ago, the added sales tax, which was to be negotiated between the provinces and the federal government. The Conservative government promised before the election not to impose another sales tax on Canadians without reaching an agreement with the provinces so as to avoid taking up a tax field which is presently theirs.
The Budget-Mr. Rocheleau
Mr. Speaker, it is shameful and ludicrous for the government to present such a budget to Canadians. I personally deplore the fact that, just before the election, the government fooled and betrayed the Canadian people by saying everything was going well while, today, we get just about the worst budget Canada has had in a long time.
Mr. Speaker, how can we cope with free trade with the Americans when our interest rates are 3 percentage points higher than theirs. How can we hope to reduce inflation? What can we do when the government itself and the minister of Finance control the Bank of Canada which is responsible for these high interest rates? How can we believe in the intellectual honesty of this government when we have a deficit of 29 billion dollars this year which, according to the budget, will increase to 30.5 billion next year? Is that good management? When the government came to power in 1984, the national debt reached 177 billion and today, in 1989, it is 330 billion. Is that good management? We are plunging into debt generations and generations to come and that is what is absurd in the budget presented by the Conservative government.
But there is another point even more important to be made, Mr. Speaker, a point which particularly affects the National Capital Region. And I want to tiy and explain to the House the frustration shared not only on the Quebec side of the Ottawa Valley but also in Ontario, throughout the National Capital Region and by all Canadians, over the awarding of federal contracts.
We all know, Mr. Speaker, how important it is for a Government to maintain its integrity and openness. Probity is the most sacred attribute a government can have, and God knows what the present Government has put us through during the last four years.
Mr. Speaker, last December, Transport Canada and the federal Government were calling for tenders. Twenty-one tenders were sent to Public Works. Five were selected, Mr. Speaker, because they met the criteria specified by Public Works. We followed the whole debate, Mr. Speaker, because we thought the government was showing us its openness. But nowadays, we see how things have changed, especially when we read in the Budget introduced by the Minister of Finance, on page 26, a completely false statement which I will now read to you, Mr. Speaker. It says that the total capital cost of this Transport Canada Building is estimated to be in the order of $200 million, that the call for tenders for this

May 9, 1989
The Budget-Mr Rocheleau
new facility will be terminated as part of the government's overall restraint effort, and that is not true. That has nothing to do with any type of investment or capital cost. It is a twenty-year lease which was a part of the call for tenders.
Is this the result of a sudden change in the way Government runs its business? Is this how things will be from now on, the Government will call for tenders just to throw them in the waste basket and restart negotiations with people they did not want to deal with anymore? And I am talking here about Campeau Corporation whose lease is expiring in 1991 and to whom the Government was paying $350 a square meter, when the lowest bids from a Quebec firm and an Ontario firm in the Ottawa Valley varied between $200 and $250 a square meter. It that the savings the federal government wants to make? That's not true.
More than that, Mr. Speaker, the federal Government, through the Public Works Department, will negotiate a new lease with Campeau for over $300 a square metre, and will have to pay for renovations to this building that is in disrepair, to strip it of asbestos and to replace the heating system. Yet, Mr. Speaker, here is what is said in Treasury Board Order 774012 dated April 27, 1981, of which the English version I will quote is much more precise:

It states: "The entry into new or renewal leases should be avoided until any potentially hazardous condition has been corrected".

In this case, Mr. Speaker, Transport Canada's employees will be working in unsafe conditions because they will remain at work while the asbestos is removed from the building. That is contrary to a 1981 Treasury Board Order, contrary to an important regulation protecting the health of men and women who work for Transport Canada.
Mr. Speaker, I ask the Government to examine their conscience and reconsider the negotiation of a contract at the present location while bids submitted were much cheaper. The situation is unacceptable, Mr. Speaker, it is indefensible. Indeed, Quebec Premier Bourassa said yesterday in Hull that it was a great injustice to have renegotiated a lease and dealt with the Campeau firm even before the Budget was tabled in this House. This decision has deceived and wronged contractors who had
submitted bids in good faith, each spent hundreds of thousands of dollars to prepare and present those bids to the federal Government, to the Department of Public Works. The results of all those efforts have simply been thrown to the garbage.
Is this how tenders will be invited in the future, Mr. Speaker? Is it how openly the federal Government intends to operate? Is this the honesty and integrity the Canadian people can expect from this Government? Certainly not, Mr. Speaker, and certainly not for the future. If this is the way the Government intends to do things in the future, it is totally unacceptable, it is completely absurd, and it is contrary to all normal procedures and acceptable decency, Mr. Speaker. I would even say that the civil servants who work for Transport Canada are insulted by the decision of the Government to force them to stay in that building while they do some repairs to remove the asbestos. This will be done over the next five years, Mr. Speaker, while the employees remain onsite, although we know that asbestos is definitely hazardous to public health. We know that asbestos is carcinogenic and a few steps from here, we will let our employees work in unsafe conditions.
Mr. Speaker, it is totally unacceptable. Again I refer to a story published in today's Le Droit where it could be read that this Transport Canada case is beginning to smell bad. This case is smelling very bad indeed, Mr. Speaker. The tender process followed in this case is a shameless scandal. We, in the Official Opposition, cannot accept that this Government revert to the ways of the old days, the ways of Duplessis, and it is not because we have the little guy from Baie-Comeau at the head of the government that we have to revert to unacceptable and aberrant ways. All the more so since it has been recognized by the Trudeau government in 1969, in the legislation on the National Capital Region, that every building project of the federal Government in the National Capital Region should be examined so as to provide a good balance between both sides of the river.
And we wish, Mr. Speaker, that this Government would live up to former policies which have never been formally changed. And in conclusion, Mr. Speaker, I hope that the Goverment will improve somehow a situation which it has created itself and I hope also that in the next few days, it will revert to the bidding process as it has been requested, and thus show some respect for contractors who made the bids as well as for the
May 9, 1989

Canadian population as a whole and mostly for the population living in the National Capital Region.


Mark Joseph Assad: Mr. Speaker, first I want to thank my colleague the Member for Hull-Aylmer for a very well-thought and accurate statement. During the Hon. Member's speech, I noticed some reaction. When he spoke of Free Trade, the Secretary of State for External Affairs reacted as usual. If I may, Mr. Speaker, I will say it in English.

Every time we talk about free trade we see a reaction by the Secretary of State for External Affairs (Mr. Clark). I will quote from Shakespeare: "Methinks you protest too much".


An Hon. Member:: That was a lady.


Mark Joseph Assad: Mr. Speaker, I would like to ask you- [English]
Take it for what it is worth. You know what I mean. [Translation]
Mr. Speaker, the Hon. Member mentioned the Transport Canada-Hull case and I would ask my colleague if he agrees to say that Conservative Members who represent Quebec in this Chamber have not done their job. They had the opportunity to gain recognition for Quebec through a process recognized as legitimate everywhere and they have not uttered a single word. Even the Quebec Premier spoke of a grave injustice. Do we hear anything from Quebec Hon. Members sitting here? Not a word! I ask the Hon. Member for Hull-Aylmer if he agrees to blame the Conservative Hon. Members who represent Quebec in this chamber. They are asked to make Quebec's voice heard and they do nothing. Here is a golden opportunity for them to show that they represent the whole of the province and look what happened in the Hull region, on the Quebec side of the Outaouais: a normal process and not a word from them when everybody agrees it is a shameful thing. And the Conservative Members do not utter a single word! Shame on you! I would like the Hon. Member for Hull-Aylmer to
The Budget-Mr Rocheleau
comment on that and I ask that a charge be made against you all. You are not doing your job! And neither is he!


Gilles Rocheleau: Mr. Speaker, I would ask the Minister of Energy, Mines and Ressources to kindly stop chattering.
Mr. Speaker, my colleague from Gatineau-La Lievre (Mr. Assad) is absolutely right. We sat together in the National Assembly for several years as members of the Bourassa government and such a thing would never have been tolerated. I was Minister of Supply and Services and responsible for the Societe immobiliere du Quebec, and I would have been hung in Quebec City if I have done something like that.
The 63 Conservative Members from Quebec did not do their homework. None of the Conservative Members did their homework. All of them learned about the budget at the same time we did on television and they still have not read it. And it shows! Let me put the facts straight. Twenty-one major Canadian promoters presented in good faith submissions to Public Works Canada. It is a fact, Mr. Speaker. Several officers from Public Works Canada repeatedly stated to the media and in public that this contract would be awarded.
Could it be that these civil servants were fooled by their boss, the Minister of Public Works, by the Minister of Finance, by the President of the Treasury Board, by the Prime Minister of Canada?
Mr. Speaker, could we ask ourselves that question? Could we ask that question to the public servants? The agreement between Campeau and the Prime Minister will cost enormous sums of money to the taxpayers for removing the asbestos and improving the heating and ventilation system. These costs will be in the neighbourhood of 25 to 30 million dollars, and the federal government will pay half just to please Campeau!
That reminds me that on June 27 1978, the present Minister of Public Works, who was then the Member for Central-Nova, was wondering for how long they would have to go on wasting taxpayers' money to please Mr. Campeau? I am talking about the present Minister of Public Works and he is the one responsible, Mr. Speaker.
Indeed, Mr. Speaker, I endorse completely the comments made by my colleague from Gatineau because he is right and he is fighting for a principle, the fundamental

May 9, 1989
The Budget-Mr. G. Wilson
principle of procurement by public tender. I say to the people in power this: never forget integrity and honesty. You got a taste of it last time and the same thing will happen this time.


Mr. Leblanc:: Mr. Speaker, the Hon. Member for Gatineau spoke at length, in the first part of his speech, about free trade. I just want to remind him he was about the only member in the Bourassa government in Quebec who was against free trade. I find that hard to understand! Anyway, I think he was forced to resign and to settle here, near Ottawa, either to save some money, since travelling is less expensive this way, or because Mr. Bourassa simply asked him to resign as he was against free trade.
So, I want to ask him this: Why wasn't he able, when he was a Minister in Quebec, to settle the problem of Highway 50, north of the St. Lawrence River? That is another thing in which he failed.
I don't know what issues the Hon. Member will be able to fight if he continues to make grand speeches based on false statements. It was just grandstanding today, because all his statements were unfounded. Unfortunately, Mr. Speaker, this kind of statements does harm to the status of the House of Commons.


An Hon. Member:: It lowers our standards.


Nic Leblanc: It undermines the ability of our colleagues.
Mr. Speaker, I would like the Hon. Member to answer two small questions and also to explain why, when he was in office, they could not stop the annual deficit from increasing every year and why they left us the country in such an appealing state.
Mr. Speaker, I would like some answers to my questions.


Gilles Rocheleau: Mr. Speaker, I never thought that the Hon. Member for Longueuil who lives next door to the Space Agency would have raised in the House today. Just the same, I should like to reply to some of his questions.
As far as Highway 50 is concerned, I can tell my Hon. friend that the Quebec Government has accepted to assume the costs of its construction provided the Federal Government pays it share. And the Canadian Minister of Transport has so far refused to include this in the Federal-Provincial Agreements.
I dare hope that this Government will have the decency to provide the funds necessary for the development of the Ottawa Valley on the Quebec side and make it possible for the people living in the Ottawa area to travel to Montreal on a Quebec highway.
As far as free trade is concerned, Mr. Speaker, I can tell the Hon. Member that the Quebec Government I was part of-that I would fully support free trade provided the Federal Government first agreed to Quebec's demands, something it has not done yet. You have no re-training programs, which was an essential condition of the Bourassa Government, Mr. Speaker. We all know that the Bourassa Government went over that and supported this Tory Government and, six months later, Mr. Bourassa came to tell you that you had not done your homework and that you lacked political conscience. That is what he came here to tell you on the other side. And I went to listen to my former boss, and the Hon. Member for Longueuil should not worry, for we are still very good friends.
I hope this is enough, because I could deal with several other issues, Mr. Speaker. Over the next few years, I know I will have a great many opportunities to set him straight.


Benno Friesen: Mr. Speaker, since the Hon. Member from Gatineau quoted from Shakespeare so easily I thought I would give him one that befits what he said. It is from Henry VIII, Act III: "His promises were as he was then, mighty, but his performance as he is now, nothing".


Geoff Wilson: Mr. Speaker, it is a pleasure and a privilege for me to participate in the Budget debate. I would like to begin with a review of the actions of the Government and the Minister of Finance (Mr. Wilson) over the past four and a half years, since the fall of 1984.
The Economic Statement of November 1984, put forward by the Minister of Finance, talked in terms of four pillars or foundations of the program of the Government. Those four pillars were economic renewal, national reconciliation, social justice and constructive internationalism.
The key to everything, of course, was economic renewal. In keeping with the goal and objective of responsible deficit reduction announced by the Minister back in November of 1984, great strides have been made toward economic renewal. That is to say, putting Canadians back
May 9, 1989

to work and dealing with the economic mess that was left to the Government back in the fall of 1984.
At that time you will recall, Mr. Speaker, unemployment was in the area of 12.8 per cent. There was a pitiful job-creation record of the previous three or four years. The national debt was approaching $200 billion. In fact, by the end of the 1984-85 government fiscal year on March 31, 1985, the accumulated national debt was in fact $200 billion.
The tragedy is that so much of that national debt was caused by program over-expenditures. It was not a case of having to meet interest payments on past debt, as is the case today. Back then it related almost entirely to program over-expenditures.
In the three years leading up to our Government taking over, that is 1982-83, 1983-84 and 1984-85, program over-expenditures increased dramatically each year.
Program over-expenditures in 1982-83 were $11 billion. That is to say, the Government of the day spent $11 billion on day-to-day programs of Government, excluding interest on any past debt. In 1983-84, the over-expenditure on a current account basis was $14 billion. By 1984-85, the last fiscal year of that previous administration, it reached an incredible $16 billion. That is to say nothing of paying interest on the past debt. We are talking here about plain and simple overspending, putting out more in government programs than there was revenue to sustain those programs.
I am going to circulate a chart to Members of the House containing these figures because I think they are very important and instructive. If one looks at the succeeding Budgets and the fiscal performance during the years the current Minister of Finance has been in charge, one will see a dramatic shift in the composition of the annual deficit. That first year, 1985-86, the program over-expenditure aspect was down to $9 billion. In 1986-87, it was down to $4 billion. In 1987-88, there was more revenue taken in by Government than spent on the day-to-day programs. In 1988-89, the year just ended, there was in fact a $4 billion surplus in terms of excess revenue over program expenditures.
Unfortunately, there has been a steady growth in the amount of money that is required to pay interest on the
The Budget-Mr. G. Wilson
national debt, which has been accumulating. We have seen the interest charges on that national debt increase steadily during the last number of years from $17 billion in 1982-83, to $22 billion in 1984-85, to $26 billion in 1986-87 and up to $33 billion this year. That is of course the root cause of the problem.
The steps that have been taken by the Government have been these: the first step was to reduce the program over-expenditures which characterized the previous administration, the previous 10 or 12 years. That is to say, to reduce those program over-expenditures and get Government back to break-even on its everyday operations.
Once the Minister of Finance was able to accomplish that, that is, to take in enough tax revenues to pay for the day-to-day programs of Government, the next step was to go to work on the interest burden. At this point in time the entire annual deficit consists of interest which we have to pay on the unfortunate accumulation of past deficits-the national debt, as we call it.
Now the objective is to try to bring down that annual deficit. The only way that can be achieved is by program expenditure reductions and by tax increases. There is no magic way that we know of or have heard of from Members opposite. It is not something that can be wished away. We have a debt and we have to confront it and deal with it.
Members opposite are now suggesting that the national debt has doubled during the tenure of this Government. The fact is that from April 1, 1985, until the end of March this year, the national debt in fact increased from approximately $200 billion to $320 billion. That is an increase of 60 per cent, unfortunately. It is fair to say that it will have doubled by 1992. However, the fact is that all of that increase, the entire doubling, will consist of interest that has accumulated on the past debt that this Government inherited at the end of that 1984-85 fiscal year.


Mr. Nicholson:: The Trudeau legacy.


Geoff Wilson: The Trudeau legacy, as my hon. colleague points out.


Rob Nicholson: Cheered on by the NDP.


Some Hon. Members:: Oh, oh!

May 9, 1989
The Budget-Mr. G. Wilson


Geoff Wilson: I believe that the moon is rising opposite, Mr. Speaker. Hon. Members are inspired by it.
The fact is that the national debt has increased over the last four years by approximately $120 billion. The chart that I will circulate to my hon. doubters opposite will indicate that all but $8 billion of that represents interest that this Government has had to find to pay interest on that past debt. Program over-expenditures in four years amount to $8 billion in total.
This, I suggest, is a solid record of achievement. However, it is still not good enough because the debt situation has reached the point where it now feeds on itself. It is at a point where interest on interest causes the debt to increase even as the Government increases taxes and reduces program expenditures. In spite of those serious measures, the debt continues to increase. Because of interest charges on the debt-the evidence of that debt is Canada Savings Bonds, Treasury Bills and Government of Canada securities-the interest charges on those securities amount to something in the order of $3 million per hour. That is the rate at which the national debt is growing. It requires $80 million a day to service that debt-over $2 billion each month.
This in effect places the country on a treadmill. Every effort that is made to increase revenue and to produce additional government revenues go merely to paying interest on that growing debt. Roughly 35 cents out of every dollar of government revenue that is raised go to interest. Next year without these measures it will go to 39 cents and to 43 cents, and on and on it will go.
Clearly serious steps have to be taken to deal with the debt, the deficit, and the interest problem. It has to be done because if serious steps are not taken we will soon reach the point where all government revenue has to go to pay interest on the national debt. There will be no moneys left over for the day-to-day programs of government, let alone the kind of social programs which Canadians have come to enjoy and which I think make Canada one of the unique countries among those in the world.
Much has been done over the past four years. I would like to cite some of the measures that have been put forward by this Government in achieving the change in the composition of the deficit from program over expenditure to straightforward deficit reduction and the meeting of interest.
The Government downsized the bureaucracy. Something in the order of 12,000 Public Service jobs have been eliminated. Now that was not easy, because every step of the way this Government was opposed by Members opposite. We were opposed by organized labour. The Canadian Labour Congress in fact declared war on the Government and spent over $2 million trying to unseat it during the past campaign. That is the price a Government pays for taking action which is necessary in order to deal with a problem.
The Government promised to get rid of Crown corporations that were serving no useful public purpose. There is no reason particularly why Governments should be in the business of manufacturing aircraft so the Government privatized Canadair and de Havilland. Again there was great debate in the House and predictions of doom and gloom, in spite of the fact that something in the order of $2 billion of taxpayers' money had already been thrown down the drain in subsidizing those enterprises. The fact is that they were sold to the private sector, and contrary to the predictions of loss of employment which we heard from Members opposite, both these enterprises are doing better than ever before and employing more and more Canadians.
We got rid of some programs which in the minds of many were questionable. Katimavik is one which comes to mind. It provoked a good long hunger strike in the halls opposite, but it was really a program of dubious value.
We have instituted tax increases along the way. We have taken measures to enhance trade relationships, both with the United States and with every other country in the world, with a view to trying to create jobs for our young people. We have encouraged the private sector through the institution of the lifetime capital gains exemption for the shares of small business. The Canadian Organization of Small Business representing some 750,000 small businesses, the entrepreneurs, the lifeblood of this country, has said that this measure is the single most important incentive toward risk taking and entrepreneurship.
At this point I think it is important to salute the small business community. On its own initiative it took advantage of the conditions the Government tried to put forth in which they could flourish. The small business sector has managed to generate an unprecedented number of jobs. The fact is that among all industrialized countries
May 9, 1989

of the world over the past four years the Canadian job creation record is No. 1. The reason for that is the private sector.
As a result, at this point in time there are 1,500,000 more Canadians working today than was the case just four and a half years ago. Elappily they are not working for government. They are not on some short-term "paint the fence" type of make work program that characterized the previous administration. These for the most part are full-time rewarding jobs for Canadians. These Canadians are now contributing tax revenue to the Government. They are not taking out for unemployment insurance and social assistance so we benefit in two ways.
While much has been accomplished, much more needs to be done. The progress that we have made over the past four years is at risk, giving to growing inflation at home and elsewhere. We require responsible budgetary measures to restrain inflation long term and to help keep interest rates down.
The Budget put forward recently reflects a difficult situation. It takes serious steps, and it reflects difficult decisions and difficult choices that have to be taken. It calls for unpopular measures. It calls for tax increases and it calls for expenditure reductions. However, it acknowledges a fair and equitable balance. It reflects regional concerns, and it places a larger burden on those who are better able to carry it.
In the course of the last number of days these measures have been mentioned many, many times, but in summary we see restraint exercised at National Defence and overseas development, reduction in subsidies to VIA and CBC, postponement of child care spaces being created, transfers to the provinces being reduced somewhat but not less than the rate of inflation, and that privatization will continue, as will the success of de Havilland, Canadair and others.
We are seeing the repayment of social transfer payments that are made to wealthy Canadians and a new corporate tax not on income but for the first time on capital. Corporations may not make any money, but notwithstanding that they will have to pay tax based on capital employed within this country. We are going to see a tightening up of the corporate tax system. Personal taxes have to increase, as will excise taxes on cigarettes and tobacco and gasoline and the federal sales tax. All these measures are hardly worthy of a lot of cheer, but the fact is that they are absolutely necessary. This problem is in front of us. It is not going to go away.
The Budget-Mr. G. Wilson
I have been listening intently to Members opposite. I have from time to time asked them at the conclusion of their 20 minutes of criticism and complaining whether they have a single, sensible, alternate, practical solution which Canadians can employ to deal with the problem, and I have yet to hear one.
The Minister of Finance and this Government have acted responsibly and decisively through a balanced measure of tax increases and expenditure reductions. The tragedy in all this is that even with the measures I have outlined the debt is of such a magnitude that they will barely offset the interest costs. The result is that the deficit this year will still be $30.5 billion, but happily next year down to $28 billion and projected to be cut in half within five years.
Members opposite will say that that is not very impressive, that it does not do much, that it just maintains the status quo. However, I would challenge them because I do not think that they can have it both ways. One does not need a vivid imagination to see where things would be at without the tax increases and without expenditure restraints. The deficit would be into the area of $40 billion to $45 billion, with interest payments going out of sight and the future of the country, the security of our safety net and the future of our children impaired seriously.
I must assume that Members opposite will apparently agree that interest on the national debt is a serious problem and a threat to the future prosperity and security of the country. Presumably all Canadians want a caring and compassionate society with the capability to maintain the social programs, cultural programs, and the important public services that Canadians need. They want a Canada which is economically strong and is able to compete with the rest of the world so that our growth in job creation can be maintained and there are opportunities for our young people.
I believe that they want as we do a Canada that can sustain the high standard of living and pass on an enhanced quality of life to those who come after us, succeeding generations.
There may be those who disagree with certain aspects of the Budget, certain tax increases or a particular expenditure restraint, but the need for action cannot be denied. Partisan rhetoric simply is not in. Mindless criticism is out. Canadians want some meaningful action to deal with this problem. I say to Members opposite that if they have some alternatives, some workable suggestions, then let us have them because we on this side of

May 9, 1989
The Budget-Mr. G. Wilson
the House do not claim to have a monopoly on all these matters. We want to work constructively. I believe that this deficit interest problem is of sufficient concern that Members on all sides should be joining together in an harmonious atmosphere in an effort to try to cope with it.
We cannot long continue to mortgage tomorrow in order to pay for today and, indeed, to pay for yesterday. That is why the Minister of Finance (Mr. Wilson) said that this Budget is about building for the future not borrowing from it.
The Budget deals with the major obstacle to our future progress, our future growth and that is the growing debt. The Budget attacks that obstacle. The measures are tough because they are absolutely necessary and absolutely required. No one on this side takes any great delight in increasing taxes or in reducing programs, but the fact is that it is the carelessness, the over-spending, the profligacy of those who went before us which have contributed in large measure to this problem. We have to face it today. It is real. It is not an illusion. It is not going to go away on its own. It has to be faced and faced now. A failure to do so now would be to abdicate our responsibility to those who come after us. We will leave our children, I suggest, with a major and very real crisis.
In conclusion, I want to say that I believe that the Minister of Finance has crafted a Budget that faces the debt challenge and will help to protect Canada's future. It asks everyone to play a part so that everyone may ultimately benefit in the years ahead. It is about our future. Its success depends on the commitment and understanding of all Canadians.


Victor Fredrich (Vic) Althouse: Mr. Speaker, I have heard the Hon. Member from Swift Current say that all of the country should be more involved in dealing with the country's deficit and I believe that most of the country is.
Prior to the Budget and prior to most budgets, we saw announcements and pronunciations by the business community and the lobby groups which represent the business interests saying that the deficit had to be dealt with, so I presume that that particular group in our society is prepared to take part in deficit reduction.
I would remind the Member of something that I reminded one of his colleagues a few moments ago, a study that was recently completed by John Orr in which he goes back to the taxes paid by the corporate sector and individuals in the 1950s. Seventy-five per cent of the Government revenues were raised by income tax at that date. The two sectors paid approximately the same amount of money.
If we were to carry that same regime of the corporate tax take being equivalent to the take from individuals, Mr. Orr estimates that we would have produced under this Budget an $18.5 billion surplus. Instead, the Minister and his Government have chosen to go with a $30 billion point something deficit. Given that the business community has been one of the loudest proponents of doing away with the deficit, can the Member explain why his Government and why the Minister of Finance did not take them at their word and begin placing the same level of taxation on the business community and the corporate community that they were paying back in the 1950s when deficits were not a problem?


Geoff Wilson: Mr. Speaker, I am happy to respond to the observations of the Member from Mackenzie.
I have not examined the study to which he is referring, but times have changed since the 1950s. The population of this country, I suspect, has virtually doubled. There are many, many more individual Canadian taxpayers. I suggest to you that the corporate sector is carrying roughly a 50 per cent tax rate. I know of no individual or corporation in this country that is making money that does not pay tax with the exception-and I want to add this exception because I know of the Hon. Member's fixation-of these 60,000 or 80,000 corporations which are "profitable" and which pay no tax.
The Hon. Member opposite, of course, knows full well that 95 per cent or more of those corporations he is talking about are individual Canadian small business people and farmers. The reason they may be profitable on one line of their tax return but not paying income tax in a particular year is because they are perfectly entitled to carry forward losses from previous years to offset the income in the year of reporting. He knows also that another reason is because of the business investment tax
May 9, 1989

credit whereby if a taxpayer, corporate or individual, makes certain capital purchases they were in the past entitled to take certain credits to offset income tax payable. That is the short answer when we get to this nonsense about all these so-called profitable corporations which pay no tax.
I want to close my response with an interesting little piece that I noticed In The Financial Post for May 5. It is entitled "Advice & Dissent" by William Watson. The heading of this article is, "Those who wanted debt control must pay". He concludes by stating:
You only hurt the ones you love. A surtax on high incomes. A new tax on big corporations. Consumption tax increases. A big jump in the sales tax credit. It's as if Mike Wilson were saying to his natural constituency-that is, the top half of the income distribution -"You want debt control? Now pay for it."
So, Mr. Speaker, an interesting comment from someone I do not know but he seems hardly over-sympathetic.


Dennis Joseph Mills: I have a question, Mr. Speaker. I listened with interest to the remarks of the Hon. Member for Swift Current-Maple Creek-Assiniboia (Mr. Wilson). He mentioned that we do not have any ideas on this side of the House. Quite frankly, I did not see very much creativity in this Budget. Let me ask the Hon. Member a specific question. One of the ways in which we compete internationally is through a very high level of productivity. We have heard repeatedly in committees of this House over the last four or five years that profit-sharing and equity participation produces an enhanced level of productivity in most corporations that employ a system like this. Does the Hon. Member think it would be in the interests of the Government to consider using the tax instrument for promoting that kind of activity in the corporate world because that would not only enhance our productivity but would also give us new levels of taxation which would allow us to attack the deficit in a more progressive way? Would the Hon. Member have some thoughts on that?


Geoff Wilson: Mr. Speaker, I appreciate the comment from the Hon. Member opposite. I may say that it is an attempt to be constructive, which is highly unusual and well above what I have heard from that side to date in this debate.
The whole thrust of the tax reform exercise which the Minister of Finance (Mr. Wilson) has tried to put forward has been to get rid of the tax expenditures. I think a number of tax expenditures which have been put out in the past have been less than productive, perhaps well meaning, but less than productive. One example is perhaps the business investment tax credit which while well meaning likely caused more problems than it was
The Budget-Mr. G. Wilson
worth. Then there is the scientific research tax credit; that was a monumental tax expenditure put forward by the Party of the Hon. Member for Broadview-Greenwood (Mr. Mills). I am not sure what the final tally on that tax expenditure was, perhaps something in the order of $4 billion. It did not do very much for research and development in this country.
I think it is perfectly open for the business community to engage in profit-sharing with its employees. In fact, I think it would be a splendid idea for more businesses to engage in that practice. It seems to me that individual initiative and incentive is what makes things tick in this country and it would give employees an opportunity to participate, to share in some of the fruits and rewards of the entrepreneurial spirit that are so important. It drives the small business sector in this country and is certainly the life-blood of the small business sector.


The Acting Speaker (Mr. Paproski):: I will entertain a supplementary question from the Hon. Member for B roadview-Green wood.


Dennis Joseph Mills: Mr. Speaker, my point was that I think the Minister of Finance should use the tax instrument to provide incentive for businesses to engage in that kind of equity participation and profit sharing system. I did not quite understand the Hon. Member's answer.
Does he support that kind of approach? Could he possibly suggest that as something creative which the Government should consider? Government Members always accuse us of lacking in creativity, but this is a very simple thing that would engage millions of people in a form of productivity which would give us global competitiveness. Yet we cannot seem to get a specific answer on it.


Geoff Wilson: Mr. Speaker, the Hon. Member opposite talks about specific answers. I am rather amused by that because for the past week I have been asking other opposition Members, at the conclusion of their critiques of this Budget, whether they have anything concrete to suggest, anything workable, anything which would help us face the problem we have in Canada. I have heard absolutely nothing whatsoever.
In answer to the Hon. Member's question, I know of nothing which prevents business people, entrepreneurs, from entering into profit sharing arrangements with their employees. It seems to me to be a very sensible way of doing business. I hate to think that it would require another tax expenditure, the sort of thing they themselves criticize over and over again as being inefficient, to encourage the business community to do that. I think it is

May 9, 1989
The Budget-Mr Harb
a very good idea. The business community ought to go right ahead with that very sensible idea.


Mr. Gustafson:: Mr. Speaker, it is interesting to note that on the Government's record between 1984 and 1988 more jobs were created in Canada than in West Germany, Austria, France, Sweden, Belgium, Greece, Finland, Ireland, and New Zealand. Canada has been creative in production, and the number is 1,432,000 jobs in a four-year period.


Mr. Mac Harb (Ottawa Centre):: Mr. Speaker, I am pleased to have an opportunity to participate in the debate on the Budget. There is no question in my mind that the deficit must be reduced if we are to compete in today's global economy and still provide the essential services Canadians have come to expect. The longer we wait, the higher the bill will be and the less money we will have to pay it. We have to start by balancing the Budget.
However, the Estimates which were tabled in the House show that the Government plans to spend $142.9 billion in the fiscal year 1989-90, despite revenue predictions of only $112.4 billion. This means a shortfall of $30.5 billion. It is obvious that the books are not balanced.
The books are not balancing because our economy simply cannot thrive in an environment of high interest rates, decreased government spending and never ending tax hikes. The deficit is increasing and will continue to do so until we find a real long-term solution to this serious problem. Unfortunately, the Government's chosen solutions are not working.
A colleague of mine once described this Government's theory of economics as one based on selling off the furniture to pay the rent. I could not agree more.
The Government is overlooking the obvious. Instead of tax hikes and cutting the veiy programs which work to prevent economic slowdowns, the Government should be focusing on increasing the country's productivity and competitiveness. The only long lasting means of reducing the deficit is to increase productivity. This is not a new idea. Increased productivity will not only make Canadian business more competitive world-wide but will provide revenue to reduce the deficit which is threatening to strangle our national economy.
Increased productivity will not only make Canadian business more competitive but will also help us move into the 21st century in a better way. We can increase productivity by improving the skills of our workforce and by putting new energy and commitment into our research and development partnership with the private sector. Improving the skills and education of our workforce is not only a good idea. It is an essential one, given the deplorable state of Canada's basic educational level.
First, let us talk about illiteracy. Based on Gross National Product, Canada ranks in the top ten of the world's wealthiest societies, but ranked by literacy of its citizens Canada is nowhere to be seen in the top ten. Hon. Members may be surprised to learn that countries such as Nicaragua, Cuba and South Korea have literacy levels higher than that of Canada.
The Southam survey carried out in the fall of 1987 is now well known for bringing to light the shocking statistics on the national literacy crisis in Canada. It reports that 4.5 million people, one out of every five Canadians, cannot read a basic job application or a simple operating manual. They cannot read government notices or product labels in supermarkets and are helpless when faced with their children's homework questions.
How did this happen and what does it mean to our economy? In 1961 author Barbara Moon warned that Canada was suffering from widespread undereducation. As Hon. Members can see from the statistics, her warning was ignored.
In today's international market-place, success and profit go to the companies on the leading edge of technology and productivity. Illiteracy simply does not fit
May 9, 1989

into this picture. Canadian companies know very well that the 1990s will bring increased international competitiveness and the need for greater productivity and higher efficiency than ever before.

They are in the process of updating their equipment and adopting new technologies to compete in a rapidly developing market.
But the benefits resulting from all this new technology may be lost if employees are unable to adjust to the radical changes involved. It would be altogether impossible to increase or even maintain productivity without providing our workers with the basic knowledge they need to prepare for the future.
The low literacy levels will reflect on Canada's ability to compete on international markets. Compared with our commercial and industrial rivals, our competitiveness would be seriously jeopardize if our workers' literacy and educational levels were not as high as those of other industrialized countries.
Recent studies have revealed for instance that 95 per cent of all Japanese workers have completed the equivalent of two years of university education. In Canada, only 42.6 per cent of all students register for post-secondary education.
These facts speak for themselves when it comes to our country's productivity. If we do not take immediate action to increase the literacy and educational levels in Canada, Canadians will be unable to compete on domestic and international markets.
A study conducted by Southam took into account the following points to calculate the cost of illiteracy in Canada: unneeded unemployment insurance benefits, lower international competitiveness, increased medical costs and workers compensations, subsidies for retraining of industrial workers, jail terms for frustrated illiterates and fiscal revenue losses.
Social and economic costs are also enormous and the final chilling result is more and more obvious. On top of being a universal right, literacy and education are an economic necessity.

A group of Canadian business executives recognized the seriousness of this situation and set up the Canadian Business Task Force on Literacy. They wanted to let the business world know the effect illiteracy is having on the
The Budget-Mr. Harb
corporate and social bottom line. This task force published a report in February of 1988 which estimated the direct annual cost of illiteracy to Canadian businesses at about $4 billion, and to society as a whole at approximately $10 billion every year. They reported that lost productivity alone could be costing Canadian corporations $2.5 billion every year. That is a lot of money, Mr. Speaker, money which could go a long way toward decreasing the national deficit without, I must add, hitting the Canadian taxpayers with more increases or chopping the already strained budget of our social programs.
In September of 1988, the Prime Minister (Mr. Mulro-ney) stood in the grand halls of Casa Loma in Toronto and spoke eloquently about the problem of illiteracy in Canada. He promised that his Government would finally do something about its 1986 commitment to fight illiteracy. He pledged $110 million over the next five years to this battle. It is now 1989. By the end of the 1989-90 year, the Government predicts it will have spent $33 million on grants and contributions related to literacy upgrading. Despite this, the problem is not going away and local groups tell us that they are still desperate for help.
In the words of the Right Hon. Prime Minister:
The voluntary sector has carried the flame of literacy and kept the
cause alive in this country.
He said this at Casa Loma in September of 1988. Many of these literacy groups have been carrying that flame for over 10 years. We have to give them a hand and share the important work they are doing in our communities. The education programs, from kindergarten to graduate school, must be strengthened and focused to increase the knowledge and skills base of our workforce. But indications are that this is not being done. Just when our colleges and universities are fighting a losing battle to maintain and extend the quality and excellence of education in this country, the Government is capping provincial transfers for post-secondary education. This is a cut of $111 million for the upcoming year.
Throughout the free trade debate, we heard a great deal about managing change and about the need for increasing research and development, a better educated workforce and greater productivity. Hearing about it is one thing, seeing it happen is another. The statistics say it all, Mr. Speaker. According to the advisory council on adjustment, among eight comparable industrialized countries, Canada is ranked lowest in gross research and development spending, lowest in industry-funded research and development, second lowest in government-funded research and development, lowest in higher

May 9, 1989
The Budget-Mr. Harb
education research and development and lowest in international patents granted per capita.
A report prepared for the Canadian Chamber of Commerce indicates that the existing research and development incentives are hampered by slow and clumsy bureaucracy. Right now, many corporations must wait 24 months to receive the refundable research and development tax credit.
I notice, Mr. Speaker, that you are asking me to speed it up and I will move right on to the very end of my speech.


An Hon. Member:: I want to hear more.


Mac Harb: In summary, we must work together, government, business and the public at large to ensure that we are ready for the future. In the 1990s, the countries which will do well, which will see strong economic growth, high employment and whose people will enjoy a higher standard of living, are the countries which invest in the skills of the workforce and the excellence of research and development today.


Some Hon. Members:: Hear, hear!


The Acting Speaker (Mr. Paproski):: It being 5.45 p.m., it is my duty, pursuant to Standing Order 84(5), to interrupt the proceedings and put forthwith every question necessary to dispose of the amendment now before the House.
Is it the pleasure of the House to adopt the said amendment?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mr. Paproski):: All those in favour of the amendment will please say yea.


Some Hon. Members:: Yea.


The Acting Speaker (Mr. Paproski):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mr. Paproski):: In my opinion the nays have it.
And more than five Members having risen:


The Acting Speaker (Mr. Paproski):: Call in the Members.


The Acting Speaker (Mr. Paproski):: I declare the amendment lost.
It being 6.14 p.m., the House stands adjourned until 2 p.m. tomorrow, pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6.14 p.m.
[Stage Direction]
Wednesday, May 10,1989