1989-05-11

Hon. Otto Jelinek (Minister of National Revenue):: Mr. Speaker, I rise on a matter of personal privilege stemming from remarks I made to this House during the course of Question Period yesterday in response to questions from the Hon. Member for Yukon (Ms. McLaughlin) regarding contaminated waste.
I said yesterday:
- I learned of the suspicion of toxic wastes being included in liquid fuels this Monday. I immediately initiated an investigation within my Department to ascertain whether or not any officials were knowledgeable of the fact prior to this Monday. The response was no.
That statement was made on information I received from my officials earlier this week and was based on the best information available to them and to me at the time.
Late yesterday afternoon it was brought to my attention that on September 11, 1987, a meeting was held at the headquarters of Revenue Canada in Toronto. As a result, calls were made to some of those purported to be in attendance at that meeting.
In clarification of my statement yesterday, I have since been advised that the meeting took place. I am advised as well that Revenue Canada was not provided with any evidence of contaminated fuels being brought into Canada.
I am further advised that during the discussions on fuel import fraud, which took place at the time, a reference was made to the transport of contaminated material between states in the United States. At no time was there any allegation made about toxic materials being placed in fuels for export to Canada. For this reason, I
am advised information was not conveyed to senior officials in Ottawa or to the Minister.
I hope that the information I have submitted to the House at the earliest opportunity will clarify the extent of my Department's knowledge in respect to this situation.


Ms. Sheila Copps (Hamilton East):: Mr. Speaker, I am to understand that the Minister has clarified his statement of yesterday and that, in fact, according to his new information his Department became aware of certain allegations in September of 1987. I have in my hand a letter from the Assistant Deputy Minister of his Department at the time. It is dated February 9, 1987. It states that "the Department is presently involved in an investigation of the petroleum importation and distribution industry and has in co-ordination with several other federal, provincial and international investigation and enforcement agencies maintained an exchange of information and liaison concerning this matter. It has been through this exchange of information with these enforcement agencies that we have been able to proceed with the pursuit of the Canadian perpetrators. Unfortunately, due to the confidential nature of our court evidence, I am unable to provide you with further details at this time.
In addition, I should mention our investigators meet on a scheduled basis approximately twice a year to discuss various enforcement issues. Petroleum fraud has been high on the agenda at the most recent meeting-," et cetera.
Mr. Speaker, the reason I have put this letter on the record is because in response to the Minister's statement today in the House that his Department has been aware of details concerning petroleum fraud since September of 1987, I can only assume that if his own Department were conducting an investigation which involved contact with international agencies and international enforcement agencies, that would have included, for example, the FBI, and we know from the reports in the press that

May 11, 1989
Privilege-Mr. Jelinek
the FBI has been aware of the petroleum PCB fraud for a number of years.
In that regard, we would like more information, specifically from this Minister and also from the Government, over repeated statements over the last number of days that it knew nothing about it from the period before Monday. Then we heard that it knew something as of March. Then there were suggestions that it might have known something earlier on. Now, by the letter from the Assistant Deputy Minister of the former Minister of Revenue, the Government itself is allegedly involved in a major investigation involving contact with international authorities.
I think the only way to resolve this matter is to have the whole issue referred to a standing committee of the House of Commons so that we can have the former Minister brought before the committee, who, according to my information, was apparently intimately involved with not only the discussions that were taking place but also a police informant who directly notified the Ministry of Revenue about the possibility of PCBs being mixed in with fuel oil, and that fuel oil being imported into Canada.
According to our sources, that information was provided in 1987 to the Ministry of Revenue. Obviously, for that information to remain silent and secret for a year and a half, or possibly up to two years, is completely unacceptable.
The only way to clear the air on this whole matter is to set aside the tissue of contradictions that we have seen between the Minister of State for Transport (Mrs. Martin), the Minister for the Environment (Mr. Bouchard) and the Minister of Revenue (Mr. Jelinek), and have the whole-


Mr. Speaker:: I hesitate to interrupt the Hon. Member. The Hon. Minister has risen on what I suppose could be called a point of personal privilege to tty to deal with a statement made yesterday in view of information, as he has told us, he has received since. I have, and I think quite properly, recognized the Hon. Member for Hamilton East (Ms. Copps) who is the critic on these matters for the Official Opposition and I have very deliberately allowed her to make a response.
However, obviously the Hon. Member has more to say on this issue, but I think it properly should be pursued perhaps later on today.
I do take the matter seriously and I hope the Hon. Member will not feel I have unfairly interfered with her intervention. The Hon. Minister may now want to say something and I certainly will recognize him.


Otto John Jelinek: Mr. Speaker, I have to set the record straight because the Hon. Member for Hamilton East (Ms. Copps) is talking about something totally unassociated-


An Hon. Member:: That is debate.


Otto John Jelinek: -with contaminated fuel. She is talking about-I am responding to the Member for Hamilton East. She is talking about an ongoing investigation between the Government of Canada, Revenue Canada, the Provinces of Quebec and Ontario in respect to tax evasion of fuels coming in and out of Canada. I made reference to that in my answer yesterday and said that it is an ongoing process. There is no secret about that.
We are, as a government and as a department, working very actively with the Provinces of Quebec and Ontario in taking every step that we can possibly take in exchange of information, in spot checks and extended spot checks, to make certain that we eliminate the extent of tax fraud that had been taking place in the past. But there is absolutely no connection to the point that I was making reference to about contaminated fuels.


Mr. Gauthier:: A point of order.


Some Hon. Members:: Oh, oh!


An Hon. Member:: Why don't you let him finish.


Mr. Speaker:: The Hon. Member for Ottawa-Vanier on a point of order.


Jean-Robert Gauthier: Mr. Speaker, the Minister is now engaging in debate. If he is into damage control-


Mr. Speaker:: The Hon. Member for Ottawa-Vanier is of course correct. This is becoming a debate, and it probably is my error in allowing it to be so. But I think I appropriately gave to the Hon. Member for Hamilton East considerable latitude in responding to the Minister. The Minister has now responded. I accept what the Hon. Member for Ottawa-Vanier says, that this is now moving into debate and should properly be pursued, as I said a few minutes ago, in another place. I see that the Hon. Member for Oshawa (Mr. Broadbent) is seeking the floor. I will hear him briefly.
May 11, 1989


Mr. Broadbent:: Mr. Speaker, I would like to rise on the same question of privilege. The Minister has now clarified what he said in the House and we accept his word that he inadvertently misled the House yesterday when he said-


An Hon. Member:: He did not mislead the House.


John Edward Broadbent: That is what I am getting at, and I am saying that I am accepting the Minister now. Unlike what he said yesterday, he is saying that a meeting took place in Toronto on September 11, 1987, in which people from his Department were involved in discussions that included the transport of fuels with toxic substances in them. I understood what the Minister said and he said it was between states in the United States and not between Canada and the United States.
I have a number of questions which it seems to me would be usefully pursued on this question of privilege that the Minister should elaborate on. He said that there was a meeting on September 11, 1987. He did not say that there has not been a meeting since then.


Mr. Speaker:: There is a difficulty here. I think I am going to have to make a very firm procedural decision at this time. The Minister of National Revenue has made his statement. The Hon. Member for Hamilton East has responded to it, and after a lengthy statement I indicated that this is now getting into debate and there is a more appropriate time and place to pursue it. The Hon. Member for Oshawa is very understandably rising to seek some further information but I have to say to all Hon. Members that there will be another occasion later on today to seek that information. At the moment I think it is appropriate that we proceed with Routine Proceedings. I thank Hon. Members for their interventions.



INTERPARLIAMENTARY DELEGATION


Mr. Len Hopkins (Renfrew):: Mr. Speaker, pursuant to Standing Order 34(1), I have the honour to present to the House, in both official languages, the 11th Report of the Canadian Group of the Interparliamentary Union, the report of the Official Parliamentary Delegation which represented Canada at the Interparliamentary
Introduction of Bills
Conference on Tourism in The Hague, The Netherlands, from April 9 to April 14, 1989.
This conference was attended by 47 national delegations. It dwelt on many of the problems that are facing tourism today, an industry that has grown up around governments and is going to creep up on us even faster because between now and the year 2000 it will double. In the year 1987, tourists around the world spent $2 trillion. It is expected that that will double by the year 2000.
The conference discussed facilitation in great length with regard to exchange rates, visas, passports, airport congestion, health services in various countries, environmental protection of tourist sites and the attitudes of people who receive tourists in their own nations.
As you can appreciate, one of the difficulties that officials are facing today is to at times recognize the real tourist from the illegal entrant in some countries. Canada has a great opportunity here between now and the year 2000 to build up our facilities and be prepared to accept the great tourist influx that is going to take place in the next few years.
I respectfully submit this report, Mr. Speaker. [Editor's Note: See today's Votes and Proceedings.]


STRIKING COMMITEE
Mr. Jim Hawkes (Calgary West):: Mr. Speaker, I have the honour to present the third report of the Striking Committee. If the House agrees, I intend to move the adoption of this report later today.
[Editor's Note: See today's Votes and Proceedings.]


PUBLIC ACCOUNTS
Leonard Donald Hopkins: Mr. Speaker, I have the honour to present the first report of the Standing Committee on Public Accounts.

[Editor's Note: See today's Votes and Proceedings.]
May 11, 1989


ELECTORAL BOUNDARIES READJUSTMENT ACT
[Stage Direction]
Mrs. Shirley Maheu (Saint-Laurent) asked for leave to introduce Bill C-239, an Act to change the name of the electoral district of Saint-Laurent.
Mr. Speaker:: Shall the Hon. Member have leave to introduce this Bill?


Some Hon. Members:: Agreed.


Mrs. Maheu:: Mr. Speaker, it is a great honour for me to table today the Bill to amend the name of the electoral district of Saint-Laurent. The new name will be Saint-Laurent-Cartierville.
Saint-Laurent includes both the City of Saint-Laurent and the northwestern part of the City of Montreal. The name Saint-Laurent is frequently associated with the City of Saint-Laurent itself in a restrictive way, which makes my Montreal constituents feel excluded.
Cartierville-Saraguay accounts for nearly 25 per cent of the population of the riding. I therefore ask the House for consent to change the name.


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


Some Hon. Members:: Agreed.
(Motion agreed to, Bill read the first time and ordered to be printed.)


Mr. Speaker:: When shall this Bill be read the second time? At the next sitting of the House?


Some Hon. Members:: Agreed.


STRIKING COMMITTEE
Frederick James (Jim) Hawkes: Mr. Speaker, if the House gives its consent, I move, seconded by the Hon. Member for Ottawa-Vanier (Mr. Gauthier):
That the third report of the Striking Committee presented to the House earlier this day be concurred in.


Mr. Speaker:: Does the Hon. Member have the unanimous consent of the House to move the motion?


Some Hon. Members:: Agreed.
The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. Albert Cooper (Parliamentary Secretary to Government House Leader):: Mr. Speaker, I ask that all the questions on the Order Paper be allowed to stand.


Mr. Speaker:: Shall all the questions be allowed to stand?


Some Hon. Members:: Agreed.


Mr. Speaker:: Before we proceed to Orders of the Day, I have two applications for an emergency debate. The Hon. Member for Oshawa (Mr. Broadbent).


John Edward Broadbent: Mr. Speaker, I rise under the provisions of Standing Order 52 to seek leave to adjourn the House for the purpose of discussing a matter of urgent and pressing concern, namely, the public revelation early this week of the transportation of fuels across the Canada-U.S. border laden with toxic substances.
I called for a debate on Monday on this subject. I appeal for it again today for a very specific aspect of this problem, namely, that the Government of Canada has not dealt in an adequate fashion with the health implications of this news. The Government has not indicated that any sampling is being done of suspected shipments already imported, or any efforts to ensure the contaminated fuel is not burned. Such efforts are needed, Your Honour, in order to ensure Canadians of the safety of burning fuels for their homes and vehicles. Fuel has been already purchased, perhaps not being used now because of the warming of the climate but it is sitting in the homes of Canadians and could be used in the fall. This
May 11, 1989

The Budget-Mr. Vincent
issue simply has to be addressed by the federal Government and it has not been.


Mr. Speaker:: The Hon. Member for Hamilton East (Ms. Copps) has a similar application. I will hear her.


Sheila Maureen Copps: Thank you, Mr. Speaker. In support of the application I have actually asked leave to propose a motion to adjourn the House for the purpose of discussing a specific and important matter requiring urgent consideration, namely, the illegal and health-threatening importation and use of fuel adulterated with PCBs and the Government's failure to deal with this dangerous situation in an urgent and effective manner.
We heard the revelations this morning in the House that the federal Government has known about the contamination of PCBs in fuel, including the potential of fuel for home heating oils as well as gasoline, for a year and a half. That information has not been acted upon. As a result, there is a direct threat to the health of Canadians, in particular Canadian children, and I think that if the information provided by the Minister of National Revenue (Mr. Jelinek) in the House today is correct, it certainly buttresses our request for an emergency debate. To keep this kind of information from Canadians is unconscionable.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Just so that all Hon. Members understand exactly what this application for an emergency debate is, and I want to be very sure that the public understands it as well, these applications are decided on by the Speaker. They should be on a subject that for the most part cannot be dealt with in any other way. This is a very serious matter, one that has taken up the time of the House, not just today but some days prior to this. It clearly is a matter of importance to both the Government and to the Opposition as has been shown by the discussion that took place a few minutes ago. However, at this time, I think that it can be pursued in the House in another way and I am not disposed, at least at the moment, to order an emergency debate. I thank both Hon. Members for raising the matter.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Wednesday, May 10, 1989, consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government.
Mr. Pierre H. Vincent (Parliamentary Secretary to Minister of Finance):: Mr. Speaker, I welcome this opportunity to continue yesterday's speech on a very important subject, the Budget. I said yesterday that interest charges on the debt would total $39 billion this year. Fortunately, this not the extent of the Canadian Government's spending.
Mr. Speaker, I would like to mention the seven broad programs administered by the Canadian Government. Thirty per cent of the monies received by the Government of Canada is returned to individuals; 24 per cent is transferred to the provinces; 11 per cent is transferred to businesses in the form of subsidies; 4 per cent to our Crown corporations; 11 per cent to National Defence; 3 per cent to foreign aid; and finally, only 16 per cent is spent on government operations.
I pointed out yesterday to the Hon. Member for Ottawa-Vanier (Mr. Gauthier), who didn't believe me, of course, that in 1984-85, the operation of the Gover-ment cost $17.5 billion. This year, in 1988-89, they will cost $16 billion, which is a real drop of 20 per cent in spending by the Canadian Government on its operations.
When I hear people from various organizations say that this Government has failed to make the necessary cuts and has failed to manage its finance effectively, I think they are wrong. I think that a 20 per cent reduction in Government spending over a period of four or five years is something not many businesses have been able to do, as far as I know.
I also heard the Opposition saying that senior citizens and the provinces and so forth would be the losers. In 1984-85, we gave $11.4 billion to senior citizens. In 1989-90, we will give $16.4 billion, an increase of exactly

May 11, 1989
The Budget-Mr. Vincent
$5 billion over five years, just for senior citizens. So when people tell me we are penalizing the very Canadians who built this country, I think that an increase of $5 billion over five years is not bad.
Suppose we consider the various forms of transfers to the provinces. In 1984-85, $19.7 billion were transferred by the federal Government to the provinces. In 1989-90, transfers will total $24 billion. I repeat, while running this country and managing to reduce the debt, our major problem, as well as the annual deficit, we have succeeded in cutting government spending and increasing the amounts that are transferred to Canadians and to the provinces. And the same applies to subsidies. Yesterday, they were saying that regional development was being cut. In 1984-85, regional development received $9 billion. In 1989-90, we are giving $10.5 billion.
Mr. Speaker, people realize that this Government does act and that it acts responsibly, by dealing with the needs of this country at all levels, including senior citizens, regional development, the provinces and so forth.
Just to give you more relevant figures, Mr. Speaker, the Government's financial requirements in 1984-85 amounted to 6.7 per cent of the gross domestic product, whereas the comparable figure for 1993-94 will be 0.3 per cent, the lowest ever since 1969-70. That, Mr. Speaker, is what we call sound administration.
I was talking about elderly people a moment ago, and I want to insist on that point because some are confused and the Opposition gets a kick out of making things even more complicated.
Mr. Speaker, in the Budget we said that a person aged 65 or more with a net income of $50,000-or a gross income of about $60,000 or $65,000-not including the old age security pension will have to pay back some of the pension benefits according to his or her income bracket. A pensioner with a net income of $70,000-again this means roughly $90,000 a year in gross income-will pay back the full pension.
Mr. Speaker, I should think that a Canadian aged 65 or more who has that kind of income can afford to lend a hand to others and to our overly endebted country.
Mr. Speaker, I see you signaling that my time is up. I say in conclusion that the Budget of the Minister of Finance (Mr. Wilson) must be adopted as soon as possible in the best interest of all Canadians.


Mr. Mifflin:: Mr. Speaker, I learned some interesting things this morning. My colleague spoke about regional development and transfers to the provinces. He quoted a figure of, I think it was, $24 billion. That may be so, but certainly in the case of Newfoundland, we depend very much on the transfers to the provinces. In fact, about 50 per cent of our revenues come from transfers. In our province alone, 23 per cent of that is spent on education and close to 22 per cent is spent on health care, two veiy basic things in life.
I understand that the transfers to the provinces will be cut by 1 per cent, and this represents $200 million. That is quite a slice considering that in 1986, only two years ago, there was a cut of 2 per cent. While $24 billion may sound like a lot of money when one mentions it alone, in fact after taking away the 1 per cent, the $200 million, it will cause a great deal of concern in Newfoundland. Who will make up the redress to pay for the education and health services, particularly in the Atlantic provinces where we depend so much on these transfer payments?
[ Translation \


Pierre H. Vincent: Mr. Speaker, I would like to add a slight correction to what my colleague said. What has been announced in the Budget is not a one per cent cut but a one per cent reduction in the proposed increase in transfers to the provinces. That is completely different, Mr. Speaker! And the best proof of it is that in the next five years, the amount given to the provinces will be increased of almost $25 billion. So, the increase is real, as I mentionned, and if we look at the figures since 1984, the provinces have received more money each and every year through the financing of established programs.
As for equalization, my colleague has not mentionned it in any way. You know, Mr. Speaker, that the equalization program is aimed particularly at those we call the "poorer" provinces, Newfoundland, the Maritimes, Quebec and, obviously, Manitoba. So the Budget does not deduct anything from the full amount of equalization payments.
May 11, 1989

As to the funding of established programs, and strictly at that level, the increase will be smaller by one per cent. I underline the word "increase". Again, Mr. Speaker, cuts in transfers to the provinces or anywhere else are never pleasant. But Newfoundland, as any other province, is part of a country called Canada, and the major problem this country is going through at the present time is the national debt, the annual deficit.
To be able to give even more in the future to Newfoundland, Quebec or any other province, we must solve immediately the issue of a debt that will grow at an incredible, incalculable and impossible rate if nothing is done right now. That is the perspective in which the cut is made: to deal once and for all with the annual deficit as well as the national debt.


Mr. Robichaud:: Mr. Speaker, how can the Hon. Member explain to the fishermen that this Budget is good for Canadians, as he just told us, and that we must hasten to pass it, when this Government has seen fit to cut-repeat, cut-some programs, including subagreements providing funds for the development of fisheries and forestry as well as other sectors?
The Hon. Member talked about a reduction in the growth of equalization payments. But there was a cut in the fisheries sector. The money is not in the Fisheries and Oceans budgetary forecast and we are told studies on fishing subagreements will be undertaken this year. Since there is no money, they probably won't be renewed.
Also, fishermen will have to pay more for their fuel because the rebates they were eligible for are being taken away.
How can he explain to Atlantic fishermen that this Budget is good for them, especially in the present situation with diminishing catches, companies closing entire plants, lost jobs and the decision not to renew fishing subagreements? How can he explain to the fishermen it is good for them?


Pierre H. Vincent: Mr. Speaker, I think that the Hon. Member opposite has a gloomy view of life. He is not realistic about the present situation and the situation of fishermen as well. Fishermen have tax and economic advantages that no other group in the country has. Unfortunately, the Opposition Member does not talk about that.
The Budget-Mr. Vincent
You know, Mr. Speaker, it is easy to always look- There are two kinds of people in life. Some will say that a glass of water is half full. The Opposition Member will say that it is half empty.
We on this side of the House, Mr. Speaker, consider it half full. We approach the future positively. We do not say that the Budget does not raise taxes. We do not say that the Budget makes no cuts. We said so and explained it. But we also say why it must be done.
It must be done because for many years, the party in power, of which my colleague is a member, created for us a monster called the national debt.
Mr. Speaker, I actually managed to wake them up!


An Hon. Member:: Yes indeed!


Pierre H. Vincent: I am glad I did. I told them yesterday evening that I would wake them up this morning, and I did.
Mr. Speaker, I will quote just one sentence: [English]
There are programs that are duplications. There are programs
that are wasteful. There is administration that is wasteful. There are
programs that are no longer useful. There are programs that no
longer serve a purpose, and I am going to cut that down.
John Turner, July 25, 1984.

At the time, Mr. Speaker, on the day he said that, the national debt totalled $199,092 billion. That was the situation on July 25, 1984. If we do some simple arithmetic and add the interest charges on the 1984 debt and the interest charges for the last four years, we set the national debt as it is today.
We are trying to deal with your debt and your problem. You should be thanking us on your knees instead of squawking like that. You should realize this is the major problem in this country and show some support or at least more some suggestions that make sense.


An Hon. Member:: That's your job!


Pierre H. Vincent: Yes, it is our job, and we are willing to co-operate but all you people ever do is criticize.
Mr. Speaker, yesterday I pointed out, and I will explain for the benefit of the Hon. Member who is new to the House. In November 1984, the Minister of Finance tabled his economic message, and in May 1985, he brought down his Budget as he did in February 1986, February 1987 and February 1988. Five times the Opposition predicted. The result would be unemployment, rising interest rates and rising inflation. Every time they predicted the country was going down the tube. Five times! And they were wrong every time. We created 1.4

May 11, 1989
The Budget-Mr. Stupich
million permanent jobs in four years. That is ten times what the Liberal Party did in four years. Eighty per cent of those jobs are permanent jobs, while your job creation efforts only produced temporary jobs. Look at the facts!
In any case, Mr. Speaker, I see that my time has expired, but I am glad I was able to wake them up this morning.


Mr. David D. Stupich (Nanaimo-Cowichan):: Mr. Speaker, on the morning of November 22, Canadians awoke to the realization that they had re-elected the Tories as the Government of Canada. The Government awoke to the realization that the deficit was a serious problem and the debt had to be taken into account. Prior to November 21, it was manageable. Cheques could be handed out and promises could be made and accommodated within the projected deficit of $28.9 billion, up until November 21. One day later the country was in an extremely serious situation that the Government had to deal with as well as the Canadian people.
The Liberals are blaming the Conservatives for having doubled the deficit in the past five years. The Conservatives are blaming the Liberals for having started the process some years ago. I say a pox on both their houses. They both had the opportunity to do something, and both have failed the Canadian people.
We have the largest country among the seven industrialized nations in the western world. We have more resources per capita, more grain production per capita, more energy consumption. Our country has the second highest gross domestic product per capita with the second best trade balance. To come to the next line: We are the second worst when it comes to government debt per capita. When I was canvassing, anyone who wanted to talk, wanted to talk about free trade. The second most important item in the minds of the voters in my constituency, and I suspect it was the same all over Canada, was the annual deficit, the accumulating debt, and what was going to be done. The people do not care who started it.
They do not care who doubled it. They want to know what is being done about it.
There is a story about the mountain that laboured and produced a mouse. This particular mountain, this Conservative Party mountain, laboured and did not even produce a mouse. Through revenue measures and expenditure restraints another $5.25 billion is being taken out of the Canadian economy. Instead of the deficit reducing, it is actually increasing by $1.9 billion. I say shame on the Government for having had all the opportunity and such a glorious country to work with and yet it failed the Canadian people.
People are worried about the deficit and they are worried about the accumulating debt. Even the Royal Bank is concerned. I have here a letter from the President of the Royal Bank. I thought it rather strange that he of all people should write about the problems of deficits and debts. After all, this is one of the organizations that regularly reports income in the hundreds of millions of dollars, and often reports paying no income tax at all. Yet its president thinks someone else should pay.
There is a story that is often used on the campaign trail: "The only fair tax is the one that you pay and I don't". That seems to be the attitude of the Royal Bank. The Royal Bank got us into part of our deficit trouble through its lending policy to nations and not caring what was done with the money or wondering how much of it was going to numbered accounts in Geneva. There was no accounting at all. It poured the money into those countries and then when it got into trouble, the bank came to the Canadian people and asked them to bail the bank out. Of course, we did bail it out. The Canadian people picked up the tab. How much did that add to the deficit in the last two or three years? How much has it added to our accumulating debt?
The President of the Treasury Board (Mr. de Cotret) said something interesting when he was speaking in the debate. He stated that the interest of $39 billion was the problem, that we were looking forward to a deficit of $30.5 billion, and if it were not for that interest we would have had a surplus. What rubbish! There would not have been a surplus. If the money had been available we would have a fleet of atomic-powered submarines. We
May 11, 1989

would have been competing with the Americans to see who could have more atomic-powered submarines patrolling the Arctic watching each other. There would not be a surplus. Perhaps the one good thing about the Budget is the fact that the Government decided that it is not in a position to build or acquire a fleet of atomic-powered submarines.
Whose fault is the high interest rate policy that the President of the Treasury Board was complaining about, and its effect on the deficit and on the debt? Who is responsible for it? I can recall hearing on television Conservative after Conservative, when they were in opposition, accusing the Liberals of having a high interest rate policy. Now that the Conservatives are in office, it is somebody else's fault. They do not say that it is the Governor of the Bank of Canada, but somebody else's fault. They take no responsibility for it at all. They recognize the effect on the deficit, and they must recognize the effect on inflation.
I heard a previous Governor of the Bank of Canada state that interest rates must be increased or we might have inflation. The moment interest rates are increased there is no more "might" about it. It is automatic that there is inflation right away. Why not lower interest rates? That has been advanced by my colleagues, and I will not address that further.
There was an editorial in The Globe and Mail which recognized that people are worried about the deficit, whether it is important or not. There is some argument about that. Economists will tell us how vital it is that the deficit and the debt are controlled, and just as many economists on the other side of the fence will state that it is quite manageable, and it is nothing to worry about at its present level. Whatever is the truth of that we will never know.
I have done a lot of campaigning and heard many stories. One of them was "if all the economists in the world were laid end to end, it would be a good thing". The editorial concludes by stating that whatever is going to be done to control the deficit and to control the debt, it must meet the test of fairness.
I wish to ask some questions about some of the measures undertaken by the Government to control the deficit. Many have been discussed previously, and I do not intend to discuss them in detail. I simply want to address the question that it is not fair.
The Budget-Mr. Stupich
The Government is getting out of contributing to the unemployment insurance fund. That is all well and good for harmonization which is part of the free trade deal, and I admit that it covers that, but when the Government abandons its responsibility to look after the differences in regional employment rates and states that it is up to the unemployed to do that. When the Government states that in difficult times it might add some money to this fund, in other words, when it suits its political purpose it will put some money in, that is not fair. The Canadian Jobs Strategy and programs like that might very well be funded by unemployed workers. I suggest that that is not a fair way of dealing with the deficit.
Once again, transfer payments meet the test of harmonization. But when transfer payments to the provinces are cut back, and there are provincial leaders who would love to cut health costs, education costs, and hospital costs, premiers want to move into privatization in all those areas. That meets the test of harmonization but it is not fair to the Canadian people.
Cutting $400 million in the next two years from regional development once again meets the test of harmonization. Is it fair that we should be cutting back on programs such as reforestation in B.C. and all the programs in the other provinces that are funded in part by regional development payments? I suggest that it is not fair to the Canadian people.
With regard to culture and cutting back on the CBC, perhaps the CBC is not the most popular radio station in each locality, but it is important to the Canadian identity. It is being cut back so far that the person in charge states that he does not know what will be left of the CBC.
There are other cultural programs that the Government is cutting back. The Americans wanted that when they were negotiating the free trade deal. They wanted the Government to get out of sponsoring, funding, and subsidizing cultural programs. We turned it down until after November 21, but then we decided to accept it. That is not fair to the Canadian people.
Year after year child care has been promised by Liberals and Conservatives, and supported by everybody in the House. Now that has been abandoned. If it was a popular program here, and if it was a popular program outside, is it fair to the Canadian people to cut that particular program? I suggest that it is not. Once again, it meets the harmonization test, but it does not meet the

May 11, 1989
The Budget-Mr. Stupich
fairness test discussed in an editorial in The Globe and Mail.
Earlier in my remarks I talked about the tremendous resources that we have and the tremendous capacity and how much more we could be doing for our own people. We also have an obligation to other people in the world who are not nearly so fortunate. We have an obligation and the opportunity to help them help themselves. We agreed that we would contribute .7 per cent of our Gross Domestic Product to official development assistance and foreign aid. We are half way there and have two years to go to meet the target of .7 per cent. It is not fair to ourselves. How can our representatives hold their heads up high in meetings of nations when Canada is failing miserably to meet a promise that was made to international development?
What can I say about VIA Rail? The Minister responsible stated that it was like trying to keep the canoes and the stagecoaches going when the railroad was built. In every other one of the seven most developed nations, other than Canada, each one is doing its best to build a modem, rapid, comfortable, and safe railway system for transporting people, and they are accomplishing it. Some countries have had that system for years and are still improving it, whereas we have been letting ours slide back. There is public pressure for this, and I hope that that public pressure will result in the Government changing its mind about this aspect of our policy. Let us examine the details of the Budget. The largest revenue measure in the Budget is the increase in the federal sales tax. The Minister of Finance (Mr. Wilson) himself calls it the silent killer of jobs. How can the Minister consider this to be a fair way to get more money from the economy when he knows it will be a killer of jobs? That is not fair to Canadians.
We were led to believe the Government was going to finally introduce a financial margins tax that would bring in $1.4 billion with respect to the banks, insurance companies and trust companies. Was it fair not to impose that tax on the Royal Bank, because of "technical problems"? There were no technical problems involved in any of the cut-backs we have talked about. There was
no technical problem with respect to increasing the federal sales tax. Yet when the Minister attempts to get money from the banks, there are technical problems that make it impossible to do so.


An Hon. Member:: Called political problems.


David Stupich: It may be technical problems or it may be political problems, but it is certainly not fair to Canadians when the Government is not getting the money it should. To the Government's credit, it has done something by imposing a large corporations tax. Instead of 89,000 profitable corporations not paying tax, only 85,800 will not pay tax. That is progress. Obviously, it is not nearly enough to be fair to Canadians.
There has been some discussion about the possibility of collecting the deferred tax or collecting interest on it. We have heard some description of the deferred tax, such as that given by the Member for Edmonton Northwest (Mr. Dorin), who is an accountant. He wanted to change the title of that tax so it would not appear as though the tax was really due at some later date.
According to the dictionary, "defer" means to put off to a later time, or postpone. Companies acknowledge that the tax is due at some later date. If you or I have that kind of debt with the Government, it charges us interest immediately. It seems quite reasonable to the New Democratic Party that interest should be charged on that deferred tax.
The purpose of the deferred tax is to enable the corporations to retain some cash in their accounts so they may expand their assets, pay out dividends or even swallow other corporations. I do not mind corporations having the cash, but at least we should collect the interest on the tax at the same rate that you and I are charged when we are behind in our payment.
The Budget also introduces the goods and services tax. There is no question that it is terribly regressive. I acknowledge that the opposition in this House will not be able to prevent the implementation of that tax. As much as I will fight it and talk about it between now and the time it is implemented, I still want to urge upon the Government to restrain itself in its temptation to give exemptions. Exemptions will not make it more fair. Exemptions will make the tax much more difficult to administer. Exemptions will be of greater benefit to
May 11, 1989

those who have more money than to those who have less money.
Exemptions will not help the poorer people. There will be a tendency to change the exemptions every four years, if it coincides with an election. The exemptions will be politically inspired rather than exemptions made in an effort to look at the needs of poor people in the community.
I associate myself with the consumers' organization when they say not to exempt food. What is food? Food comes in many different forms and can be obtained in many different places. Flow does one make a distinction in order to apply an exemption? The regulations and definitions would have to be constantly changed.
I urge the Government to correct the discrepancies by providing a larger tax credit for the poorest people in the community. It is easy to identify them, to know how much income they are getting and how much they are spending. It would be much easier to determine the size of credit they should receive. Exemptions would only make the process much more difficult.
The Minister stated that he would pay this out quarterly in advance. There are many Canadians living on welfare or at the welfare level. It will be very difficult for them to make this extra amount of money last for three months when they must meet basic daily expenses. Let us ensure that the poorest in our country get those cheques monthly rather than quarterly. It is not fair to ask them, with their very limited means, to budget the small amounts of money they have over a three-month period.
Finally, I want to talk about personal tax. I agree that it is fair to impose a surtax. However, it is not fair to have abandoned the different categories and let the people with high levels of income pay the same tax as those at the medium level. We need a progressive income tax. Why should people who make capital gains get away with paying less tax than those who work with their hands? The Government should do away with the capital gains tax exemption and its special deals for investment.
According to The Financial Post there are 48 people who made $500,000 or more a year. If they were paying tax at the maximum rate, it would be about 50 per cent.
The Budget-Mr. Stupich
The top earner made about $4.6 million in cash compensation. I doubt that that person is paying 50 per cent tax.
I would like to know how much they are paying. I very much doubt any of them are paying at the maximum rate.
I have more to say, but will do so on another occasion.


Mr. Thacker:: Mr. Speaker, the Hon. Member spoke about deferred corporate taxes. Does he and his Party believe that this should be abolished? While some large corporations get the media coverage, the fact is that the same provision applies to tens of thousands of small businesses, including farmers and comer store operators. Would he draw a distinction between those?
Is it his view and the view of his Party that the 12 per cent manufacturer's sales tax should continue rather than a sales tax? I believe he said the capital gains tax exemption should be abolished. Does he include those 300,000 farmers who qualify?
I totally agree with the Hon. Member with respect to the sales tax exemption. It is hard to believe that he is a Member of the New Democratic Party. He sounds more like a New Zealand labour socialist. They have no exemptions at all which, in principle, would be the wisest policy. Food should be included, with a generous refundable sales tax.
Will he distinguish his view as compared with the NDP official view? His position seems far more sensible than has his Party's position for quite a few years.


David Stupich: Mr. Speaker, I believe I made it very clear that I do not agree with the goods and services tax. I think it will be a very regressive tax. I do not trust the Government to properly look after the poor people in our community. I do not agree with it.
However, if the Government is going to do it, and I am sure that it will unless the heat builds up in the country-


Mr. Dick:: You already approved it in the last Parliament.


David Stupich: I was not here in the last Parliament.
However, if we are going to go that route then what I said is true. I think there should be no exemptions. However, it is still a very regressive tax. There is no question about that. The sales tax is equally regressive. I did not say anything about that tax other than that I was

May 11, 1989
The Budget-Mr. Champagne (Champlain)
opposed to increasing it because, as the Minister of Finance (Mr. Wilson) said, it is the silent killer of jobs.
The Hon. Member asked me whether I speak for my Party or for myself when I talk about deferred taxes. Several Members in this comer of the House have asked already: "Why do we not at least charge interest on deferred tax accounts?" If the Government is letting people with such accounts use that money for whatever purpose, for whatever time, recognizing that it is only deferred, only postponed, then let us get interest on it in the meantime.


Blaine Allen Thacker: What about capital gains to farmers?


David Stupich: The Party position is that if the farm is staying within the family and is being passed down in the form of an inheritance or a transfer, then there should be no tax at all, at least not on the first half million. However, if it is being sold to someone else, then why should it not be like any other asset of industry or business?


Mr. Michel Champagne (Parliamentary Secretary to Minister of State (Forestry)):: Mr. Speaker, I listened carefully to what my New Democratic colleague said and I realize that the New Democratic Party is talking out of both sides of its mouth. When they are close to winning an election, they are ready to reconsider, for example, as former MP Michael Cassidy said, they are ready to reconsider tax breaks for flow-through shares. At first, when they were far from power, they said that this left the rich too much money. When they were close to power, they wanted to restore flow-through shares for those people. They even had a special day on it, because they were close to power, Mr. Speaker.
But we also realize that the New Democrats do not have a certain economic vision of Canada. They are prepared, Mr. Speaker, because they say that we absolutely must make the rich pay, and they are the first to get up and say that in the present budget reform, it is incompatible for a Finance Minister to say that those earning $50,000 and more will gradually have to give back up to $70,000 they received. They make no distinction, Mr. Speaker, between those with high salaries and people on low wages. They make no difference- That is
a comment, my dear friend. They make no distinction between the rich and the poorest people and the measures the Government took in that direction.
What I would like to ask my colleague, Mr. Speaker, and I ask him to answer as honestly as possible, is how he as a New Democrat can claim to defend the interests of the weakest and most disadvantaged when he gets up to say that those receiving $50,000 and more should be given the benefit of the doubt, have greater eligibility for federal programs, while those who need them most are those who earn the least. And that is why the federal Government's Budget, the Finance Minister's Budget, takes into consideration the least fortunate and is not based on the interests of the New Democratic Party.


David Stupich: Mr. Speaker, it is a real surprise to me that any Tory would stand up to accuse somebody else of talking out of both sides of their mouth during the election campaign.


Some Hon. Members:: Hear, hear!


David Stupich: I made no comment about flow-through shares. I recall the discussion prior to the election-


Michel Champagne: Your colleagues and your Party did.


David Stupich: I thought we were talking about my speech this morning. I said nothing at all about flowthrough shares. Given another opportunity, I might.


Mr. Barrett:: He needs another 20 minutes. I ask the House to give the Hon. Member another 20 minutes.


Some Hon. Members:: Agreed.


David Stupich: I had a little trouble keeping up with the Hon. Member, Mr. Speaker, since the interpreter had a little trouble keeping up. I may have lost something.


An Hon. Member:: You didn't lose a thing.


David Stupich: The Hon. Member talked about the claw-back on the family allowance and old age pensions. Mr. Speaker, did you hear me mention anything about that issue during my speech? He is talking about a speech I have not yet made.


David Barrett: Let us hear that speech.
May 11, 1989


Mr. Kindy:: Mr. Speaker, I would like to hear some comments from the Hon. Member with regard to the Australian experience. In 1987, the Labour Government of Australia introduced a means test. I point out that the Labour Government in Australia had inherited a deficit of about $8 billion. The inflation rate at that time was 11 per cent and unemployment was at 9.6 per cent.
Today, the experience in Australia shows that the Government is expecting a budget surplus of approximately $5.5 billion. So that experience worked extremely well. The Budget was balanced and a surplus is expected.
The unemployment rate in Australia is down to 7.6 per cent and the inflation rate is 7.7 per cent. It was a socialist Government in Australia and it did very well. However, it had the courage to introduce a means test.


David Barrett: What do you think income tax is?


Alex Kindy: I would like the Hon. Member to comment. I think we should perhaps look at that experience. We have a huge problem in Canada. Our deficit is rising and our debt is increasing. I would like the Hon. Member to comment.


David Stupich: Mr. Speaker, at the beginning of my remarks I admitted that the deficit is rising, that the debt is rising and that the Government is not doing anything about it and that the Liberals did not do anything about it either. I suggested ways of dealing with it. I suggested ways of getting more revenue by going after the corporations which have been escaping the tax man so far. I suggested that the Government go after individuals in the high income tax brackets. I would like to see us get three-quarters and not half of the $4.4 million that the person at the top of the list received in cash compensation last year. There are ways that the Government could be getting more money. We do not need the means test. There are methods.
The Hon. Member asked me about the Labour Government in Australia. The one significant thing it did at the beginning is that it sat down with industry, labour and the communities and got everyone to agree to the program as it was proceeded with. It had the support of business, labour unions and individuals.
I challenge the Government and I challenge the Hon. Member to produce one Tory Premier who supports the GST.
The Budget-Mr. McKnight


Some Hon. Members:: Hear, hear!


David Stupich: I challenge the Government to get into a consultative process with the community as a whole before it moves in this direction.


Hon. Bill McKnight (Minister of National Defence):: Mr. Speaker, as the debate on the Budget that was brought down by my colleague draws to a close, I am very pleased to take part in the debate and to discuss in a rational forum, as my colleagues on this side of the House have, the necessity of the instrument of a Budget to rectify wrongs that have built up over a number of years in Canada.
This was a difficult Budget. It was a difficult Budget for all Canadians. It was a particularly difficult Budget for the Canadian Armed Forces. However, it is very easy to imagine something that could be worse.
We could have ignored the extent to which we were going, with the debt building up ever increasingly day by day, year after year. We could have listened to the wailing prophets of gloom and doom from the Liberal Party and the New Democratic Party who have in their loud voices this time recognized that there is a debt. However, those voices were stilled over a number of years. Those who held those voices had their eyes shut. They stepped on the accelerator. They blew down the alley of Utopia. They looked for the end of the rainbow. Or, they had a fantasy that was substituted from the troublesome reality that Canada has to face today.
I guess in some ways I envy Opposition Members in their simple world, a world of self hypnosis that they are involved in. I suppose if the finances of Canada could be tranquilized by hypnosis it would be a much easier country to govern. I do not believe in the theory of Disneyland economics. There are realities of today and those realities have to be met.
It is an entirely different world outside of that comfortable cocoon that Opposition Members sit in. We have heard them enunciate all the wrongs that have been brought out in this Budget in their minds. But we have not heard how they would have handled the real reality of today.
The Minister of Finance (Mr. Wilson) has given this House a very stark, informative picture of the finances and realities of today. He has outlined the stringent

May 11, 1989
The Budget-Mr McKnight
actions that are required to curb the debt that is faced by this country.
Like all Canadians, the men and women in Canada's Armed Forces and their civilian colleagues accept that they have a role to play in the broader strategy intended to bring the deficit down and restore our economic health. Because it is their lives' work to provide security to this country, they share the concern of all Canadians of the immediate and present danger inherent in the ever-growing national debt we face today.
I am sure it bears repeating again what my colleague, the Minister of Finance, said when he talked about what this Government had inherited in 1984, and what we have done to correct it and the actions that we now find necessary to set it right.
I would like to expand somewhat in the time allowed to enunciate the contribution that the Department of National Defence has made to the national effort to reduce the deficit in Canada. Mr. Speaker, $2.74 billion of the projected spending over the next five years has been removed from the budget from the Department of National Defence. As some colleagues would know, when you project that over the 15-year planning period, that is a total of $22 billion plus in the planning timeframe.
The Department has cancelled the plans to provide nuclear propelled submarines, additional long range Aurora aircraft, the battlefield night observation equipment, additional CF-18s, the unmanned airborne surveillance and the target acquisition program.
We will purchase smaller quantities of equipment to outfit the countermeasure training vessels. We will purchase fewer northern terrain vehicles, army radios and CF-5 avionics. We will postpone the procurement of light armoured vehicles for the militia, and put on hold the acquisition of the main battle tanks. The North American Defence Modernization Program will proceed as planned, as will the research into territorial and air space surveillance. The two phases of the frigate program, so important to Canada's security, will continue. As well as the modernization of our tribal class destroyers, we will acquire a new ship-borne aircraft as we
identified earlier. The countermine sweepers for the naval reserve will continue to be constructed.
This Government started in 1984 to rebuild the capability of Canada's Armed Forces. We will continue to rebuild that capability. As the Minister of Finance identified, we will immediately examine the alternatives to ensure that our naval forces are able to make an effective contribution to the maintenance of our national security.
We will continue to re-organize our land forces and we will set up a new regional command structure. In particular, we will continue to concentrate on the requests for peacekeeping whenever Canada can contribute to the peaceful resolution of disputes around the world.
As other Members know, over the last months no fewer than 1.500 of Canada's men and women who serve in the military have served in peacekeeping operations around the world in the last 12 months. This is something that all Canadians are proud of but in particular those men and women who have the opportunity to serve Canada and bring about peace and security in the world.
The Canadian Forces will also concentrate on the collective security and defence in Europe. We will continue to seek security within that alliance. Our commitment to NATO is unwaivering and that, sir, has brought about the longest period of peace in Europe in the last 200 years.
We will continue to increase our reserves. It will be at a slower rate than identified, but with the commitment to using total force concept it will be necessary to continue to create reserves around this country.
What has happened is that financial restraint will require us to find some personnel savings so that we have room for other expenditures. As I have noted, the reserves will grow at a slower rate. There will be a slight reduction in our civilian and military personnel over the next five years. As we move to reduce military establishments, employment reductions will be necessary.
As some Members will know, perhaps from having participated in station closures over the last number of years, the workforce adjustment program of this Department has been recognized as one that has compassion, that understands the need, the sensitivity and the change that takes place when these stations and bases must be reduced.
May 11, 1989

Some 14 bases and stations will either be closed or rationalized. These plans are advanced for economic reasons and they are based on military rationale. With changes in technology, CFS Holberg, Sydney and Barrington are no longer necessary and Gander can be reduced in size. Mont Apica will be replaced with other facilities nearby.
On other occasions in the Elouse, I have mentioned the tracker fleet at Summerside. It is over 30 years old and could not be kept going beyond 1992 without major retro-fit. It no longer has a military role. These aircraft and the base that supports these aircraft because of that necessity are surplus to military needs.
Portage la Prairie is another base that has been discussed. We are actively pursuing plans to co-operate with the commercial sector for the preliminary flight training that takes place there. When it is concluded, that activity will allow adequate notice to the people of Portage la Prairie because in the near future we will be going forward with requests for availability and costs in that project.
The remaining bases that are being closed or rationalized are to bring about cost efficiency to the base structure. It is an efficiency that we must now have to compensate for the reduction in the Budget.
There are some Members who perhaps will not recall that some 20 years ago there were 120,000 men and women in Canada's military. The bases that have been identified have been in existence for over that period of time. With fewer military personnel, the military need from a defence and capability point of view can no longer be supported. Some people have suggested that this may be a plot against certain regions and certain provinces.


Some Hon. Members:: True. True.


William Hunter (Bill) McKnight: The simple fact is that those bases were opened when they were needed. When they are no longer needed because of changes in technology, resources and priorities, then the need to close them is as apparent as the need was to open them.
Those who wish we could keep these bases open are saying that the military payroll in the community is more important than having properly equipped armed forces who can fulfil the commitments that the Canadian
The Budget-Mr. McKnight
people task the men and women in the military to fulfil. Those who would suggest that we close bases in Europe instead would see Canada sacrifice its contribution to stability and peace around the world so that obsolete facilities could be kept full of men and women who in turn have obsolete equipment and would be doing things that would no longer need to be done from a military perspective. Uneconomic bases must be closed so we can bring into balance the infrastructure and the capital dollars that we have to provide the equipment that men and women need in the military.
This contribution of $2.7 billion to the war on the debt over the next five years is significant and everyone understands, particularly this Minister, how painful that is at DND. I am convinced though that we must halt this slide of our national finance into the pit of oblivion. DND and all other Departments of Government will be asked to make a contribution and we have made that contribution. If we had not made it we would continue to have to sacrifice more and more as we slide further and further into that pit.
I firmly believe that lack of economic security would impair our ability to have defensive security and that is an important part of Canada and an important part of the debate in which we are involved.
Obviously the goals in the White Paper will be achieved more slowly and, in some cases, less fully. We will keep our present forces in Europe. We will continue to provide the North American defence role in which we have been involved and we will continue to stand ready for peace-keeping missions around the world.
I suggest to you, Mr. Speaker, even if the rate of progress is slowed, the continued expenditure of over $2 billion annually on capital equipment will continue to rebuild our Canadian forces.
The White Paper tabled some two years ago continues to provide the basic parameters of our defence policy. Those programs will be put in place more slowly but the budget will continue to grow in real terms, although at a reduced rate.
The last four years' real efforts that have been taken to end the neglect of our armed forces and to bring into line our defence commitments and our defence capacities are efforts that have been recognized and will continue.

May 11, 1989
The Budget-Mr. McKnight
It has not been easy for the leadership of Canada's Armed Forces to see the debt crisis undermine these plans that military and civilian officials at the Department of National Defence have a duty to both Canada and to the men and women who are serving Canada to bring into fruition.
I firmly believe that a failure to act now would require very dangerous sacrifices as to capability in the future. The military leadership as reflected on the defence budget produced a significant contribution to debt reduction. That has to be recognized and one that I wish we had not had to ask for.
Through the Budget discussions, they offered to me the forthright advice that I needed and that I required to protect the capability of the forces within a much less than adequate budget than had been planned for a short time ago.
I suggest to you, Mr. Speaker, thanks to their contribution, the goals and efforts of the White Paper are still attainable and while armed forces modernization will take place at a slower rate over a longer period than intended, that modernization will take place.
One of the things that bothers me is that the military did not contribute to this problem. Unfortunately our options in resolving the situation are limited and we have to call on the resources we have in order to prevent a larger debt and an even greater tragedy that could take place in the years ahead.
We accept the responsibility on this side of the House for what must be done. As Minister for Defence, I am responsible for contributing to the struggle against the debt while maintaining the integrity of our Armed Forces. Our military leadership has done its duty in supporting the necessary budgetary policies put forward by the Government, and I believe it is my duty to ensure that the rebuilding of our capability resumes without further delay and diversion.
I take the opportunity at this time to reiterate that the Government found these decisions difficult. As difficult as those decisions were, the Government had the courage to act upon them because of the necessity for future generations of Canadians, so that those Canadians would not be impaired in their ability to take part in the life and
economy of this country as we know it as a result of lack of will or leadership by the Government of the day.


Mr. Harb:: Mr. Speaker, I do not want to comment too much about the speech on the Budget because the Hon. Member concentrated more on the Defence Department and the budget cut in his Department as a way to reduce the deficit. In my view, that cut has left the Department defenceless.
My question to the Hon. Minister concerns those 14 or so bases that are going to be shut down over the next years. Could he tell us what is going to happen to those bases once they are shut down? Will they remain or will they be torn down? I heard some rumours that the Government intends to tear them down. Is that the view of the Minister? If so, could he inform the House?


William Hunter (Bill) McKnight: Mr. Speaker, the bases and stations that were identified in the Budget for either closure or rationalization will be closed or rationalized starting in 1990. The work force adjustment program is now in force in the Department of National Defence and will be furthered developed. That adjustment program for civilian employees will provide for priority hiring, redeployment, reallocation of families, or retraining, if necessary, for a period of up to two years, and will allow time off for job interviews in either the private or the public sector. This program will allow these civilian employees, both men and women, to have an opportunity to continue employment either within the Government of Canada or outside the Government.
The question which the Hon. Member asked regarding the bases and their structure will involve those communities affected. The Department has gone through this process in other years under other administrations and it has always been-and I have experienced it within my own constituency-the Department's intent to allow for reuse to take place, for committees to be established locally, for opportunities for industry or other Government Departments to locate in those infrastructures already there. This will happen as bases are identified and the reuse committees are structured involving the community and community leaders.
The Department of Public Works has the responsibility for disposal. In other words, as other Government Departments turn over their assets for disposal, they will be offered to another Government agency. If there is no governmental use, they will be offered to the community and the private sector. The past experience I had in my riding shows that with co-operation between the communities and Government, alternate uses can be found.
May 11, 1989

There is an opportunity for development, some of which may be unique. Some Hon. Members might remember the Alsask Pinetree Base located on the border of Saskatchewan and Alberta. Most people would not consider that to be a retirement area but there is now a very vibrant retirement community located on that base. Senior citizens from across Canada have come to that strange small comer of the heartland of Canada on the border of Saskatchewan and Alberta because there is a community there with security, infrastructure and the support of one another.
There are options. We know it is difficult. Other Ministers will be involved. We will seek co-operation from other government Departments so that something we recognize as being very difficult for communities can be less traumatic with assistance.


Mr. Harvey (Edmonton East):: Mr. Speaker, I must say that while listening to the Minister during the course of his remarks this morning, I was more than once moved almost to tears. The spirit of selfless sacrifice that obviously has motivated the Minister and his Department's approach to this Budget is something which I think we must all deem to be little short of heroic.
However, there was a nagging doubt at the back of my mind. I finally felt compelled to check with one of my colleagues, and imagine my surprise when it was confirmed that in fact the defence budget is increasing this year. In fact, the defence budget is assuming a larger proportion of total Government expenditures. So, it seems to me that we are left again with a question of choices.
It is not the fact that vicious cut-backs in the Defence Department budget are forcing the Minister to close bases. No, the Minister is choosing to close bases, and I would suggest that that be borne in mind.
I do have a question for the Minister, if I may, and it arises from a letter I received last week from a fellow Albertan. He notes in his opening paragraph:
The Budget-Mr. Harvey
A balanced budget is no guarantee for financial well being and a large national debt is not a recipe for financial disaster. Antonio Salazar-
Parenthetically, I would note that he, too, was a big fan of large defence budgets.
- the late dictator of Portugal, religiously balanced the budget for 35 years in a row and Portugal remained the poorest country in western Europe. During World War II Canada had deficits, in today's terms, of $100 billion per year and in 1945 the national debt was $700 billion. What followed was 25 years of excellent economic growth, low inflation and low interest rates.
Can the Minister point to any substantial factors-other than that, at the time, corporate income tax made up more than individual income tax and it was unquestionably the period of the largest Government regulation of the economy in Canada's entire history-to explain this remarkable financial record prior to the ascendancy of the Conservatives?


William Hunter (Bill) McKnight: Mr. Speaker, I do not find it strange that a Member of the New Democratic Party would treat with sarcasm and scorn actions that have been taken by the men and women who serve Canadians. I do not find that strange at all from a Member of the New Democratic Party.
The Hon. Member says that our budget will increase. In nominal terms, it will increase. That increase is needed.
If the Hon. Member were to consult with his Party's defence critic, he would understand that Canada's commitment, ability and opportunity to bring about and take part in peace-keeping around the world is not just incumbent upon the UN peace-keepers. Every man and woman who is in uniform today is a peace-keeper in Canada and a peace-keeper for the world. Canadians asked them to do that. Canadians set the task. In this country, the Canadian Government sets the tasks and the men and women who serve fulfil them.
The Hon. Member spoke of dictatorships and of expenditures. He spoke of the tremendous growth Canada saw. This country spends 35 cents of every dollar the people send to Ottawa to pay interest on a debt that was accumulated in a very, very short period of time. When this debt started to really steamroll was when the New Democratic Party and the Liberal Party joined in a coalition in 1972 to 1974.

May 11, 1989
The Budget-Mr. Mifflin
I make no apologies for attempting to provide, on the advice of my senior military advisers, the ability to continue our defence operational capabilities by taking actions that are difficult. We ask others to take difficult decisions. The Government is also taking difficult decisions. We are listening to the people who have knowledge about providing defence capability to Canada and attempting, in the financial realities of today, to meet the needs of the men and women who serve in Canada's Armed Forces, the men and women who protect the Hon. Member and I and who contribute to international peace and stability.


Mr. Rideout:: Mr. Speaker, perhaps the Minister could explain why the previous Minister of National Defence would announce $100 million to be spent on the base in the City of Moncton while a year later, the Department changed its decision and in effect closed the base. What factors came into play?


William Hunter (Bill) McKnight: Mr. Speaker, the actions that have been taken were taken because $2.74 billion of planned expenditures became unavailable. Those actions were taken because of that reality, and $2.74 billion is a lot of money.
The base in Moncton to which the Hon. Member refers is basically a supply depot. It has the infrastructure of a full base. We can continue to supply from that region and we have said we would, but it is not necessary to have the infrastructure support of a full military base for a supply operation located in Moncton. We have said that the operation will continue and be rationalized, but not with the infrastructure and support of a full military base.


Fred J. Mifflin: Mr. Speaker, I am very pleased to have an opportunity to speak on the 1989 Budget this morning. Before I do, though, I would like to publicly thank my Leader, the Right Hon. Leader of the Opposition (Mr. Turner) whose courage and integrity has been a great inspiration and an example to me. He has shown me more than anything else that politics can be an honourable profession.


Some Hon. Members:: Hear, hear!


Fred J. Mifflin: On the subject of the Budget, if I could synthesize the comments of my constituents, it would be that this is as bleak a report on our national accounts as
has ever been tabled or attempted to be tabled in the House of Commons. This is a Budget that makes a mockery of the Canadian assertions of sound economic management, breaks the promise of the sacred trust and does not do much for the hope of a brighter tomorrow. It does not do much for the expectation of more jobs. It does not do anything for a stronger commitment to defence and it does less for the vision of economic prosperity.
The name of my riding stands for three great bays on the east coast of Newfoundland, Bonavista Bay, Trinity Bay and Conception Bay. I represent 90,000 people in that riding and they are very special people, descended from a veiy special breed. My constituents have inherited qualities from their history, their background and their ancestors, qualities that in some ways are paradoxical. They are steadfast and demanding of themselves, yet they are forgiving of others. They are strong of the spirit and strong of the will, yet they are steeped in the milk of human kindness. They have come to accept the hard knocks of life that have been so often dealt their way. Yet they cheerfully return to fight another day. When darkness sets in, we can be philosophical and dismiss it by the very thought that yesterday is over and tomorrow will not last forever. But perhaps more than anything else in the world, we thrive on the fundamental belief that a man's word is his bond. Herein lies the big disappointment and the big disillusionment in this Budget.
This Budget has been called a hard-line Budget. My colleague, the Hon. Minister of National Defence, just called it a difficult Budget. A hard-line budget is bad enough, Mr. Speaker. Low and middle-class households will become the brunt of the Government's deficit-cutting exercise. The largest share of these measures have fallen on the backs of working people. This is the blackness, and what makes this blackness a nightmare is that the policies and measures inherent in the Budget represent the biggest about-face imaginable in the lexicon of promises known in recent political history.


Some Hon. Members:: Hear, hear!


Fred J. Mifflin: There were $17 billion worth of promises for megaproject after megaproject, from Bonavista- Trinity-Conception to Vancouver Quadra. These prom-
May 11, 1989

ises were as colourful as candy in a glass jar and just as attractive. These promises gave hope to the electorate last November when Canada was headed for a glorious and prosperous future, thanks to free trade and the Government's economic policy, we were told. Suddenly within six months, we are threatened by inflation, our interest rates are historically high and we have a crippling national debt. The commitments have disappeared into thin air, and hope has given way to despair. Broken promises, Mr. Speaker.
In a riding with chronic unemployment, a shortage of health and education facilities, a lack of public revenues relative to government revenues and services, the straight-faced and fervent campaign promises, made by the Prime Minister (Mr. Mulroney) and his team, of more jobs, no change to social programs, better health and education facilities, tax reform, improved regional development opportunities and even construction of major infrastructure must have raised the expectations and hopes in the minds of even the most skeptical.
I must admit, I was beginning to believe it myself for a while. We did not expect political miracles. We did not expect anything more than was promised. What did we get? We did not get very much, Mr. Speaker. If we bear in mind that this Budget must have been formulated last fall when this Government knew about the deficit and the national debt, we wonder what was going through their minds when they, six months later, made the announcements that we have seen and upon which I am commenting this morning.
I would like to examine some of these promises. First regarding unemployment, in mid-March of this year, unemployment insurance recipients in a part of my riding had their qualifying time increased from 10 to 16 weeks, not because the employment had increased, but because of an unfair quirk in the system. I have already spoken about this in the House. A few weeks later we found out that $30 million would be taken from Newfoundlanders out of work as a portion of the $1.3 billion directed from unemployment insurance. On April 26 we learned that this Government is giving up its 23 per cent contribution to the unemployment insurance fund. Together that represents an over-all reduction of unemployment insurance funding of just over $4 billion. If you
The Budget-Mr. Mifflin
work that out on the back of a cigarette package, it equals $1,400 for each unemployment recipient.
The playing field that we heard so much about during the free trade debate is being levelled even before the referees are being called out to referee the game. This all occurs after Newfoundland's representative in the Cabinet said, and I quote: "You're damn right I asked the Prime Minister about changes, and he said, no, no one was planning any changes in the unemployment insurance program".
To use his language, there is a change, a damn big change and they damn well knew it at the time.


Some Hon. Members:: Hear, hear!


Fred J. Mifflin: What kind of public trust is engendered by this kind of behaviour? On the subject of jobs, we were promised that free trade would produce over 200,000 jobs. This was the cry during the election campaign. But the Conference Board of Canada this past weekend predicted that this Budget will slam the brakes on economic growth that will cost somewhere in the vicinity of 87,000 jobs in 1990 on top of the thousands of jobs that we have just lost since this House sat last December.
The Minister of Finance (Mr. Wilson) admitted that unemployment would rise from 7.7 per cent to 8.5 per cent next year as a direct result of this Budget.
I would now like to look at two basics, health and education facilities. They are important in all provinces. Newfoundland relies heavily on the transfer of revenue from the federal Government, as I indicated earlier this morning. In fact we derive nearly 50 per cent of our provincial revenue from the Government of Canada. Twenty-three per cent of our budget goes to education and 22 per cent goes to health care. That is a big slice. Beginning next year, I see from the budget papers that transfers to the provinces, its growth, whatever you want to call it, is being reduced by $200 million, in addition to the 2 per cent cut-back that took place in 1986. This is bound to have a detrimental effect on the health of our people and the education of our children. The question is who is going to pick up the slack? Where is the slack going to come from?
In the few moments before one o'clock, Mr. Speaker, I would like to talk about regional development. In Newfoundland, we rely heavily on regional development agreements called ERDAs for short. The ERDA process is critical to fueling the engine of economic growth in Newfoundland; indeed in all but two provinces in Cana-

May 11, 1989
da. It represents a total expenditure of around $6 billion. That is a lot of money, and it covers such areas as mining, tourism, rural development, ocean industry, forestry, farming, fisheries and agriculture, all good stuff in Newfoundland. Of immediate concern are the 40 subagreements of around $1.5 billion that expired on March 31 of this year. In my province, these ERDAs represent a total federal commitment of over $400 million. There are six that are still waiting for approval. We have learned also that while ACOA will not be cut this year, but reductions are coming next year. The original $1.05 billion commitment to ACOA remains, but it will be spread out over a longer period of time. The new word for this is reprofiling. That is a great word. What it means to me is that we are going to get less money for Atlantic Canada.
I am at a point in my presentation, Mr. Speaker, where I would suggest that we call it one o'clock at your discretion, please.


Mr. Deputy Speaker:: It being one o'clock, I do now leave the chair until two o'clock.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Ms. Barbara Greene (Don Valley North):: Mr. Speaker, yesterday, May 10, was the anniversary of the independence of Romania, a nation once considered the bread basket of Europe, with a respected cultural heritage.
Today, this country of 23 million is on its knees in the midst of the most severe crisis in its history. Starvation is everywhere. Thousands are imprisoned for their political convictions.
The dictator, Nicolae Ceausescu, is intending to destroy more than 7,000 villages and thousands of churches, cemeteries, and homes. Food, medicine, fuel, and even water are being rationed. Security police are terrorizing the population and those involved in the 1987 riots are still being persecuted. Over 500 people have disappeared.
Europe is incensed and outraged at the disaster zone that is now Romania. Hungary is overflowing with refugees from this cruel regime.
Like many Canadians, we have been increasingly preoccupied by the deteriorating human rights situation in Romania. We must continue to protest these flagrant violations of human rights. I urge the Secretaiy of State for External Affairs (Mr. Clark) to encourage the Romanian Government to co-operate with the Conference on Security and Co-operation in Europe provisions that were established in Vienna last January.



AGRICULTURE


Ms. Catherine Callbeck (Malpeque):: Mr. Speaker, three events in the last five weeks have had an immense impact on the well-being of dairy farmers, including those in Prince Edward Island.
First came the Government's decision to sign the recent GATT Agreement which will freeze industrial milk prices for the next 20 months. This decision disregards a fundamental principle of supply management and goes against a five-year policy commitment that the federal Government made in 1986 to the daily industry.
Then dairy farmers were hit with the elimination of the $7-million subsidy on planned diary export quota, and with a $7-million cut from operation costs of the Canadian Dairy Commission. Together this amounts to an annual loss of $260,000 dollars for the Prince Edward Island dairy farmers.
Time after time, the Minister of Finance (Mr. Wilson) has insisted that all Canadians must share in the task of controlling our deficit. However, the dairy industry has been asked to do more. This Budget is unfair and unreasonable to diary farmers, in light of the recent GATT Agreements signed by the Government.
May 11, 1989



DAYCARE CENTRES


Ms. Audrey McLaughlin (Yukon):: Mr. Speaker, this week, we are witnessing another adverse effect of the Budget introduced by the Minister of Finance (Mr. Wilson). Hundreds of parents from the province of Quebec are threatening to resign from boards of directors of non-profit daycare centres in protest against the potential consequences of the withdrawal by the federal Government of its commitment to child care.
After the Budget announcement, the provinces find themselves with a lot less flexibility for the funding of child care services. In Quebec, the Liberal government is considering cutting back on direct grants to non-profit daycare centres in order to put that money in the only joint funding program maintained by the federal Government, the Canada Assistance Plan. This would cause an increase in the cost of child care services to parents in the province of Quebec.
Where are all those promises that the Conservatives made regarding the support they so wanted to give to parents in Quebec and in all Canada? They have gone up in smoke, and today we are facing an even more severe crisis in the area of child care.



FORESTRY


Mr. J. W. Bud Bird (Fredericton):: Mr. Speaker, National Forestry Week is an important occasion to remind ourselves about the great value of our forest resources. They are precious to Canadians in many ways: recreational, environmental, and economic.
One impressive measure of the economic value of Canada's forests is the enormous contribution which pulp, paper, lumber, panelboard and a wide range of other forest products make to our international balance of trade.
Based on 1987 statistics from the Canadian pulp and paper industry, Canada exported a total value of $20.3 billion in forest products to other countries. This export
volume is larger than the contribution made by mining, petroleum, fisheries, and agriculture combined.
In economic terms, Canada's forests are the foundation of our enviable position in world trade. For example, one-third of all the pulp and paper sold internationally comes from Canada, and we have customers on every continent, more than 75 countries in all.
Our Government commitment to a strongly mandated Department of Forestry is recognition of the forestry imperative in the Canadian way of life.



TRANSPORT


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, on December 12, 1985 at 6.45 a.m. a tragic event occurred in Gander, Newfoundland. An Arrow Airlines DC-8 crashed to the ground killing all people on board. There were 248 American servicemen and eight crew members who lost their lives.
The ensuing investigation by the Canadian Aviation Safety Board has been riddled with controversy and contradiction to such a point that to this day the parents and families of those victims still do not know what caused the deaths of their loved ones.
Later today I intend to table a petition signed by 1,500 Americans who wish a judicial inquiry to take place in order that they can find out the truth about what happened on December 12, 1985 in Gander, Newfoundland.



DRUG ABUSE


Mr. David  Bjomson@Selkirk: Mr. Speaker, I am pleased to be part of a Government that recognizes and has declared war on drug abuse.
The community of Selkirk was represented this week at the National Anti-Drug Conference in Saskatoon by Dr. Ian Reid and the Selkirk PRIDE group led by Sharon Purvis. At this conference, the nationally recognized group received an award for being the most active community in Canada for its work in promoting drug abuse awareness. In addition, Dr. Ian Reid received the

May 11, 1989
individual award for his outstanding work in the fight against drug abuse.
I am encouraged by the impact that this group and Dr. Reid are continuing to have on the war against drug abuse, and I salute their efforts.



FORESTRY


Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, the week of May 7 to May 13 marks the National Forest Week. Each year, the Canadian Forestry Association bestows on a municipality the title of Forestry Capital of Canada 1989.
I am proud to inform the House that the municipality of La Sarre has been chosen as the Forestry Capital of Canada 1989. La Sarre is the first municipality in Quebec to receive this honour.
This prestigious title will be officially bestowed on the municipality by the Minister of State (Forestry) next Saturday May 13. I am delighted that the people of La Sarre will thus become the focal point of Canada.
Allow me, Mr. Speaker, to congratulate all interested parties as well as all forestry workers in my region whose contribution has made 1989 a memorable year for the municipality of La Sarre.
A big cheer for La Sarre, Forestry Capital of Canada 1989.



FISHERIES


Mr. Dave Dingwall (Cape Breton -East Richmond):: Mr. Speaker, the announcement today by Gordon Cummings, the President of National Sea Products Ltd. in Halifax, is another fatal blow to the economy of Atlantic Canada.
National Sea Products Ltd. have closed the Lockeport fish processing plant in Nova Scotia. It is also closing for a two-month period the following fish plants in Atlantic Canada: the Lunenburg wetfish operation, the Canso operation, losing 625 jobs-the Minister of Finance (Mr. Wilson) may laugh, Mr. Speaker, but the people of Atlantic Canada are not laughing. He will have to account for the sins, not only of his Budget, but also because of his fisheries policy which is hurting the people of Atlantic Canada. Stop your smugness and stop your rude remarks.


Some Hon. Members:: Order!


David Charles Dingwall: National Sea Products will close the North Sydney fish plant, 400 jobs; Louisbourg in Nova Scotia, 450 jobs; Lockeport, 220 jobs; Burgeo, 450 jobs; Arnolds Cove, 350 jobs; and St. John's, 450 jobs.
I urge the Government of Canada to give a directive to National Sea Products Ltd. to curtail those lay-offs until such time as all the reviews conducted by the Department of Fisheries and Oceans are within the jurisdiction of the Minister.



EXTERNAL AFFAIRS


Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, the cry for democracy in Panama is being heard throughout the world. The annulment of Sunday's election is nothing less than morally reprehensible and a violation of any notion of justice. The victory by the opposition parties was the first ray of hope for Panamanians to rid themselves of a dictatorship. It was a clear statement for democracy and self-determination. We urge the Government to support the call for General Manuel Noriega's removal from the country, and for the result of Sunday's election to be respected.
The people of Panama have chosen to rid themselves of dictatorship through the democratic process of the ballot box, and they deserve the full support of Canadians. An escalation of violence or militaiy intervention by an outside party at this time would only aggravate the situation and prolong the rule of tyranny. We urge the Government to call in the Panamanian Ambassador and

May 11, 1989

express in the strongest terms possible Canada's rejection of Noriega's hijacking of the will of the Panamanian people.



THE BUDGET


Mr. Bruce Halliday (Oxford):: Mr. Speaker, you have shown a special interest in the problems which disabled persons face. You will be aware that the recent federal Budget introduced changes in the Income Tax Act which will improve employment equity for disabled persons. They will now be able to deduct the cost of care provided by a part-time attendant to a maximum of $5,000. This initiative, at a revenue cost to the federal Government of $5 million per year, is an important step toward creating equity in the workplace.
This measure is one from a package of tax considerations discussed with the Minister of Finance (Mr. Wilson) by the Canadian Paraplegic Association and the Coalition of Provincial Organizations of the Handicapped, demonstrating that this Government does consult, listen and respond to those deserving equitable treatment.
There remain many other obstacles to full participation of disabled persons in the labour force but I remain confident that this Government is prepared to act and eliminate these obstacles.



PULP AND PAPER INDUSTRY


Mr. Jean-Pierre Blackburn (Jonquiere):: Mr. Speaker, while all Canadians are celebrating the National Forestry Week, the people of Jonquiere, the constituency I have the honour to represent in this House, are having problems in a related field, namely with their pulp and paper industry.
Senior executives of Abitibi-Price Inc. met yesterday with the social and economic interest groups of the area and the 1,200 workers of their Kenogami plant.
Mr. Speaker, we don't often see top executives, like Mr. Davis and Mr. Beaudoin, schedule a meeting with
the workers in order to tell them the plant is in trouble. Obviously, the situation is serious.
However, Mr. Speaker, I am sure the workers will be able to face the challenge and to turn their plant into a viable operation in just a few months. It's a huge challenge which the workers will take up with the support of the whole population.



NATIONAL FOREST WEEK


Mr. Reginald Belair (Cochrane-Superior):: Mr. Speaker, this week we celebrate the Week of the Tree and of the Forests. The slogan "Your Forest and Your Future" illustrates very well the great interest Canadians have in this natural resource, upon which depend close to one million workers. The forest has a national impact, and this is a good opportunity for Canadians to think about its value in our lives.
The ideal thing would be to witness in the coming weeks the renewal of the six federal-provincial agreements on the development of forest resources. They are essential for the viability of the industry and they are in line with the objectives we set for ourselves: to preserve the environment, while at the same time ensuring regional and national economic viability.
In conclusion, Mr. Speaker, during this Week of the tree and of the Forests, the owners and workers of sawmills across Canada would have been delighted to hear that the 15 percent surtax on lumber exports would be eliminated.



EMPLOYMENT


Mr. Jean-Guy Guilbault (Drummond):: Mr. Speaker, on the occasion of the launching of the campaign to hire students, I would like to urge all the students of my riding looking for a summer job to apply as soon as possible to Canada Employment Centres for Students.
I call on all companies, businesses and private individuals in Drummond, to contribute to the success of the Canada Employment Centre for students by hiring quality manpower.

May 11, 1989
Oral Questions
Through the Challenge '89 program, 302 jobs will be created in my riding, thanks to pay subsidies amounting to $406,314 granted by the federal Government.
I know how much students are counting on those summer jobs and I am particularly proud to contribute to the creation of jobs for the students of Drummondville through this program.
I wish good luck to all the youths of my riding in their quest for a job. I urge them again to apply without delay to the Canada Employment Centre for Students of Drummond.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, yesterday the Minister of Finance could not explain why he violated the principle of universality by attacking old age pensions. Today I want to ask him questions on the disastrous impact of his Budget on the average Canadian.
Can the Minister explain why a two-income family with two children living at the poverty level has seen its taxes rise by 176 per cent, according to his own figures, since he became Minister of Finance? Can he explain why the taxes of a similar family making $100,000 a year have increased by only 11 per cent? Can he explain why taxes paid by families living at the poverty level are growing 16 times faster than those paid by families earning $100,000? Does he think this is fair?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, I have tried to set out very clearly the impact of the tax changes. We acknowledge that there have been tax increases in this Budget. However, I think if the Hon. Leader of the Opposition reflects on what we have done with the large corporations tax, the high income surtax, the number of loopholes that have been changed in the tax system both for corporations as well as for individuals, he will agree that there has been a very substantial
increase in those people with high incomes or corporations that have a better ability to pay the increased tax load. That is the direction we are going. That is clearly the burden of the Budget, and clearly the burden of the changes that we brought in over the past four years.


John Napier Turner: The questions I have been putting to the Minister over the last two weeks are drawn from his own Budget Papers, all 800 pages of them.


FAIRNESS OF PROPOSED SALES TAX
John Napier Turner: Mr. Speaker, I have another question about fairness and the implications of the new proposed sales tax upon provincial Governments and the people who live in the provinces. How are the poorest provinces going to cope with the addition of this 9 per cent federal sales tax? These provinces are already being hit with a cut to transfer payments and already have the highest provincial sales taxes in the country.
I put my question to the Prime Minister, rather than the Minister of Finance, because yesterday the Prime Minister issued a warning to provincial Premiers that if they did not play ball on his new sales tax they must, to use the Prime Minister's words: "Accept the consequences". What does the Prime Minister believe he is going to accomplish in this shallow attempt at intimidation? Why does he not listen to the provincial Premiers on this issue of the sales tax instead of attacking them? Where is this new renewed federalism he is talking about? Where is this renewed sense of national harmony?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, the renewed federalism to which the Right Hon. Leader refers comes from the fact that the Minister of Finance has been meeting with his provincial counterparts with regard to the national sales tax for almost two years. That is an indication of the tremendous change from when the Right Hon. Leader and his Party were in office. There is a difference.
In response to a question I simply indicated that we had no problems at all with provincial Governments or provincial Premiers themselves commenting on areas of federal jurisdiction. This is an area of federal jurisdiction. I indicated that I thought that the Premier-
May 11, 1989


Mrs. Campbell (South West Nova):: Including Peterson.


Martin Brian Mulroney: I am trying to come to that.
I indicated that I thought that the Premier of Quebec in terms of his comments was being vigilant in regard to the interests of the Province of Quebec.
I indicated as well that Premier Peterson of Ontario had already engaged us in a battle on the free trade question, and that he was free to do so again; it is a free country and we welcome his participation.


John Napier Turner: Mr. Speaker, that was certainly not the tone of the Prime Minister's remarks. However, I am sure that both the Premiers of Quebec and Ontario will take renewed heart from what he had to say today.


Some Hon. Members:: Hear, hear!


FAIRNESS IN CORPORATE TAX
John Napier Turner: Mr. Speaker, the Minister of Finance mentioned corporations. I want to put another question to him about the fairness in the Budget.
We have reviewed his budget papers. Corporations already pay only 12 per cent of the taxes in Canada. As part of tax reform the Minister of Finance promised that he would shift some of the burden to corporations from individual taxpayers. That he has not done.
Will the Minister of Finance be good enough to explain to the House why tax increases in his latest Budget for individual Canadians are six times higher than tax increases for corporations? Does he think that is fair? How does he reconcile that with his earlier statements to the House this afternoon?


Michael Holcombe Wilson: Mr. Speaker, let me observe that the tax on large corporations results in an increase in corporate taxation of 7.3 per cent. Increases in the personal income tax in this Budget result in an increase of 2.1 per cent. Clearly, we are asking corporations to pay a greater share of the burden of income taxation.


John Napier Turner: That is wrong.


Michael Holcombe Wilson: The Leader of the Opposition is suggesting, I think, that we hammer the corporations, and ask them to pay a good deal more tax. He knows full well that if we followed that route the
Oral Questions
opportunities, the incentive to invest in Canada, would be lowered relative to other countries. Corporations would move down into the United States or other countries, set up business down there, create jobs, and take job opportunities away from Canada.
If that is the short-sighted approach that the Leader of the Opposition wants to follow, I think he will find out very quickly that there will be no one following him in that direction.


Mr. McDermid:: Now we understand why he is resigning.


DANGEROUS PRODUCTS
Sheila Maureen Copps: Mr. Speaker, my question is for the Minister of National Revenue. Yesterday, the Minister said in the House that he did not learn of the toxic fuel fraud until this week. This morning he clarified that statement in the House, admitting to a meeting that took place in September of 1987. However, he claimed that that meeting dealt with the issue of toxic fuel fraud in the United States only, and did not involve transborder shipments.
How can the Minister continue to mislead the House-


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Order!


Sheila Maureen Copps: -when in fact in a statement this morning the Executive Vice-President of the Petroleum Marketers Association of Canada said that he met with the former Minister of National Revenue on January 7,1987, and told the Minister specifically about allegations of transborder shipments of toxic fuels placed in gasoline?


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Otto John Jelinek: Mr. Speaker, as Your Honour knows I took the earliest opportunity this morning to come before this House to clarify the statements as a result of new information that came to me late yesterday afternoon.
I said, and I will repeat what I said this morning, that I am advised that Revenue Canada was not provided with any evidence of contaminated fuels being brought into Canada, at the September meeting, or since. Whatever

May 11, 1989
Oral Questions
new information comes to light, I will be very happy and delighted to look at it.


PRIME MINISTER'S POSITION
Sheila Maureen Copps: Mr. Speaker, I have a supplementary for the Prime Minister who yesterday suggested in this House he was proud of the clarity of answers given by his Ministers on this matter of tainted gas.
In view of the fact that the vice-president of the Petroleum Marketers Association of Canada informed me this morning he met on January 7, 1987 with the former Minister of National Revenue and that the discussion dealt with toxic material from the United States being sold in Canada, and since that information was conveyed directly to the Minister of National Revenue on January 7, 1987, is the Prime Minister still fully satisfied with the clarity of answers provided by his Ministers in this House?


Martin Brian Mulroney: Mr. Speaker, I indicated yesterday that matters involving health protection were of concern to all Members in this House, whatever the political organization they might belong to. This is an overall concern of all Members in this House.
Certain details were given yesterday, which were explained with clarity by the Minister of State for Transport and the Minister of the Environment who yesterday pointed to a series of events. All the evidence before us is to the effect those Ministers acted diligently and effectively in the discharge of their ministerial responsibilities.
Now, if the Hon. Member has private information, there are investigating bodies such as the RCMP, she is free to submit it to the investigators involved, and certaiinly it will be brought to the attention of the proper authorities.
So my answer is this: Yes, indeed, frank and clear answers were given by the two ministers who were questioned. And I would say further that the third Minister concerned, the Minister of Revenue, who this this morning brought to light further details that were needed, acted according to the best of parliamentary traditions. I believe the Hon. Member should instead emphasize the Minister's integrity in so doing.
[English\


TRANSPORTATION OF TOXIC SUBSTANCES
John Edward Broadbent: Mr. Speaker, my question is for the Minister of National Revenue.
This morning he got up in the House to correct the statement he made yesterday afternoon. He acknowledged that officials in his Department were at a meeting of his Department in Toronto in September, 1987, during which time the transportation of toxic substances and fuels was discussed, they said now. However, according to the statement the Minister made, it was only a discussion about the transportation of such substances from one state to the other and not across the border into Canada.
My question to the Minister is this. Considering that the reporter who has done a series of articles on this subject, and has not yet been factually corrected in any matter-in fact, has been proved correct-has said that three officials were at that meeting and that the subject about the substances coming into Canada was discussed, is the Minister telling us that he believes and that he would have the people of Canada believe that there was a meeting in Toronto of Revenue Canada officials with Americans in which the subject came up and they did not even ask the question about it being shipped across the Canadian border? Does the Minister really want the people of Canada to believe that?


Otto John Jelinek: Mr. Speaker, the meeting to which the Leader of the New Democratic Party refers was attended by seven officials of Revenue Canada. We have since yesterday-since it came to my attention late yesterday afternoon after Question Period-had the opportunity to talk to all seven of those officials. Five of those seven officials had absolutely no recollection of any discussions taking place in regard to the subject of contaminated fuel. The other two stated that there was a reference made by an RCMP informer that there was, in the context of import fraud, in fact a reference made to the transport of contaminated fuels between states in the United States but no connection whatsoever was there given as to transborder crossings of contaminated fuel.
Further, I would like to add that notes were taken at this meeting. We have been able to obtain those notes.
May 11, 1989


An Hon. Member:: Table them.


Otto John Jelinek: There is no reference in those notes whatsoever with regard to contaminated fuels or the border crossings of contaminated fuels from the United States into Canada.
In conclusion, no word was passed to higher senior officials in the Department of National Revenue. As far as I am concerned, the case is closed.


An Hon. Member:: It has only just begun.


John Edward Broadbent: I would like the Minister to know that the case may be closed for him but for a matter affecting the health of Canadians in profound ways, the case has just begun to be opened.


Some Hon. Members:: Hear, hear!


INQUIRIES RESPECTING TOXIC SUBSTANCE SHIPMENTS
John Edward Broadbent: Mr. Speaker, what was said in The Globe and Mail article is consistent with what the Minister just said, that officials in his Department did not pursue the toxic substance matter because they were just interested in the revenue implications: For example, they were not interested in the health concerns of Canadians, they were interested in revenue and therefore the matter was not pursued.
I would like to ask the Minister if he asked any of his seven officials when he met with them if the officials asked whether any of these shipments were coming across the border, when it was raised that there was within states in the United States shipment of toxic substances in fuels? If they did not ask that question, why did they not?


Otto John Jelinek: Mr. Speaker, the Hon. Leader of the New Democratic Party says that we were not concerned about the safety, health and well-being of Canadians. Let me tell you that every Member of this Government is very much concerned-


Some Hon. Members:: Oh, oh!


Otto John Jelinek: -about the health and well-being of Canadians.


Some Hon. Members:: Hear, hear!


Otto John Jelinek: To underscore that fact, as soon as we found any hint of contaminated fuels coming across the
Oral Questions
country, fast, appropriate and direct action was taken to deal with this situation for the protection of Canadians.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: The House will have noticed that the Minister did not answer the question, nor did he tell us exactly what the fast and direct action was. We now know, from what the Minister said yesterday, that the Government added one more inspector at the border after another Minister came back from a conference in Switzerland. That is the fast action, one more inspector.


MINISTERS' ACTIONS -PRIME MINISTER'S POSITION
John Edward Broadbent: I would like to ask the Prime Minister, who not that long ago became concerned about tainted tuna, which was not potentially fatal-


Some Hon. Members:: Oh, oh!


John Edward Broadbent: -but serious, and actually took steps to fire a Minister at that time. I would like to ask him if he is happy that the Minister of the Environment claims that he just found out about this matter at the beginning of this week and that half the country knew about months ago, and that another Minister was at an international conference a couple of months ago and did nothing about it, and then another Minister has had officials in his Department who have sat on it for months. Three irresponsible Ministers. When is the Prime Minister going to take action with his Ministers and tell them to shape up or ship out?


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: Mr. Speaker, we take this matter very seriously.


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: I hope my hon. friend will agree that the Minister of the Environment, the Minister of Revenue and others involved, both here where it is a matter of great interest and in the Legislature of Ontario where it is of great concern, and in Quebec and elsewhere, have come together and are coming together to make sure that this very important issue-


An Hon. Member:: Will come together.

May 11, 1989
Oral Questions


Martin Brian Mulroney: -of national-I am trying to answer the question, Mr. Speaker, this important issue of national concern is dealt with in the best possible way in the interests of the people of Canada.
My hon. friend asked the question with regard to ministerial responsibility. Last week he asked for the resignation of the Minister of Finance and he failed. Today, he is asking for the resignation of the Minister of Environment, and he is going to fail again.


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF GOVERNORS OF THE STATES OF OHIO, WISCONSIN, MICHIGAN, MINNESOTA AND ILLINOIS
Mr. Speaker:: I would like to draw to Members' attention the presence in the gallery of Richard Celeste, Tommy Thompson, James Blanchard, Rudy Perpich and James Thompson, Governors from the States of Ohio, Wisconsin, Michigan, Minnesota and Illinois.


Some Hon. Members:: Hear, hear!


DANGEROUS PRODUCTS
Mr. Brian Tobin (Humber-St. Barbe-Baie Verte):: Mr. Speaker, my question is to the Prime Minister. What is at issue today is whether or not Canadians were unnecessarily exposed to cancer-causing toxic substances.


Some Hon. Members:: Oh, oh!


Brian Vincent Tobin: Mr. Speaker, we have learned today that Mr. Jim Conrad, the Executive Vice-President of the Petroleum Marketing Association of Canada met January 7, 1987 with the Member for Central Nova, the then Minister of Revenue. Mr. Conrad has said today that during that meeting on January 7, 1987, 28 months ago and eight months before the September meeting with officials in Toronto, that he told the Member for Central Nova, the then Minister of National Revenue, of strong concerns about toxic fuels, tainted fuels being brought into Canada from the United States.
My question to the Prime Minister is straightforward. Given that the then Minister of National Revenue was made aware of this matter 28 months ago, and given in the intervening 28 months Canadians have been exposed to cancer-causing substances, why is this Minister still in the Prime Minister's Cabinet today?


Some Hon. Members:: Hear, hear!


Hon. Lucien Bouchard (Minister of the Environment):: Mr. Speaker, I want to advise the House of the measures the Government is taking to improve a situation which is already under control. First, the operation launched yesterday has been accelerated today. In practically all regions of Canada we now have teams of inspectors at the main Canadian border points. Samples have been taken from a great many oil, fuel oil, kerosene and diesel carriers, mainly in Ontario and Quebec, but elsewhere in Canada as well.
Later today we will complete our plan of action. Among other things, the federal Minister of Energy, Mines and Resources has convened a meeting for this evening where spokesmen for the Canadian oil industry will be told about the measures we intend to take, and we expect them to offer their full co-operation.
In addition, the Ontario and Quebec Environment Ministers have been asked to come to Ottawa tomorrow morning to meet with the Minister of Energy, Mines and Resources and finalize our joint plan of action. We will keep in touch with all concerned and follow up on this matter. Mr. Speaker, I believe Canadians should feel more secure.


INFORMATION RECEIVED FROM CANADIAN PETROLEUM MARKETING ASSOCIATION
Brian Vincent Tobin: Mr. Speaker, the Minister of the Environment is telling us what the Government of Canada is doing today. We want to know why it has not done anything for the last 28 months about cancer-causing toxic fuels being consumed by Canadians.
Mr. Speaker, the Member for Central Nova who was in the House a moment ago has left.


Some Hon. Members:: Oh, oh!

May 11, 1989


Brian Vincent Tobin: I will repeat my question to the Prime Minister. A reputable industry spokesman and executive vice-president of the Canadian Petroleum Marketing Association has said today that he met with the Member for Central Nova, the then Minister of National Revenue, 28 months ago in the Minister's office face to face and told that Minister of that industry's concern about toxic-laced fuels being brought into Canada from the United States. If the Prime Minister is concerned about the finest parliamentary traditions being respected in this House, why wasn't that information made available to Members yesterday, again today, and what is that Minister still doing sitting in the Cabinet?


Martin Brian Mulroney: Mr. Speaker, I think Canadians will be astonished at the apparent disappointment of my hon. friend-


Brian Vincent Tobin: He has known about it for two and a half years.


Martin Brian Mulroney: -and the disinterest of my hon. friend in a major plan of action announced by the Minister of the Environment to deal with a serious problem.


Some Hon. Members:: Hear, hear!


Mr. Simmons:: Cover up.


Martin Brian Mulroney: The interest of the Opposition appears to be directed infinitely more toward something that may or may not have happened on the basis of an allegation rather than the health and welfare of Canadians.


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: Mr. Speaker, I would have thought that given, to understate the case, the indelicacy of his remarks yesterday, the hon. gentleman would have learned to be a little more prudent today. He had to withdraw his remarks yesterday and I assume he may have to withdraw them today.


Some Hon. Members:: Oh, oh!


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


CLOSURE OF NATIONAL SEA PLANT
Roger Simmons: Mr. Speaker, I have a question for the Prime Minister. It concerns National Sea's announcement today of a plant closure and considerable down-time at other plants, including Burgeo in my riding, reducing more than 4,000 positions to seasonal status and wiping out nearly 300 additional jobs.
Fishermen and plant workers in Atlantic Canada are once again being asked to bear the brunt of this Government's mismanagement of fish stocks and its recent cave-in to France on the fish issues.
In view of the fact that the Fisheries Department is awaiting the assessment report of the Northern Cod Stock Review Panel, will the Prime Minister assure the House that he will prevail upon National Sea not to implement those drastic measures until the Department and the Government have had time to receive and review the Cod Stock Review report which, I understand, will be in the hands of Government early next week?


Hon. John C. Crosbie (Minister for International Trade):: Mr. Speaker, National Sea has had to make a decision based upon the quotas of fish that are available. They cannot catch or process fish that is not in the water and available for them to be caught. This is a very unfortunate situation but conservation of the fish resource and fish management is our responsibility and we have to see that the best kind of job is done that is possible.
The worst consequences of the National Sea decision is the closure of the fish plant in Lockeport. The Government Member for South Shore is in Lockeport today discussing options with plant managers and workers to try to keep the plant going. He is not here trying to score points based on the unfortunate results of this decision that National Sea has had to take based on quotas. I would suggest to the hon. gentleman that he might well be in Burgeo discussing the same kinds of things with the people of Burgeo.

May 11, 1989
Oral Questions


DISPUTE WITH FRANCE-CONTINGENCY PLANS
Roger Simmons: Mr. Speaker, the Minister from St. John's West knows full well that the people of Burgeo did not create this problem. His sell-out to the French created the problem.


Some Hon. Members:: Hear, hear!


Roger Simmons: You cannot catch the fish twice and if his buddies, the French, have already caught it you cannot catch it again.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Perhaps the Hon. Member would put his question.


Roger Simmons: Mr. Speaker, I have another question for the Minister from St. John's West or the Prime Minister, whatever suits their fancy. Would the Minister tell us whether this is just the tip of the iceberg? Can he assure us that the Government's mishandling of this issue, including ignoring the overfishing on the northern tail of the Grand Banks, is not going to trigger more closings, more cut-backs by other fish companies in Atlantic Canada? Will the Minister tell us, in particular, while he is on his feet, what he has in mind? What contingency plans does the Government have in mind to address the suffering, the hardship being inflicted on those fish plant workers?


Mr. Speaker:: I think the question has been put.


John Carnell Crosbie: Mr. Speaker, we have-and it has been known for some time-a serious situation on the east coast of Canada with respect to fish stocks. On the advice that the Government received from Fisheries scientists earlier this year, a committee has been appointed to review the work done by the Fisheries scientists. Quotas have had to be reduced this year and they might well have to be reduced again next year. The Government is working on plans in that connection. We will assist and, of course, as to the shut-down of the plant at Lockeport all readjustment programs of the Government will be applied and hopefully a committee will be set up under the industrial adjustment service.
I hope that the honourable gentleman-and I have several of these fish plants in my own district as well- will be prepared to work to try to reach a solution, not to make partisan points in the House. National Sea did brief the honourable gentleman several days ago and he
ran to VOCM and leaked the private and confidential information.


Some Hon. Members:: Oh, oh!


EFFECT OF FREE TRADE AGREEMENT
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is for the same Minister on the same topic.
Gordon Cummings, Chief Executive Officer of National Sea Products, said in December in defence of the Free Trade Agreement, and I quote:
Canadians have to get off their butts and get out there and find out about the American market and win.
Can the Minister tell this House and tell those workers who have been laid off how the American system is helping them?
Hon. John C. Crosbie (Minister for International
Trade): Mr. Speaker, this decision and problem has nothing to do with the Canada-United States fish trade agreement unless somehow that agreement drove the fish out of the waters so that they are not there any longer to be caught. This has to do with the fact that the fish stocks we hoped and expected were there are not there.
How does the Free Trade Agreement help the situation? This does not affect secondary processing which continues at Lunenburg because of access in part to the American market. It will continue in National Sea plants in the United States. The Free Trade Agreement helps their marketing position, but unless they can catch fish nothing can help them, neither the Free Trade Agreement nor any other arrangement in the world.


GOVERNMENT ACTIONS RESPECTING UNITED STATES AND FRANCE
Rodney Edward Murphy: Mr. Speaker, Mr. Cummings has put Canadians on their butts. He hasn't got them off their butts, he has put them on their butts. This Government has given in to the Americans, it has given in to the French and has not defended Canadians. Why has the Government not done that?


An Hon. Member:: It's a red herring.


John Carnell Crosbie: been necessary for conservation purposes and that company is to be sympathized with, not blamed as the hon. gentleman attempts to do in his unwitting and uncaring way.


Some Hon. Members:: Hear, hear!


NATIONAL DEFENCE
Hon. William Rompkey (Labrador):: Mr. Speaker, my question is for the Minister of National Defence. It is obvious that he has taken over the drum of the Minister of Health simply to beat the retreat of the Canadian Armed Forces.


Mr. Beatty:: The Liberals now love the military.


Bill Rompkey: Since the Minister has taken over he has turned around tanks, grounded CF-18s and satellites and virtually disarmed the Canadian Armed Forces. After four years of attacking Liberal policies and raising-


Some Hon. Members:: Oh, oh!


Henry Perrin Beatty: This is coming from a Liberal.


Bill Rompkey: We are getting sound and fury, Mr. Speaker, but no substance.


Mr. Speaker:: Perhaps we could get the question.


Some Hon. Members:: Oh, oh!


Bill Rompkey: The question is, after four years of damning Liberal policies and raising expectations of some great white knight on a tricycle, how can the Minister of Defence now turn around and cancel almost everything in his Budget? Is it the Minister's intention to let the United States defend Canada or is he simply-


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: A Liberal talking about defence?


Mr. Speaker:: Order.


William Hunter (Bill) McKnight: Mr. Speaker, I could not help but notice the smile on the Hon. Member's face. He started out biting his tongue
Oral Questions
and then ended up wishing that he had not started the process.
A Liberal Member is criticizing the actions taken by this Government since 1984, but when that Hon. Member was a member of the Liberal Government, in 16 years the forces were reduced from 104,000 to 78,000. Canada's capacity and its maritime responsibilities were jeopardized. That Hon. Member and his Party now wish to criticize a Government that since 1984 has had an increase in defence expenditures so that the men and women who serve Canada and all Canadians can have equipment. That I cannot understand, and I know the Hon. Member does not believe a word of what he says.


Bill Rompkey: Mr. Speaker, the honeymoon is over.


COMMITMENTS TO NATO
Bill Rompkey: Mr. Speaker, let us talk about one year ago. One year ago in Lahr, and I want the Prime Minister to hear this, the Prime Minister said:
-we will refit all our forces in Europe with appropriate equipment. Our attitude is simple: you are the best. We want you to have to the best equipment to do a tough job -
In the past several days, the Government has reneged on its commitment to increase Canadian land forces in Germany and supply them with tanks. How can the Minister square the statement of the Prime Minister made in Germany one year ago with the decisions taken in the last two weeks? Does the Government have any credibility left at all?


William Hunter (Bill) McKnight: Mr. Speaker, I am pleased to see the renewed interest in NATO by the Liberal Party.


Some Hon. Members:: Hear, hear!


William Hunter (Bill) McKnight: I am sure that as their leadership debate continues, there will be newly enunciated positions on their NATO posture.
The Hon. Member wanted to go back one year and he referred to Lahr and our responsibilities in central Europe. I would like to take the Hon. Member back to 1983, the last time his Party was in Government. Based in central Europe, Canadian forces, joined with our allies, had 5,400 troops. There has been an additional
2,000	troops added. There will be more troops added this summer. The Hon. Member has to understand that this Party's-

May 11, 1989
Oral Questions


Some Hon. Members:: Why?


William Hunter (Bill) McKnight: I hear "why". The reason why is this Government has a commitment to seek joint security with our allies, and the Hon. Member and other Hon. Members should understand that that has-


Some Hon. Members:: Hear, hear!


CLOSURE OF MILITARY BASES
Mr. Ronald J. Duhamel (St. Boniface):: Mr. Speaker, my question is directed to the Minister of National Defence. The Minister may know that the Hon. Member for Winnipeg South and the Hon. Member for Portage-Interlake had indicated that the Minister of Defence would come to Manitoba to explain the closure of the bases at Portage La Prairie, Manitoba, and Kapyong Barracks in Winnipeg, Manitoba. That does not appear to be the case at this point in time.
In fact, a delegation is coming to Ottawa next week. When that delegation comes, will the Minister be able to show the members of the delegation that before taking decisions to close the military bases in areas such as Summerside, Prince Edward Island, London, Ontario, Portage La Prairie and Kapyong Barracks in Manitoba, he undertook a study to determine the total economic impact on these communities of that kind of decision?


William Hunter (Bill) McKnight: Mr. Speaker, the Hon. Member asks an important question. The decisions to reduce in size or close some 14 bases and stations were difficult decisions. They had to be made so that we could bring into balance our infrastructure costs with our capital needs. One cannot have a reduction in a budget of the magnitude of this without taking that action. If one did not take that action, one would not be able to provide the equipment that the men and women need.
The Hon. Member should understand that we are prepared, through the civilian workforce adjustment program, to sit down with those employees who are affected. We are prepared to sit down and examine opportunities for base re-use. We are prepared to sit down and examine the possibilities that exist.
I will be meeting with the Premier of Manitoba later this day. I will be meeting with a representative of-


Some Hon. Members:: Order!


ECONOMIC IMPACT STUDY
Ron J. Duhamel: Mr. Speaker, my supplementary question is directed to the same Minister. Can the Minister confirm that there has been no economic impact study? Can he confirm that there have been no studies to consider the impact of the closure of the bases on those communities and that neither his Department nor any other Department of Government has looked at the impact of additional taxes such as excise, sales and income taxes, cut-backs in the agricultural sector, cut-backs in transfer payments that will affect education and health on those communities? Can he confirm to the people of Canada that no such studies were undertaken in order to show the Minister and the Government the devastating effects those decisions would have on those communities?


William Hunter (Bill) McKnight: Mr. Speaker, I understand the Hon. Member's concern, but what causes me additional pause is that the Hon. Member is not asking the questions that are important to ask as to the responsibility of the Minister of National Defence. The Hon. Member is more interested in having empty barracks with men and women who do not have the capacity to fulfil the tasks the Government of Canada asks of them.


THE ENVIRONMENT
Mr. Cid Samson (Timmins-Chapleau):: Mr. Speaker, I direct my question to the Minister of State for Transport.
She admitted having been told, on March 22, that toxic wastes were being shipped illegally to Canada from the United States and used in industrial furnaces and greenhouses, in Quebec and Ontario.
She said nothing for about 50 days. Is this standard carelessness for the Conservatives, or should she not rather announce in the House she is resigning for reasons of incompetence?


Lucien Bouchard: Mr. Speaker, the facts seem pretty obvious to me. The Minister of State for Transport attended a conference in Bale where was signed a treaty on toxic substances transportation. Officials of the Environment Department were given in her presence some general infor-
May 11, 1989

mation they communicated immediately to Ottawa. This information was transmitted to those concerned, in Ottawa. Action was taken. That Minister cannot be blamed in any way.


THREAT TO HEALTH OF CANADIANS
Cyril (Cid) Samson: Mr. Speaker, my supplementary question is for the Prime Minister. Does the Prime Minister believe that the health of Canadians should only be protected from PCBs when the media reveals a threat, or will he tell Canadians that health protection is important to the Government? Just what does it take for a Minister to resign if this issue is not considered important enough?


Martin Brian Mulroney: Mr. Speaker, I indicated in response to questions from my hon. friends yesterday and today that I believe questions of this nature to be of great interest and genuine concern to every Member of the House, irrespective of political persuasion. Since that is the case, I think we owe an obligation to the House, on this question at least, to a certain degree of objectivity. I think the test of the reasonable man would indicate that the Minister of State for Transport and the Minister of the Environment have, in regard to this question, acted with clarity and objectivity and very much in the national interest.


AGRICULTURE
Hon. Jean Lapierre (Shefford):: Mr. Speaker, my question to the Right Honourable Prime Minister deals with the statements made by Mr. Page, the Quebec Minister of Agriculture, who after having accused yester day the Deputy Prime Minister of speaking from both sides of his mouth, finally indicated that Quebec farmers had been hoodwinked and betrayed by this Tory Government during the election campaign.
My question to the Right Honourable Prime Minister is this: What step is he planning to take and what measure will he adopt to compensate Quebec farmers
Oral Questions
for the loss of some $15,000 per farm per year they are going to sustain, according to the UPA?


Hon. Pierre Blais (Solicitor General of Canada and Minister of State (Agriculture)):: First of all, Mr. Speaker, I should like to emphasize the fact that the agreement reached on April 7 represents for Canada a real victory, because the other countries recognized there for the first time the importance of our farm product marketing boards. It is quite significant.


Some Hon. Members:: Hear, hear.


Pierre Blais: Moreover, Mr. Speaker, at least this time the importance of Clause 11 of the GATT has been recognized, and both the Opposition and the Quebec farm producers have asked us to protect it. And we did Mr. Speaker. We saved it, and now, we are going to work to clarify and re-inforce it. It is the major element in this agreement, and we have obtained that both our American and European friends accept to put on the table the exceptions to this agreement.


DANGEROUS PRODUCTS
Mr. Jim Fulton (Skeena):: Mr. Speaker, my question is for the Minister of National Health and Welfare.
Canadians in British Columbia, Alberta, Ontario, and Quebec may have poisoned fuel in their vehicles, home heating systems or in gas cans, a situation where someone could in fact come in direct skin contact with PCBs, if they were for example cleaning a paint brush in contaminated gasoline.
Will the Minister advise the House now on why he has not issued a national health alert about the dangers of coming in contact with substances such as PCBs?
We have a situation where there is money in the Budget to advertise about the national debt. How about advising Canadians-


Henry Perrin Beatty: Mr. Speaker, the hon. gentleman is true to form. Instead of wanting to inform Canadians, he wants to frighten them.

May 11, 1989
Business of the House
As soon as information was made available to us which suggested that there could be the transport or shipment of such tainted fuels, we immediately started an investigation. To date-and the hon. gentleman should know this-there has not been confirmation that in fact Canadians have burned tainted fuel.
Notwithstanding that fact the Minister of the Environment is continuing with his investigations. My Department and I have been in touch with our provincial colleagues in Ontario and Quebec. We will be meeting with our colleagues from the Departments of the Environment and Health in Ottawa tomorrow. We are also continuing to contact all provincial Governments.
If it turns out that such allegations are justified, we have proposed already to the provincial Governments in Ontario and Quebec that studies be undertaken to determine whether or not Canadians have been exposed to toxins. The first thing to do is to get the facts, not to make wild allegations like the hon. gentleman usually does.


BUSINESS OF THE HOUSE
Hon. Herb Gray (Windsor West):: Mr. Speaker, this being Thursday, I want to ask the Government House Leader if he will give the customary statement of business which he intends to call for the coming week.


Hon. Doug Lewis (Minister of Justice and Attorney General of Canada):: Mr. Speaker, today will be the conclusion of the budget debate with a vote, if a recorded division is asked for, to be held Monday at 6 p.m.
Tomorrow will be an allotted day. On Monday, May 15, we will resume second reading debate on Bill C-ll, the borrowing Bill. On Tuesday, May 16, we will continue with Bill C-ll, if that is required, and then move on to Bill C-8 dealing with labour adjustment.
I should advise the House of the only change that could occur. If the other place were to amend the interim supply Bill which was sent to it last week, under those circumstances we would deal with the Government's response to that amendment first thing Monday morning.


Mr. Caccia:: Mr. Speaker, when will the Hon. Government House Leader introduce a motion to strike the
standing committee on acid rain which was in existence until the call of the election and served very well in pursuing a matter of high interest in the minds of the Canadian public?


Douglas Grinslade Lewis: Mr. Speaker, the House will know that we revised the number of committees and their mandates earlier this year after a lot of deliberation with the House Leaders of the two opposition Parties.
At that time it was thought that perhaps the entire matter of acid rain could be dealt with by the environment committee. I can tell my hon. friend that the subject has not come up again, but I would be very willing to entertain any suggestions my hon. friend might have to re-enact such a committee after talking with other House Leaders.


Mr. Fretz:: Mr. Speaker, I want to draw your attention and the attention of the House to the fact that yesterday members on this side were rising on questions and only one Member was recognized. Today, Sir, no Members were recognized on questions.
Part of the problem rests with the Opposition and its long preambles which have kept many other Members from raising questions which are important to the House and important to the country.
Therefore, I would like Your Honour to consider the point which I have raised today and hope that you will give it due consideration.


Herbert Eser (Herb) Gray: Mr. Speaker, I rise on this point of order. In your consideration of this matter will you please give attention to the excessively long answers by government Ministers?
If Ministers wish to make statements, I would appreciate it, Sir, if you would direct them to make them on motions as provided by our Standing Orders. We too in the Official Opposition have concerns. We receive fewer questions than we are entitled to in our view because of the abuses of Question Period by the long answers given by Ministers.


Rodney Edward Murphy: Mr. Speaker, I rise on the same point. I do believe there is a problem with the length of both questions and answers in the House. I would ask you to meet with all three House Leaders to see what can be done.
An. Hon. Member: Oh, oh!
May 11, 1989


Rodney Edward Murphy: I hear a Conservative squawking on the other side. I would like to indicate to him that we are quite willing to have the Hon. Member for Portage-Interlake ask a question on national defence.


Mr. Nunziata:: Mr. Speaker, while considering this particular point, I would also ask that you consider the nature of questions that emanate from the government benches. All too often, when recognized, government Members ask set up or planned questions about which the Ministers know in advance.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: I have, of course, paid careful attention to the interventions of Hon. Members. Perhaps tomorrow things will go better.



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.
Fred J. Mifflin: Mr. Speaker, I should like to continue the presentation I started this morning on the effect the Budget will have on Canadians. I covered jobs, unemployment, regional development, health, education, and transfer payments.
I would now like to deal with the so-called tax reform promise which raises $3.7 billion or nearly two-thirds of the budget cutting effort. I have a few figures that I would like to pass on for consideration. By 1991 Ottawa will collect $55 billion in personal income tax compared with $29 billion in 1984. This is an increase of close to 90 per cent in seven years. Over the same period total corporate taxes will have increased from $9.4 billion to $14.6 billion. That is an increase of approximately 50 per cent.
In 1965 personal income taxes made up 30 per cent of Canada's revenue and corporate taxes made up 20 per cent. In 1988 the situation had changed. The ratio was personal taxes, 44 per cent; corporate taxes, 11 per cent. For the next three years it is calculated that consumers will continue to pay almost four times as much income
The Budget-Mr. Mifflin
tax as corporations. It is clear that once again individuals are bearing the brunt of the tax load. They are paying more than their fair share. This point was made very adequately by the Right Hon. Leader of the Opposition about an hour ago in this very Chamber.
On top of this heavy income tax burden there are consumption taxes which will add another $200 to $500 to most family tax bills. The Government has steadily raised consumption taxes in its past Budgets, despite complaints from consumer groups and welfare advocates that such moves penalize the poor. The Government has been unmoved by those arguments.
Householders will also have to shoulder much of the burden of Ottawa's decision to shift the entire funding of unemployment insurance to the private sector. Consumers will probably have to pay higher provincial taxes as a direct result of the lower transfer payments from Ottawa.
Recently the Minister of Finance confirmed that on January 1, 1991 Canadians would begin paying a 9 per cent tax on goods and services, on almost everything but food, rent, health care, and education. In Newfoundland, with 12 per cent provincial sales tax, the net effect will be to add 21 per cent to goods and services at the point of purchase. That is almost 25 per cent on the price quoted in the stores.
This tax started out to be revenue neutral, another catch phrase. I am not sure if it means that the Government will not be collecting more or that the consumer will not be paying more. I do not think the definition matters. Sooner or later, and I would expect sooner, the Government will raise it from 9 per cent to 10 per cent, to 11 per cent, to 12 per cent.
It would be interesting to discuss the experience of some European countries where similar taxes started out at around 10 per cent and in 20 years they were double that amount, around 20 per cent. That works out to approximately half a per cent every year or one per cent every two years. That has us all concerned.
I now wish to turn to the universality of Old Age Security and family allowances. Members of the Government gave repeated personal assurances that universality would continue, would remain, would not be violated, and was a sacred trust. What happened to the sacred trust? This year it will only affect people with an income of $50,000 or more. When will it become $40,000 or $30,000? The foot is in the door. The mind set that universality is here to stay has now been breached. How long will it take? I would suggest that the principle has

May 11, 1989
The Budget-Mr. Mifflin
been established. All we are haggling over now is the price or in this case the threshold.
I do not have very much to say on child care. The Government did not have very much to say on child care. This was another promise close to the heart of Canadians that has been eliminated even before it was put in place.
I have a specific concern pertaining to my riding, which deals with promises, broken promises. In my riding on August 25, 1988 the Government announced approval to construct the first federal penitentiary in Newfoundland. It was a 160-unit medium-minimum security penitentiary, to be constructed at a cost of $30 million. It was to have an annual budget of $7.4 million, and it would employ 100 to 120 people. The prison was to be built in Harbour Grace. I do not have to tell anyone in the House the impact that such an announcement has on a community with a population of approximately 4,000 people.
Harbour Grace? I considered it a living, breathing, real commitment, and so did the people of Harbour Grace.
All Canadians were suitably impressed when the Government stood tall on a promise to continue the effort that was launched in the mid-1970s to improve national defence. There was a White Paper entitled "Challenge and Commitment". Where is that White Paper today? Where is the commitment? Where are the bases that are being closed? Where are the CF-18 replacements? Where is the naval modernization program? What is DND saying to its international colleagues? I would suggest that national defence deserves better. Our men and women in uniform deserve better. Canada deserves better.
This massive tax hike in the Budget, the biggest in Canadian history, will drive up costs and prices and will edge Canada closer to an anticipated economic slowdown. The forecast of the Minister of Finance of an average annual 3.2 per cent rise in real GNP in the next three years is optimistic. Most economists put Canada's potential growth rate in the 1990s at about 2.75 per cent. I understand from economists that this is a tremendous drop.



Twelve days before the November 21 election day there was a sign put up, and here is a shot of it in a local newspaper. It states: "Harbour Grace location of planned federal medium-minimum security penitentiary". That was the sign 12 days before the election. The sign was put up, everyone took note, and everyone made plans. Corrections Canada made plans and the Town of Harbour Grace made plans. What happened to the prison? Something happened, because in the Budget it states: "Construction of the new prison planned for Newfoundland will be delayed, reducing expenditures by $30 million over the next three years. The delay will not jeopardize public safety as existing cell capacity can meet the region's needs".
The Minister for International Trade wrote to the Evening Telegram and stated that he spent three years of continuous work trying to make sure that this prison finally got to Newfoundland some 39 years after Confederation. Can anyone explain what happened to that promise? Can anyone explain that to the people of
Before the Budget was released one-third of Canada's economists were forecasting a recession in the early 1990s as a result of the current high interest rates. Now more than half the economists think that the probability of a recession is more than 50 per cent, and sooner, and that this is a direct result of the Budget.
With some political issues, where one stands often depends on where one sits. That is not the case with this Budget. There is a discomfort index all over the House. I can assure you, Mr. Speaker, that I feel it. It is also felt by my colleagues on this side of the House.
When government members woke up on November 22, and I am winding up my remarks now, they discovered that there was a national debt problem. What is now being proposed as a solution is a disastrous cut in defence spending. Defence represents 10 per cent of government spending, and it is being cut by one-third. There is a reduction in the number of social and regional development programs, and a tax grab that will stifle economic growth and dampen our entrepreneurial spirit for some time to come.

May 11, 1989

In closing, I would like to conclude my remarks by quoting H. L. Mencken who once stated: "Every human problem always has an easy solution-neat, plausible and wrong".


Mr. Crosby:: I have a comment and a question for the Hon. Member for Bonavista-Trinity-Conception. I listened with interest to his remarks. When he was talking about the income tax changes, he did not bother to mention the 850,000 low income earners who have been taken off the income tax rolls. When talking about the sales tax, the Hon. Member did not bother to mention the fact that Canadians are now paying a 12 per cent plus sales tax on most of the goods that will be covered in the tax changes. I guess we cannot expect much different. He finally got around to mentioning national defence, but only in the closing moments of his presentation.
I want to make a few comments about national defence with which I am sure the Hon. Member will agree. I believe the biggest threat to Canada's Armed Forces and military effort would be a bankrupt national Treasury. I think the Member realizes that if Canada did not pursue sound economic policies, we would not be able to take our place in the world as a world power and exercise some sort of military intervention when that was required. I cannot believe that he does not recognize the need to trim the budget, to get our financial house in order. I am sure he agrees with us on that point.
How will that be done unless we look at major expenditures like national defence? I am sure the Member, as a military person, does not expect Canada to continue to subsidize military bases simply for the reason of assisting the communities. Surely we can find better methods to provide economic support to Canadian communities.
Is he suggesting that we should keep the trackers in the air for the two hours that they are able to maintain surveillance? Should we retrofit them at great expense to the national Treasury in order to keep what many consider obsolete planes in the air? He is not suggesting that.
My specific question concerns the nuclear propelled submarine issue. We had an address by the Minister of National Defence who explained the Government's
The Budget-Mr. Mifflin
reasoning in this action. I am sure that when the Member remarks on the cut-backs in national defence he will take the nuclear propelled submarines into account.
Did not he, along with his colleagues, complain about the nuclear submarine program during the election campaign? Did he not tell his constituents that it was not necessary and that we should spend the money on child care and social programs?
In the Halifax area candidates said that they did not want nuclear submarines. They said: "We don't want them. We will crush the Navy. We don't care what the future holds for Canada's Navy?
Did the Member join that chorus from the Liberal Party? Was he part of that protest movement? Did he cause Canadians to rise up against the nuclear submarine acquisition so that the people demanded the cancellation of that program? Was he part of that?


Fred J. Mifflin: Mr. Speaker, I am delighted at the number of questions put to me by the Hon. Member for Halifax West. I am not sure where to begin.
Some suggestions were made across the floor. I remind the House that I was privy to a lot of information that caused national defence to be where it is today.
The House will be aware that the acquisition program of ships, aircraft and tanks takes anywhere from eight to twenty years. I recall distinctly a cabinet memorandum and a paper which was initiated by the Liberal Party. I can even remember the date, December 22, 1977. That was a great day because the Liberal Party, the Government of the day, decided that Canada should have 24 frigates to make up a strong Navy. That was the position of the Liberal Party in 1977. It was the position of the Liberal Party as we commissioned six that are built and six more that are being built. It will continue to be the position of the Liberal Party. We support a very strong Navy. I am for a strong Navy, and I can assure the House that every member in the Liberal Party on this side of the House is for a strong Navy.
There are other aspects of this which I would be quite prepared to address. However, I want to return to something my hon. friend from Halifax West said about whether I remembered the low income Canadians who are not taxed. Does he remember the high income Canadians who are not paying much tax?

May 11, 1989
The Budget-Mr. Mifflin
I am sure there are other questions, so I will wait for them.


John Horton McDermid: Mr. Speaker, I rather enjoyed the presentation of the Hon. Member. I like to be entertained just like anybody else.
As the Hon. Member attempted to close his speech five times, he reminded me of the definition of an optimist. It is the man who reaches for his car keys when a politician says "in closing".
The Hon. Member can correct me if I am wrong, but I understand that he was in the Armed Forces and served this country well and honourably. We as Canadians appreciate that very much.
How can he stand up in the House today and talk about the defence of this nation after what the Government has done over the last five years for the Armed Forces, compared to what Prime Minister Trudeau and his merry band of bandits did to the Armed Forces during the period he governed this country? Why did he not stand up then and take the side of the Armed Forces? He sat silently by.
Now he stands up in the House to say with emotion and fervour that the Armed Forces are being destroyed. He knows that the purpose of this action is to maintain our Armed Forces and commitments to NATO. It is to maintain a good, solid Armed Forces and to provide the equipment that the men and women of the Armed Forces deserve. Why did he not stand up and speak about that when he was in the Armed Forces?


Fred J. Mifflin: Mr. Speaker, at the outset let me congratulate the Hon. Minister for an excellent presentation and excellent performance.


John Horton McDermid: You haven't see anything yet.


Fred J. Mifflin: I feel very comfortable because I see members of the military in the gallery.
Let me say what the Liberals did not do. They did not lead the military on by preparing a White Paper entitled "Challenge and Commitment", making great promises for modernization, and leading them down the garden path by cutting everything off. We did not do that.
Let us look at some of the figures. In my opinion the burden of the cuts falls disproportionately on national defence, where the reductions will account for one third
of all government cuts over the next two years. The Department only makes up 11 per cent of federal spending. I am sure this news landed like a mortar bomb on DND. The Department cannot say very much about it, like I could not say anything about it when I was in uniform.


John Horton McDermid: But you were opposed to what was being done.


Fred J. Mifflin: I could not say anything when I was in uniform. My job was to serve, and I served.


Some Hon. Members:: hear, hear!


Fred J. Mifflin: I come here to serve as a politician. Only two years ago the defence White Paper entitled "Challenge and Commitment" gave great hope to this country with a commitment to continue the modernization process that was begun earlier by the Liberals in the mid-1970s.
Let me answer the Minister's question. It would appear from the lead up announcements to the Budget that the Minister of National Defence must have agreed to a series of cuts or delays in major capital acquisition programs, in a real effort to save the nuclear submarine program. It appears equally likely that the change of mind centred on the Government's inability to sell a tough Budget if this high profile, increasingly nationally unpopular project was left unscathed. DND got the worst of both worlds. It got both barrels-bang, bang.
The spending cuts leave national defence in tatters. Will the capital acquisition delays result in equipment rust out? Will the manpower cut-backs leave the forces unable to meet the White Paper manpower commitment to NATO and to reinforce Europe? What is the rethinking on redressing the balance to have a strong Navy and the new approach to ensuring Canadian Arctic sovereignty? Where is that vigorous naval modernization program Canada was embarking upon?
What about base closings? They will cost jobs and decimate the local economies of regions across Canada. They will decrease our mobility infrastructure.
How will defence planners have any confidence in the Government or its plans for money when acquisition programs take 20 years and it cannot tell from year to year how much money it will have?
May 11, 1989


Some Hon. Members:: Hear, hear!


John Horton McDermid: Mr. Speaker, it is a pleasure to rise in the House today to speak to this Government's budgetary policy.

I have been following the debate closely. I want to use this opportunity to address one or two specific misconceptions about the Budget. Before I do that, however, I want to look at the entire Budget.
In this debate we have heard a great deal-and we heard it just now again-about the negativism that delights in picking holes in the details of policy, especially policies that show a breath of vision. Speaker after speaker from the other side has avoided dealing with the overriding imperative that has shaped the Finance Minister's Budget-Canada's large and growing public debt.
We have heard them criticize the Government and what it is trying to do to get the burgeoning debt under control. They have criticized every single budget cut that the Government has announced-every single one. We just had a member of the Liberal Party criticize the decision on the nuclear propelled subs.
They have criticized every single budget cut. They have criticized every single tax increase. There has not been one that they have not criticized.
However, what they have not done is they have not been honest with the Canadian people. They have not stood up in their places and said where they would cut, where they would save money for the Government, where they would try to get the debt under control, where they would try to get the deficit down-not once. Not one Member has said that.
I sat and listened to the Leader of the Opposition (Mr. Turner) ad nauseam the other day. He criticized every single part of the Budget. However, did he have any ideas as to how to get the debt under control? Not one.
Do you remember, Mr. Speaker, when he ran in 1984? He was going to cut the deficit in half in a very few years. He did not say how. Then, in 1988, he said: "By golly, that did not work in 1984. Cutting the deficit did not work in 1984 so in 1988 I am going to make $40 billion worth of promises in the campaign. That is what I am
The Budget-Mr. McDermid
going to do". His whole caucus, this fine looking group of men and women, together with their socialist buddies, have stood up time after time and criticized. However, they have not had one idea.
Do you know what they say, Mr. Speaker? It happened just the other day. They sat there and they yelled at me the other day. They said: "It is not our problem, no, no, no. It is your problem. You are the Government. You solve the problem. Do not ask us for ideas".
The Hon. Member who is a former Cabinet Minister and who has a new riding now-it is South West Nova-sat there the other day and said: "It is not my problem. The debt, the deficit are not my problem". I am going to tell you, Mr. Speaker, it is everybody's problem.


Mr. Karygiannis:: How much are you spending on advertising?


John Horton McDermid: It is your problem. It is my problem. It is the Prime Minister's problem. It is the problem of the people in the galleries. It is all our problem. If we do not come to grips with those problems now-


Jim Karygiannis: How much are you spending on advertising, John?


John Horton McDermid: I will answer your question. Do you know what we have? We have a question and answer period following this speech. I will be happy to answer the Hon. Member's question after the speech. Okay? If he will give me the courtesy of delivering my speech-


Jim Karygiannis: Do you give us the courtesy when we are up?


John Horton McDermid: You're dam right.
I want to review, because I think it is important that we understand, why we have this problem. It is a real problem. It has to be faced. I do not believe that it will go away and that it cannot be ignored-


Jim Karygiannis: So you have to advertise during the 11 o'clock news at $700 a crack.


John Horton McDermid: -even by the loud-mouthed shoe salesman over there.


Jim Karygiannis: They are not as expensive as Wilson's.


John Horton McDermid: Let me review how the problems developed.

May 11, 1989
The Budget-Mr. McDermid
Some 20 years ago Canada had no deficit. Our total debt at that time was $18 billion. The debt was $18 billion but there was no deficit. In other words, we were bringing in enough income to pay for that debt without having to borrow to pay for it.
At that time 12 cents of every revenue dollar-every dollar that the Government collected in taxes-every dollar my friend the tax collector collected-I mean the Minister of Revenue, who is sitting here in front of me today-went into interest payments. That was 20 years ago. Four and a half years ago, when this Government came to office, that debt had grown to nearly $200 billion. The amount of revenue devoted to the interest payment on that debt had grown to 32 cents out of every dollar. The annual deficit that year was $38 billion. In one year it was $38 billion.
This dramatic increase, as I said earlier, should be of concern to all Members. For now we have a self-propelling force in our public finances that threatens to undermine our reputation for fiscal prudence and responsibilities. We must bring that debt under control so that we can maintain this nation's ability to provide the social programs, the Armed Forces and the services that Canadians value and rely upon.
Let me be more precise about the burden that debt imposes on our Government's financial flexibility. In 1988-89, $33 billion was spent on public debt charges, that is, just the interest on the existing debt. That makes debt interest payments the biggest single category of government spending.
I would ask Hon. Members to keep in the back of their minds that we are paying $33 billion. I would like to compare that with transfers to persons. We do a great number of transfers to persons here with the funding we collect. Transfers to persons this year is $30 billion. The interest on the public debt alone costs us more than Old Age Security, the Guaranteed Income Supplement, family allowances and veterans' pensions all together. For the current year we forecast that the debt will rise to $39.4 billion. That is the interest on the debt. This year 35 cents out of every revenue dollar will go to pay interest on the public debt.
Can you imagine, Mr. Speaker, what a Government could do if it had that 35 cents and did not have to pay interest on this huge debt that we have? Can you imagine, Mr. Speaker, what services we could provide or
what taxes we could cut? Can you imagine, Mr. Speaker, what income we could leave in the pockets of the people of Canada?
That is the problem. It is so clear that we cannot continue to pay more and more of every revenue dollar on debt interest and still be able to provide the services that, let us face it, Canadians now take for granted. Health care is one, as are old age pensions and so on. Beginning in 1987-88, and carrying on into 1988-89, public debt charges have exceeded the annual deficit. In other words, without our large stock of debt we would have a budgetary surplus in each year. We would have a budgetary surplus if we did not have to pay the interest on this huge debt.
This has put us on a treadmill. It has become a major problem because now we are just borrowing money to pay interest. That is insane. There is no end to that. That is why the Minister of Finance brought in the Budget he did. I would like to tell you something. Nobody on this side of the House likes this Budget. That is why I agree with what is going on over there.


Some Hon. Members:: Hear, hear!


John Horton McDermid: Nobody likes it. We do not like raising taxes. We do not like cutting spending but we know that it is needed. If we do not do it now, within the next two or three years we will be spending 50 cents of every $1 collected just to pay the interest. This Government has the guts to come to grips with the problem. Opposition Members have no guts at all. They do not have any idea how to handle this problem.


An Hon. Member:: Are they bankrupt?


John Horton McDermid: Yes, they are bankrupt of ideas. They have not made one suggestion.


An Hon. Member:: They run their Party like they ran the country.


John Horton McDermid: That is right. Yes, I believe their Party is still in debt quite a bit. That is the way that they ran this Government for a number of years too.


An Hon. Member:: No wonder we are in trouble.


John Horton McDermid: What has been going on is that total spending on Government has dropped significantly as a portion of national income. Over the last four years, the Minister of Finance has made sure that program spending has only grown at an average of 3.6 per cent a year,
May 11, 1989

which is less than the rate of inflation. Actually, it is less than half the growth in the economy.
Over that period, costs of Government operations have actually fallen. The costs of operating the Government, not the transfers of moneys to provinces, medicare or to people; whatever it may be, but the cost of actually operating the Government, which is about 16 per cent of our total expenditures, has gone down over the last four years. We have trimmed and we have reduced the annual deficit. It has dropped from 8.6 per cent of GNP, when we took over, to 4.8 per cent in 1988-89. It dropped to $28.9 billion in the fiscal year just ended. That is almost $9.5 billion below the level of what it was when we took over in 1984. However, it is not enough. We have to do more. The measures introduced in the present Budget take us further along the path of fiscal responsibility, the path we have been on since we came to office. The measures reflect the seriousness of the present situation. They are a result of a great deal of work, and some tough decisions.
I sat with the Minister of Finance, along with my colleague, the Minister of State for Finance (Mr. Loi-selle), and our Parliamentary Secretary, and he can tell you the tough decisions that had to be made. I would like to say that paramount in our Minister of Finance's mind in all of those deliberations, was to make sure that the less fortunate in our society were protected.


Some Hon. Members:: Hear, hear!


John Horton McDermid: That was paramount in the deliberations that went on for this Budget.


An Hon. Member:: Breath-taking.


John Horton McDermid: There is my jolly friend from Edmonton, the token socialist from Alberta, chuckling away in the back row. He was not here when his Leader stood up in the House after the Minister of Finance delivered his economic statement in November of 1984 and predicted the greatest doom and gloom for this country. Two hundred thousand jobs were going to be lost-


An Hon. Member:: Two hundred and fifty thousand.


John Horton McDermid: Two hundred and fifty thousand, was it? Two hundred and fifty thousand jobs were going to be lost, and we were going into a recession as a result of this economic statement and the role that the Government had taken. This is how accurate he is every time he
The Budget-Mr. McDermid
stands up and makes a prediction. I turn him right off because he has been wrong every time.
In the next four years a million and a half jobs were created, a million and a half more people are paying taxes, and have worth-while, meaningful jobs. That is what has happened because of the economic guidance we have given this country.
In the few minutes left to me I would like to turn to some criticisms that have been expressed in this debate which I think are unfair. First, one of the things that the Opposition Parties have been saying all along is that this Budget is an attack on families. This is what they state: It is an attack on families. Let me tell you what an attack on families is. The minute a baby is bom in this country-


An Hon. Member:: You tax it.


John Horton McDermid: -that child owes $12,000. Every day that child lives that debt goes up $3. That is an attack on the families. That child and that child's child cannot be paying our debts. That is why we have tried to come to grips with the debt problem and the deficit problem in this country.
I ask the critics to be realistic. The real threat to families is the growing debt. There is no question about that. Without action to control it, our flexibility to take action is constrained by the debt charges.
That has never been discussed by the Members opposite. They have never stood up and said: "Hey, we do have a problem here. We should do something about it. Here is what we propose". Not one of their speakers have done that. I have listened to the whole debate and read the debate, and none of them have done that. The NDP Party says that it has. It said, "bring the Armed Forces back from Europe and that will save money".


An Hon. Member:: Thx the large corporations.


John Horton McDermid: The NDP Party's own figures show that the defence budget will be more by doing that. Its own figures show that. That is not a solution.


An Hon. Member:: Tax the large corporations.


John Horton McDermid: Tax the large corporations. Here we go, let me give you an exaggeration. The House Leader of the New Democratic Party got up the other day and said that 87,000 large profitable businesses in Canada do not pay taxes. That is what he said. Do you know how many large corporations we have in Canada in total, 2,120. He says that we have 87,000 profitable large

May 11, 1989
The Budget-Mr. McDermid
corporations that are not paying taxes. The NDP Party is always exaggerating. I have told the Members a million times, "do not exaggerate".


An Hon. Member:: Where do you guys get your numbers?


John Horton McDermid: I do not know where they get the numbers. I think Ed comes in from outside and plucks them out of the air on his way in. I would like to-


An Hon. Member:: Conclude.


John Horton McDermid: -to be serious here for a moment. I am not finished yet. I would like to talk about asking the Hon. Members to be realistic. Repayment of family allowances and old age security benefits begin when an individual's net income exceeds $50,000.
The measure is progressive. It affects only 14 per cent of the present recipients of family allowance. Less than 10 per cent will end up paying back all of their family allowance. If I ever had a suggestion from the public presented to me more on debt reduction, it was this one: that family allowances should be taxed back from the high income people. That was suggested to me many, many times. I know that my friend from Kingston and the Islands (Mr. Milliken) heard that suggestion from his constituents as well. It is the same with the old age security, there is no question about that.
Mr. Speaker, I notice you are signalling me but I still have time. I watched my hon. friend give his speech and he received about an extra seven minutes-


An Hon. Member:: Order, order.


John Horton McDermid: I would hope that there might be a little leeway in the Chair.


An Hon. Member:: Time. Time.


John Horton McDermid: In any event, Mr. Speaker, our agenda has always been open.


An Hon. Member:: It was well hidden.


John Horton McDermid: It has always been clear, right from 1984, day one, when the Minister of Finance presented his economic statement. It was just not talked about, but proclaimed in that economic statement of 1984 and reaffirmed explicitly in budget after budget and in throne speeches. It was discussed-I get this-we did not discuss it in the last election. I would like to tell you what
happened when I got into all candidate meetings in the last election. I started talking about the deficit. My opponents stood up and said, "You are afraid to debate free trade. You are getting off the subject. We want to talk about free trade. We do not want to talk debt. We do not want to talk deficit". That is what went on in the last election.
I am going to conclude with this: If we are going to maintain the social, cultural and other programs that are an integral part of Canada, if we are going to meet the needs of the people of Canada who need the help most, then we must have an efficient and effective government. We must have a balanced and equitable financial system. We must get out from under this crushing load of debt and get it under control.
I believe the Budget presented by my colleague is an important one for Canada. It builds on what has gone on before. It addresses the problems we face today. It sets out a reasonable set of measures which will enable us to deal with the debt problem and, at the same time, preserve our social programs. I am proud to be able to stand and register my support for it and for the Minister of Finance.


Don Boudria: Mr. Speaker, after listening to the speech I now understand fully what Amnesty International means when it refers to cruel and unusual punishment. I do not envy you having to listen to several Tories across the way. Being the non-partisan person that you are, that must be real punishment.
I want to read a few quotes for you and see if you can try and remember who said them. Let us try this little contest here.
We would cut spending. We would not raise taxes. rIax levels in
Canada are already too high.
Guess who said that?


Some Hon. Members:: Michael Wilson.


Don Boudria: I think my colleagues behind me have it right. It was the Hon. Member for Etobicoke Centre (Mr. Wilson) on March 6, 1984. That person, of course, is now the Minister of Finance.
Let me read another one, Mr. Speaker, and see if you recognize it.
May 11, 1989

Liberals have made election promises. Conservatives have made spending commitments-In the way that I have described it, yes, it is zero (the cost of Tory election promises) -.In those reserves, we have sufficient money to handle the announcements that we made prior to the election and those that have been made since the election was called.


Shirley Maheu: Who said that?


Mr. Comuzzi:: Who said that?


Don Boudria: I am glad you asked. The Minister of Finance on November 11, 1988 as reported in The Globe and Mail.


Some Hon. Members:: Oh, oh!


Don Boudria: Let us try another one to see if people can guess who made the following statement:
We achieved this record (of deficit reduction) with a new disciplined approach to the management of government and its expenditures.
Guess who said that one?


Shirley Maheu: Who?


Don Boudria: That was the Minister of Finance on December 15, 1988. If we were that disciplined on December 15, 1988, why did we have to cut back so much in April of 1989?


Shirley Maheu: Wreck the family.


Don Boudria: Let me see. I have got another one here and it is even better.
In the future, Canada will be doing more, not less for all of you. As long as I am Prime Minister of Canada, social benefits, especially those for the elderly, will be improved, not diminished by our Government -
I guess it is a give-away right there, Mr. Speaker. That was the Prime Minister (Mr. Mulroney) on October 15, 1988, in Summerside, Prince Edward Island.


Mrs. Marleau:: That is terrible.


Don Boudria: I know it is extremely unfair to quote the Prime Minister using his own words, but does the Minister across the way remember those words from the last election campaign? If so, could he explain today why this double-speak and this double-talk on the part of Tories should be endured by any Canadian?


John Horton McDermid: Mr. Speaker, I think that Canadian people are smarter than the Hon. Member opposite. Canadians are beginning to understand the problems we have in this country. They understand why we are trying to do something about it. Do you know something? I
The Budget-Mr. Harvey
think they are prepared to support this Government in trying to tackle this problem. They are far more committed, far more interested than the Opposition Parties are in this problem. I do not think there is any question about that. The Prime Minister said that social benefits will be improved. To my recollection this year senior citizen's pensions will be raised four times and about 4.9 per cent.


Don Boudria: Clawed back.


John Horton McDermid: Here is my hon. friend saying, "Claw back", whatever that means. What we are doing is exactly what his Party asked us to do and that is tax those in the higher income brackets. The Hon. Member is defending people earning over $75,000 a year. That is what he is doing now. The Leader of the Opposition said, and I heard him say it many times, "Tax those in the high income area". That is what we are doing with this Budget. Members of the NDP have said the same thing, "Tkx the rich". It was their campaign, tax the rich. That is exactly what is done in this Budget. Four per cent of senior citizens earning over net $50,000, which works out to about $60,000 or $70,000, somewhere in there, will pay taxes.


Mr. Parker:: Universality.


John Horton McDermid: It is universality. They get their cheques, and it is taxed back, and that is the answer. Yes, our Prime Minister said social benefits will be improved, and they are being improved. There is no question about it.


Diane Marleau: Not to our seniors.


Ross Harvey: Mr. Speaker, every speech I have heard from across the way during the course of this debate has at some point or another included a statement to the effect that the Opposition has advanced not a single idea on how we might come to grips with the deficit and the debt. I must say if that were that the case, I would, in fact, be truly ashamed and I would feel myself compelled not to rise in this debate.
However, I know that even before the Minister's Budget was-well, I was going to say presented-our finance critic had sent to the Minister of Finance a six-page letter detailing a dozen proposals for various budgetary programs that could be used to reduce the deficit and begin to tackle the debt, including six proposals dealing with taxes alone.

The Budget-Mr. Milliken
I understand, and we have had it demonstrated in the last week, that communication within the Ministry is not the most efficient. It is possible that the Finance Minister neglected to share these excellent ideas with his colleagues, both within the Ministry and within his Party. I have a copy for the Hon. Minister. In fact, I have copies for any of the unfortunately benighted Members of the benches opposite.


Mr. Weiner:: Table it.


Ross Harvey: I am sorry, I have not sufficient copies to table. We work on restricted budgets over here.


Some Hon. Members:: Oh, oh!


Ross Harvey: I will just send this over to the Minister, and while it is in transit, might I ask him whether we are really to take seriously his protestations of fairness in the matter of taxes in the Budget? His Government's record, not according to the NDP, but according to the Institute for Research on Public Policy; in the course of this Government's first mandate, for the richest 1 per cent of Canadians, the tax burden was reduced by $3,500 a year, while everyone else's went up. Are we to place the slightest shred of credibility then in the taxation policies of this Government?


John Horton McDermid: Mr. Speaker, I get a charge out of the New Democrats and the various Budgets they talk about. For example, the Hon. Member is talking about tax. He is talking about tax reform a year or so ago when we reduced something like nine or ten different tax levels to three tax levels. The NDP forget that. The Government took 850,000 low-income earning Canadians off the tax rolls. These Canadians do not pay taxes anymore. The Hon. Member fails to mention that. He fails to mention that this Budget increased taxes for high-income people. He forgets to mention that the wealthy in this country who have more ability to pay got an extra surcharge, and we have heard from them too.
The Hon. Member talks about corporations. One of the things the New Democrats do not understand, and they showed their ignorance when they were debating the Free Trade Agreement, Canada is a trading nation. We rely on 30 per cent of our income in this country, three million jobs, many of them unionized, on international trade. If we cannot be competitive with those countries we are trading with, then we will not do any
trading. This gang of bandits would tax these corporations right out of existence because if we followed their tax recommendations and policies, the companies could not compete in the world of trade today, and that is a fact.


Ross Harvey: That is blackmail.


John Horton McDermid: The Hon. Member is yelling "blackmail". That shows the absolute ignorance of that Party when it comes to international trade and its importance to Canada. The Hon. Member should talk to some union members, particularly those in my community who work in the auto trade. He would find out how competitive they have to remain if they want to sell their products to the United States.
Any company that trades has to be competitive. If we tax them out of existence, they will not be competitive. That is the NDP philosophy, and I understand it.
Perhaps the Hon. Member should take time to study this Budget. He would see that high income earners will be paying proportionately more. He will see that the
850,000	who were dropped off the tax rolls are still off the tax rolls. He will see that there was a doubling of the sales tax credit to low income earners. If he did that, maybe then he would be honest with the Canadian people when he criticizes. Perhaps he would be a little more objective.


Mr. Peter Milliken (Kingston and the Islands):: Mr. Speaker, I believe that this is the first time I have had the privilege of rising in the House on other than a procedural matter.


Some Hon. Members:: Hear, hear!


Peter Andrew Stewart Milliken: I have commented on the speeches of a few Hon. Members, but I have not made my own, so I will take advantage of the opportunity since, in a technical way, this is my maiden speech, to say a few words about my riding of Kingston and the Islands and how honoured and pleased I am to represent it in this House. As Hon. Members will know, it is one of the most historic ridings in Canada since it was represented in the first Parliament of Canada by none other than Sir John A. Macdonald.


John Horton McDermid: He is still in your riding, I understand.
May 11, 1989


Peter Andrew Stewart Milliken: His spirit. Kingston has been represented by a string of very distinguished predecessors, and I hope that over the years I am here I will be able to live up to the high standards that have been set by those who have gone before me in this position. I have referred to Sir John A. Macdonald, but I also mention Mr. W. F. Nickle.


Mr. Friesen:: Benson.


Peter Andrew Stewart Milliken: I will come to him. The Hon. Norman McLeod Rogers served a very distinguished career as Minister of National Defence of Canada. The Hon. Mr. Justice William Henderson, as he now is, of the Ontario Supreme Court, served as a Member in this House for many years. The Hon. Ben Benson who Members opposite obviously recall with great affection brought in wonderful Budgets and did not have leaks the way we do today. He served as Minister of Finance and Minister of National Revenue at one time or another.
Of course, my immediate predecessor is the Hon. Flora MacDonald who for 16 years represented the riding in this House and served her country as Secretary of State for External Affairs, Minister of Employment and Immigration, and Minister of Communications. I think she will be particularly fondly remembered by Hon. Members opposite.
I should also say that the riding of Kingston and the Islands, besides its terrific location on the shores of Lake Ontario where the St. Lawrence River flows from the lake and wends its way off toward the Province of Quebec and the Maritime Provinces, contains two of Canada's great educational institutions in the form of the Royal Military College at Kingston and Queen's University, a university very close to my heart as I attended that university and am fortunate to be a graduate of the same.
In addition, Kingston boasts a series of penal institutions, and in many ways it is the penal capital of Canada, having more prisons within the confines of the riding than almost any other place. There are four of them, and there are two other large prisons outside the immediate confines of the riding of Kingston and the Islands, in the riding represented in this House by the Hon. Member for Hastings-Frontenac-Lennox and Addington (Mr. Vankoughnet).
In addition, Kingston has a substantial military base which, fortunately, has not been closed by this Budget.
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An Hon. Member:: You are lucky.


Peter Andrew Stewart Milliken: We are lucky, very lucky. In addition, it has many industries that are well known across Canada and are part of national chains, as well as many smaller businesses that flourish in the community.
Kingston is one of Canada's oldest communities. It was founded in 1673 by le comte de Frontenac and has survived to this day. It is of course known as the Limestone City because of its many beautiful limestone buildings. Kingston is active in preserving its historic past. There are active historical societies that seek to preserve the ancient buildings of Kingston and make use of them for future generations by maintaining them in good condition.
The riding itself comprises the City of Kingston, the Township of Kingston, part of the Township of Pittsburgh, and the three townships that comprise the islands of the riding-Wolfe Island, Howe Island, and Amherst Island. These three islands sit off the south shore of the mainland of Ontario in the St. Lawrence River very close to our boundary with the United States.
Kingston is Canada's second largest retirement centre after Victoria and has a substantial population of seniors. Those people, I must say, are disappointed with the Budget that we are discussing today. I would like to turn now to that Budget.
The Minister of State for Privatization (Mr. McDer-mid) was on his feet immediately before me and gave what I can only describe as an incredible speech. He was shedding crocodile tears about how he hated, as he maintained did everyone on that side of the House, to impose taxes. Honestly we have never had a Government that has imposed taxes the way this Government has. For him to make that rather bold-faced statement and try to maintain that it was an accurate representation of the true feelings of the Government is, quite frankly, unbelievable.
I would like to turn to the attack that has been made on the universality of social programs by the Minister of Finance (Mr. Wilson) in this Budget. I want to deal specifically with seniors, because recently they have decided that it is time to speak out and condemn the Government for the actions it has taken. There is an article in today's The Ottawa Citizen in which the National Pensioners and Senior Citizens Federation is quoted. It has launched its criticism of this Budget. The group sent telegrams, The Ottawa Citizen reports, to the Prime Minister (Mr. Mulroney) and to the Minister of Finance

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on Wednesday protesting the claw-back program the Government has embarked upon. The article quotes the group as saying:
"We think we were betrayed because both the prime minister and the Minister of Finance - indicated there would be no tampering with the social security programs,"- "Seniors were misled by statements that were made during the election".
I submit that that is exactly the kind of thing that has been going on for some time. Citizens were misled during the course of the election campaign. They were told that there would be no change in benefits.
I would like to remind Hon. Members opposite who seem to have forgotten that citizens contributed to their pensions for many years. They paid an old age security tax until 1971 when it was melded into the general income tax revenues of Canada. Having made that contribution, I find it incredible that today, they are not receiving those benefits. They receive them only to pay them all back.
The Minister of State for Privatization tried to justify this move by saying that they were simply taxing the rich, but the only rich that are being taxed by this scheme are the the seniors who are receiving a pension. I suggest that that is unfair-


Mrs. Dobbie:: No, that is mistaken.


Peter Andrew Stewart Milliken: The young wealthy person is not taxed in this way. The taxes only apply to wealthy seniors, and that is unfair. It is discrimination, and those people have contributed to those pensions for years and years. Now they are being taken away.


Dorothy I. Dobbie: That is not true.


Peter Andrew Stewart Milliken: That is true. Read the Budget. The seniors of Canada object to this move and feel that it is unfair. There is no other kind of income that is taxed the way this income is taxed. The only ones who receive this income are seniors.


Dorothy I. Dobbie: I don't want to argue.


Peter Andrew Stewart Milliken: I will argue it with the Hon. Member any day. It is a tax of 100 per cent.
I am sorry to keep drawing attention to the Minister of State for Privatization, but after all, it was his speech that immediately preceded mine. He stood there and complained, as the Minister of Finance whines and complains every day in Question Period, that we never come up with any suggestions for saving money, that we always criticize every cost cutting measure that Hon. Members opposite propose.
We have praised the nuclear submarine cuts. I have another suggestion for the Hon. Members opposite that will save us a good deal of money. They should abandon the rather stupid advertising campaigns to which they are subjecting Canadians as a result of this Budget. Over $2.7 million has been wasted to convince Canadians that the national debt is a problem. How stupid can they get? Honestly, if the Government is going to waste the money of Canadians in this way, surely it should not be complaining about us saying "don't cut here and don't cut there".
We are trying to save programs that mean something to Canadians, not wasting money on advertising in newspapers, on radio and on television trying to tell Canadians that the debt is a particular problem. If Canadians cannot understand that the debt is a problem, they should leave it and deal with it in the Budget. That is what they have done. We do not need a huge advertising campaign with the pictures of loonies with the sides cut out of them to illustrate that the debt is a particular problem. That is an example of waste of money.
In fact, the Government is spending over $90 million a year trying to convince Canadians that its policies are right. Canadians know they are wrong. They do not need to be convinced with ads. I would suggest that the Government pull that advertising campaign at once and save Canadians some of their money. There is a suggestion. Do not let me hear again that there has never been a suggestion from this side on how to save money. I will come up with another if I am forced to.
I have got another way to save money, that is, to cut down the size of Cabinet. We have never had such a huge Cabinet in Canadian history. It has continued from 1984. If this Government were serious about saving money, it would cut down the numbers of members of its Cabinet and save all those salaries and car allowances. There has been no suggestion that there will be any cuts

there. It has been left intact. It is a huge Cabinet, oversized, and, as we saw earlier today, sadly lacking in competence.
I would like to turn to a couple of other items in this Budget that I think are particularly unfair. I would like to turn to the proposed cuts in VIA Rail, a most shocking breach of promise on an absolutely grand scale. Here we have a Government, as I indicated in a comment the other day, that came into office in 1984 promising, with solemn promises by the Deputy Prime Minister in particular, that it would restore VIA Rail to its former grandeur and make it a show case of railway travel for the world right here in Canada. Every single line was going to be improved. The Minister reinstated lines that had been cut and said that they could not do without them and that they were vitally important to our country.


Dorothy I. Dobbie: We found out later that we could not afford to do those things when you guys left.


Peter Andrew Stewart Milliken: We could afford it in 1984 while you were doubling the debt and now you are telling us that we cannot afford it because you have doubled it already. The deficit is going up and up.
The behaviour of Hon. Members opposite is so inconsistent that it borders on the ludicrous. The Hon. Member laughs; she should be ashamed of the Government that she is supporting. These cuts to VIA Rail fly completely contrary to the promises made by the Deputy Prime Minister and many other members of the Cabinet opposite. The Hon. Member for Winnipeg South interrupts and suggests that I am not being fair in my comments, but I tell her that I am being perfectly fair in my comments. They are accurate. She should pay more attention to the facts.
Another thing I would like to turn to deals with VIA Rail and the proposed cuts. These continual reductions over a four-year period will have a devastating effect on this company. In 1987 VIA Rail paid $179 million in trackage fees to CN and to CP. Last year it paid $103 million for the privilege of using those tracks. VIA Rail was created in order to save those two companies money, one of which is wholly owned by the Government, CN. In fact, its President has been appointed head of VIA Rail.
Those companies have these tracks, and they were relieved of their obligation to run passenger service so that they could make more money, in both cases. They
The Budget-Mr. Milliken
applied to the Canadian Transport Commission to have their obligation to carry passengers lifted so that they did not have to lose money on passenger service. The Government of the day created VIA Rail to take that particular service out of those two railways and put it in a new corporation, VIA Rail, where the operation would be carried on.
VIA pays $100 million to subsidize the maintenance of tracks on those railways. It was created for the sole purpose of preventing them from losing money on passenger service. I suggest that they should be getting that service for free. Instead of cutting the operation grants, the Government should introduce legislation to say that they get it for free. Then there would not be a need to cut the operating grants because $100 million would be saved right off. That is more than is being cut this year.
The Hon. Member for Winnipeg South shakes her head. I say to her "go and look at the facts". Canadians have built the national train service. We have paid for it over the years. It was a precondition of the establishment of this country that we have a rail line to British Columbia. Now this Government is seeking to destroy our railway system. I say that is wrong, that is improper, and that the Government ought not to be doing it. The largest committee room in this building, as far as I know, is the Railway Committee Room behind us. It was called such because of the massive amount of time Parliament has spent on railways over the years. Now, with a stroke of a pen, the Minister of Finance says that they are going to carve up VIA Rail, cut it out, sell it off, sell off chunks of the service, sell off lines here and there, get the provinces to operate it, and shift the expense and the burden to somebody else. The Minister is incompetent to organize the finances of Canada in such a way-and he has had five years to do it-that that burden can be properly shouldered by the people of Canada today. That is the problem.
The question of child care is another one that I would like to address. I recall during the last campaign how much we heard about child care, how important it was, and how frightful it was that the other place had held up the child care legislation. Let us see the record in this regard. I am sick and tired of listening to this drivel. I heard it all through the election from my opponent.
The child care Bill was passed in this House on September 26, 1988. It went to the Senate for first

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reading on September 27. It was called for second reading on September 28 and got through second reading. Parliament was dissolved two days later, on September 30. Yet the Minister of Finance has the gall to stand up and say that this was held up by the Senate. It was four days in the Senate, and we are told that the reason we do not have the child care Bill passed today is that the Senate held it up. That is just rubbish.
The Senate was not taking an undue amount of time on this. The Senate offered to stay in session for another day in order to pass this Bill, but the Prime Minister would not have it. He said: "No, no. We are going to the people. We are going to dissolve Parliament". He kept saying all through the campaign that we would have had child care if it were not for the Senate. We now see that in fact that was not accurate. He misled Canadians during the election.
The Minister of Finance stood up the other day and said that we could not have child care because we could not afford it. If we cannot afford it today, why could we afford it in October or November? He did not want to admit that we could not afford it. It was a complete deception of the Canadian people. They were not told the facts. The Minister of Finance knows it, the Prime Minister knows it, and I suggest that his supporters know it.
I would like to turn to CIDA because this has to be one of the most vicious and nasty cuts that we have seen in this whole Budget. CIDA's grants and contributions are being cut by $200 million. That in itself is appalling, but I suggest that what is worse is the increase in the costs of operating CIDA. They have gone up by $19 million-$19 million extra to administer $200 million less. It is a shocking indictment of the priorities of this Government-cut aid to Third World countries and increase the payments to the people who administer the funds. That is what is going on in these Estimates. The Hon. Member should read the Estimates. I refer her to page 9-3 of the Estimates that were tabled in this House. It is completely shameful. The Hon. Member should read the Estimates.


Mrs. Gibeau:: You are misleading the people of Kingston.


Peter Andrew Stewart Milliken: I invite the Hon. Member to read the Estimates.


Marie Gibeau: I hope they do not listen to you.


Peter Andrew Stewart Milliken: I hope that they do not listen to the Minister of Finance. The stories of misleading and intellectual dishonesty during the last campaign are coming to light every day in the House with new revelations of incompetence and new stories of financial horror the Minister of Finance conjures up in order to convince Canadians that what he is doing is right.
The final statement in the Budget must be for Canadians to look at the amount of tax increases and then look at the amount of cuts. The deficit has increased; it has not gone down. It has increased, despite this huge tax increase. I suggest that the reason it has increased so much is that government spending is out of control. In spite of the announced big cuts in defence, and in spite of the big cuts to CIDA, and the nasty tax back on Old Age Security earners, the Government has failed in its attempts to bring the deficit under control. It has failed to convince Canadians that what it is doing is right. I suggest that it has done the opposite and convinced Canadians that it is unfit to remain in office.


Dorothy I. Dobbie: I congratulate the Hon. Member opposite, my erstwhile travelling companion, on his fine maiden speech which was very well done. The Hon. Member certainly gave us an interesting piece of history. He suggested to us that we should continue to subsidize VIA Rail because the nation was built on the promise of a railroad from coast to coast.


Peter Andrew Stewart Milliken: That's right.


Dorothy I. Dobbie: I am questioning his logic. Is the Hon. Member suggesting that we should also continue to use the horse and buggy, because traditionally this country was built on that type of mode of power?
We heard from the Hon. Member opposite a litany of complaints about cut-backs. He also suggests that government spending is out of control. However, the Hon. Member does not seem to have any concrete suggestions for how we can fund some of the programs that he holds so dear to his heart. He made some casual suggestion about cutting some advertising program. However, he has not offered one item of real substance.
May 11, 1989

Could the Hon. Member explain to us his program to reduce the debt and the deficit? Perhaps the Hon. Member could give us an outline of his program.


Peter Andrew Stewart Milliken: I thought I had given some ideas to the Hon. Member. I suggested to the Hon. Member for Winnipeg South that the advertising budget of the Government be cut. The Hon. Member should use her influence with the Ministers in front of her to do this. If she has been attempting to do so, I believe the pleas have fallen on deaf ears.
I thank the Hon. Member for her question and comment. The Hon. Member knows as well as I do that she has a duty to represent her constituents. I would like to know their views on the cuts to VIA Rail. Do they know that the Hon. Member is supporting this scheme to slash VIA?


Dorothy I. Dobbie: Yes, they do. I am encouraged.


Peter Andrew Stewart Milliken: I am glad that she encourages them to buy up these cuts. I have a feeling that, come the next election, they may remember her support and may have something to say to her about her chances of being re-elected.
Every Member on the other side of the House, including the Minister of Finance, whines and whimpers that we are not suggesting ways to cut. When we suggest ways, they are ignored. Today I have made two very sound suggestions to save millions of dollars, and there has been no positive response from the other side. I do not know why the Minister of Finance does not run down from his office now and say: "Yes, all right, we will cut the $92 million from advertising". We have suggested something, and I do not know why he does not come down and agree. Instead there is dead silence, and all we get is a statement that we have not suggested anything.
We are not the Government. We are the Opposition.


Benno Friesen: There is a very good reason.


Peter Andrew Stewart Milliken: It will not be for long. I can tell Hon. Members that there is no need for us to come up with all the suggestions to help them run the Government. That is not our job. Our job is to look at the proposals they make and ask if those proposals are fair and just in the eyes of the people of Canada. I have stated that the proposals the Government has made are unfair and unjust. They are discriminatory in that they are taxing the senior citizens of the country, the people who have
The Budget-Mr. Young
worked and contributed to the schemes that we have in place. Those are the people the Government is depriving of money, and I suggest that that is unfair. Our job is as an Opposition. The Government's job is to propose, and our job is to oppose.
However, I have come up with suggestions that are falling on deaf ears. Hon. Members opposite are so enamoured of their misguided proposals that they feel to convince the Canadian people of how good these misguided proposals are that they have to advertise and put it all through the papers. There is $90 million worth of advertising to convince Canadians about the wrong policies that are being pursued.
If the policies were correct, there would be no need to advertise. Perhaps that is why we have to go through the charade of spending $90 million to convince Canadians. Perhaps that is why we need so many members of Cabinet. There have to be more spokesmen to sell a bad policy than to sell a good policy. We on this side of the House are selling good policies to Canadians.


Mr. Young (Beaches-Woodbine):: I have a question for the Hon. Member for Kingston and the Islands. I too wish to congratulate him on his maiden speech.
I wonder if the Member would agree that the Government seems to have something against pensioners. I do not know what its hang up is, but it has something against pensioners. The Hon. Member may recall, even though he was not in the House, that the Minister of Finance, when he was attempting to defend his proposal to deindex pensions in the 1985 Budget when speaking to the Chamber of Commerce in Montreal, made the statement that he did not think there were enough rich people in Canada, and this was why he was attempting to deindex old age pensions. We all know that the Minister has been preoccupied.


Benno Friesen: A little bit of honesty.


Neil Young: Did the Hon. Member say "lies"?
In the last four years the Government has consistently attacked pensions. There is no question about that, and it is doing so again.
My question for the Hon. Member for Kingston and the Islands is the following one. In establishing government priorities, surely to goodness the Government should be aware that there has been an explosion in the number of food banks across the country. The Canadian

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Association of Food Banks released a press release today pointing out this very fact.
In terms of establishing priorities, surely Government has an obligation to say to people who are living in abject poverty that it wants to do something for them, rather than the 60,000 very profitable corporations that ain't paying a red cent in income tax. That is the type of priority the Government should be addressing, and it is not.


Peter Andrew Stewart Milliken: Of course, I agree with the comment made by the Hon. Member. It is accurate. Hon. Members opposite laugh when they hear the facts. Seniors are being very badly treated in the Budget. The record of the Government is a very dismal one in respect to seniors. Perhaps Hon. Members opposite represent suburban areas of Canada and not the downtown areas that some Members here represent. The Hon. Member for Winnipeg South is a prime example. We know about the problems faced by those people who are deprived of a livelihood by the Government with these vicious taxes.
I wish to turn to another matter, but I do not wish to provoke Hon. Members opposite too much. However, during the election campaign my Conservative opponent was a person very near and dear to the hearts of Hon. Members opposite. During an all-candidates debate she was discussing the fact that the Conservative promises made during the election were not going to cost Canadians a cent and that it was all looked after in the financial plan of the Government. I asked if it was not in the Budget and she turned to me and said: "Peter, you don't understand government finance".
I understand government finance. I understand that to pay for these promises, the ones that are not broken, we are seeing another huge tax increase in Canada. The seniors are being taxed to the hilt.


Dorothy I. Dobbie: Seniors are not being taxed to the hilt.


Peter Andrew Stewart Milliken: They are being taxed to the hilt. They are being taxed 100 per cent of their pension income if their income exceeds a certain figure.


Dorothy I. Dobbie: Yes, a million dollars a year.


Peter Andrew Stewart Milliken: It is taken out of their limited incomes by the new sales tax. That is how the Government is paying for those promises. That is the financial plan of the Government. The financial plan always was to hike taxes and use the additional money to pay for the promises it chose not to break. It is a shocking record of financial organization and mismanagement.
[Translation\


Mr. Deputy Speaker:: Resuming debate. The Hon. Member for Bourassa (Mrs. Gibeau).


Marie Gibeau: Mr. Speaker, I rise today on behalf of my constituents in Montreal North- Bourassa to support the Budget brought down by the Minister of Finance (Mr. Wilson). When I talk to people in my riding, to men and women representing various interest groups, to my friends and family, they all say I am concerned about so many issues: the environment, health care, ageing of the population, immigration, the declining birth rate, and especially Canada's debt. And the last one is very important. How not the Government, but our society deals with these issues will determine the quality of life in Canada in the years to come. Today, I want to say to my constituents in Montreal-North- Bourassa that our Government not only listens but acts to ensure that these problems are under control and will be solved.
The previous Government was in charge of the destiny of Canadians for nearly 20 years. In charge is perhaps a bit exaggerated. The previous Government wanted to be popular and fell in with the fashion at the time which was to live for the here and now. We have experienced the disastrous consequences of this laissez-aller approach in all social and economic sectors of our society. Many of the problems we are having today, and the debt is the most crucial one, are the result of those years of carelessness and neglect. The Liberal era was a time of instant gratification, of disposable just about everything which created the concept of planned obsolescence.
As approaches go it was not reprehensible, except that in management terms, the cricket's philosophy, as opposed to the ant's, left Canada without any room to manoeuvre when it was necessary to pull back. It is of course much easier to hand out presents and say yes than to ask people to be prudent and to say no. However, there comes a day when we have to choose between being popular and being responsible. Anyone who is
May 11, 1989

responsible for raising children knows this, and anyone who is responsible for making others go the extra mile know this as well. Unfortunately, the previous Government took the easy way out and decided to try and please everyone. As the saying goes, however, gouvemer c'est prevoir. And considering the statistics, I think we have every right to blame our predecessors for poor planning .
Public debt has existed in Canada since Confederation. But it has grown too big in the last 20 years. Borrowing per se is not bad. Canadian consumers borrow to pay for houses, education, cars. Companies borrow to build new factories and buy raw materials to make their products. Governments also borrow to pay for social programs such as unemployment insurance or health insurance, to finance megaprojects like space research or the development of the Old Port of Montreal, to pay public servants' salaries or to heat the Parliament Buildings. Governments also borrow to invest in the future through scientific research and development as well as to subsidize companies and thus promote economic growth. In itself, borrowing is a useful, if not necessary, economic tool, as anyone who has a credit card knows.
However, when expenses are greater than revenues and the money borrowed cannot be repaid within a certain period, a deficit is created. This is called living beyond one's means. Accumulated deficits make up the debt and when we have to borrow to pay the interest, without even being able to repay the principal, we know that the situation is dramatic.
The Government last had a budget surplus in 1969-70. Since 1970-71, the federal Government has spent more every year than it took in. In short, the Government has run a deficit every year and to make up for this shortfall, it has had to borrow. This is normal during tough economic times, but why has the Government continued to spend more than it took in when the economy was going well?
In hindsight, the Government has been too eager in periods of prosperity to satisfy the desires and demands for new services and programs. The previous Liberal Government has too often consented to the creation of new programs or tax shelters instead of resisting it. Short-term needs have sometimes prevailed over longterm consequences. Since 1984, our Government has made an all-out effort to correct the situation. But, Mr. Speaker, the fact remains that loans contracted over 20 years translate into a colossal debt that keeps getting
The Budget-Mrs. Gibeau
bigger. At the end of last month, annual deficits accumulated over the last 20 years had brought the public debt up to $320 billion. As the debt was growing, so was the proportion of public funds used to service it. Last year alone, interest on the debt amounted to $33 billion.
In a way, the debt has reached a critical point. This year, Government revenues from taxes and other sources will finance all our economic and social programs, national defence, as well as our international commitments. But, Mr. Speaker, the crucial point is this: every dollar borrowed by the Government, and probably a little more, is used to pay interest on the public debt. In other words, we are not even paying back the capital. We are simply borrowing to pay more and more interest on the debt. You don't have to be a financial genius to figure out that a person who must borrow money to pay interest to his bank is not in good financial shape.
You know as well as I do that the $33 billion used to pay interest could be better spent elsewhere. That amount represents twice what is spent on elderly benefits, three times what is spent on national defence, 20 times what is spent on job creation and training and 24 times what is spent on all regional development programs. Seen in this light, debt charges bring us to a sad conclusion. Debt interest payments do not in any way contribute to the improvement of Canadians' living standards. The debt problem got worse, but it is the result of 20 years of a spendthrift Government. From the beginning of its first mandate, the Progressive Conservative Government has made fiscal responsability one of its priorities and that has not changed.
Over the past four years we have severely restricted program expenditures and they are now less than the revenue we collect.
As I pointed out earlier, a key element of our progress has been a renewed and systematic effort to eliminate waste and boost public service efficiency. For example- and I draw this to the attention of my colleague on the other side who made unfounded remarks a moment ago-more than 10,000 public service jobs have been eliminated. Operating expenses have been reduced in all departments, productivity has gone up, and that is just the beginning. A number of corporate grants have been cut down or eliminated altogether. Many tax loopholes which were a boon to companies and high income individuals have been closed. A minimum tax has been

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The Budget-Mrs. Gibeau
implemented to improve the personal income tax system.
Program expenditures which accounted for 19 per cent of national revenues four years ago were brought down to less than 17 per cent last year.
Lower expenditures and higher revenues enabled us to slow down the growth in the public debt. In 1984-85 the debt was going up at the annual rate of 24 per cent. Last year we brought that rate down to 10 per cent. But, given the size of the current debt-$320 billion-the growth rate is still to steep.
All things considered, financial responsibility combined with the implementation of constructive economic policies have strengthened the economy. Our approach is producing results. Canada's economic growth since 1984 ranks among the best of all industrialized nations. Investment growth has been strong. Nearly one and a half million new jobs have been created. Generally speaking, Canadians have enjoyed a much greater economic security.
The Budget proposed by the Hon. Minister of Finance (Mr. Wilson) is a turning point for Canada's future. It recognizes that our lifestyle is being threatened and this Government has started to effectively and courageously meet that threat.
This Government is taking its responsibilities. The Bourassa people, when voting for the Conservative Party, asked us to protect the quality of their present and future life, as well as Canada's reputation among our economic and social partners.
The Budget put forward by the Minister of Finance aims at protecting our generous social programs, our high standard of living, our markets in a sovereign country that is respected abroad, our inheritance made vulnerable by the ups and downs of interest rates. The challenging measures in the Budget reflect the seriousness of the situation. Some tough decisions had to be taken, but this is what the people elected us for. This Government opted for balanced measures, reflecting regional characteristics and requiring more from those who are in a better position to contribute. We succeeded in greatly reducing program expenditures, after reviewing them to ensure that we get the maximum results from taxpayers' money.
In the Budget, this Government was mainly concerned with people and families. The Government is injecting more money into direct income support for Canadians, more than for any other program.
I would like to tell my constituents in Bourassa that Canadians 65 and over are eligible for old age security pensions, and families with dependent children under 18 are eligible for family allowance payments, regardless of the need for assistance. Those benefits are subject to personal income tax.
The Budget proposes to recover those payments from high- income Canadians. They will refund OAS and family allowance benefits at a rate of 15 per cent of individual net income excluding $50,000.
Repayments will be calculated on the income tax return and will be deductible in determining the amount of income subject to personal income tax. The $50,000 threshold ensures that only benefits received by higher-income Canadians will be subject to repayment. Lower-and middle-income Canadians in receipt of these benefits will not be affected. And of course, we are talking about a net income of $50,000.
The Minister of Employment and Immigration (Mrs. McDougall) recently announced a new labour force strategy for the 1990s. It will based upon consultation with the private sector to design programs to train Canadians and upgrade their skills so that they can better meet the demands of the quickly evolving labour market.
Expenditures will not be reduced. The size of the unemployment insurance program will remain, but it will be a better program.
In December 1987, the Government announced a national strategy for child care, which consists of new tax assistance to families with pre-school children and children with special needs, and a fund to support innovative initiatives to meet child care needs. The new tax assistance measures are in place, and before the end of its term of office, the Government will act to meet its child care objectives.
Mr. Speaker, the Minister of Finance (Mr. Wilson) had the courage to make the decisions that were necessary. Our Government has acted responsibly. However, the Government is elected by the people, with whom it forms a partnership. The debt is a national problem, and

the success of these measures depends on the understanding and commitment of all Canadians. Only if it is prepared to make such a commitment will our country be able to continue to afford the social, cultural and economic programs that are the very expression of our personality as a nation.
By what we do, we can ensure that our children's opportunities will be unrestricted. We have a duty to pass on to them the same advantages that we inherited and especially, to offer them the province of a better future.


Jim Karygiannis: Mr. Speaker, I was amazed while listening to the Hon. Member. I was amazed because time and time again the Hon. Member praised the Minister who, in the reality of this world, we can say took the Canadian public and stuck it to them.
I am wondering how the Hon. Member could be proud to be part of a Government which, in 1984, said: "Do not worry about it. We will not touch them, they are a sacred trust". In 1985 Members of that Government had to back off. In 1988 they said the same thing: "We have every nickel accounted for-every little nickel".
Members opposite have called our Leader a liar.


Some Hon. Members:: Shame!


Jim Karygiannis: I am saying, will the real liar please stand up. Of course, lo and behold who rises-


Dorothy I. Dobbie: You are walking on thin ice.


Jim Karygiannis: In today's paper the Government is quoted as saying: "Jobs, jobs, jobs". In an article in the same newspaper it states that free trade is the culprit in the closure of Toro Co. Ltd.'s only Canadian plant in Manitoba. "The Minnesota-based Toro announced Wednesday it is closing the plant, which opened in 1985 after receiving $720,000 in government aid."
Another article in today's newspaper states:
Canadian auto parts maker Galtaco Inc. is closing its doors in
Canada, affecting about 400 workers -
In Orillia about 260 people will lose their jobs at the same company.
The Budget-Mrs. Gibeau
How can the Hon. Member stand and say that she is proud of her Government? Members opposite should be ashamed of themselves. Not only are they willing to put in place a national sales tax without consulting the provinces, but they say: "If you do not like it we will go ahead and do it alone". As if the national sales tax that the Minister of Finance wants to bring in is not bad enough, he leaked the Budget also. That sales tax will cost the average person thousands of dollars every year. The average person who goes to McDonald's for breakfast will have to pay an extra 40 cents. It costs $5 for a decent breakfast. Now it will cost him $5.40.
Members of the Government state that they have created 1.4 million jobs. Yet those jobs pay only $3.50 per hour.
I have one question to ask of the Hon. Member. How can she stand up to say: "I am proud of my Government"? How can she stand up to say that she is proud when jobs are being lost?
I am wondering if people in my riding are not different from the people in her riding.


Some Hon. Members:: Yes.


Jim Karygiannis: Are the people in my riding stupid? I will tell you, Mr. Speaker, my riding was represented previously by a Conservative Member of Parliament. Do you know what they did to him? They kicked him out. I am wondering when the people of Canada will do the same to this Government.


Marie Gibeau: Mr. Speaker, I would like to thank the Hon. Member of the Opposition for giving me this opportunity to say how proud I am of our Government and how proud I am of our Minister of Finance (Mr. Wilson). I am very proud to be a part of a Government that has both the courage to identify serious problems and the courage to propose solutions.
Mr. Speaker, I have the figures here, and I will read them in English because I think the Hon. Member did not quite understand what I said. I suppose he doesn't speak the language. It says here:

One million, four hundred and thirty-two thousand jobs have been created in the 54 months since September, 1984, including 247,000 in the past year. In contrast

May 11, 1989
The Budget-Mr. Whittaker
only 358,000 jobs were created under the Liberals in the 55 months between February, 1980 and 1984. That is three, almost four times the number of jobs. Since September, 1984, jobs have been created at an average rate of 26,519 a month as compared to the Liberal monthly average of 6,509.

Mr. Speaker, that is why I am proud of our Government, and it makes me furious to see the Opposition deceiving Canadians with their half-truths. They take facts and they twist them, treating their fellow citizens as if they were unable to face reality. The people who elected you, the people who elected us-our fellow Canadians-have a right to know the facts about their country's debt and their country's finances, and our Government has the courage to give them that information so that they will understand and support the courageous measures we are taking.


Mr. Deputy Speaker:: The Hon. Member for Saskatoon-Humboldt (Mr. Hovdebo) on a question or comment.


Mr. Hovdebo:: Mr. Speaker, I would like to congratulate the Hon. Member on her presentation. I would like to comment and ask a question. The most chilling part of this particular Budget is the fact that over the years, even as the Government has reduced the Public Service by, as it suggests, 10,000 jobs, there have been massive increases in taxation. It has had made massive program cuts and it is proud of them, it says. The deficit has gone up by about $1 billion to $31.5 billion. The accumulated debts, if we are to understand the Auditor General, have risen to $340 billion or $350 billion. Interest rates have gone up as well. This Government is keeping them up. We are told that a 1 per cent reduction in interest rates would reduce the deficit by $1.5 billion.
I would like the Hon. Member to defend the Government's policy of keeping the interest rates high.


Marie Gibeau: Mr. Speaker, my Hon. colleague must know that interest rates are not solely dictated by the Bank of Canada. We must borrow on world markets to
make our interest payments and that is exactly why our Government is presenting a Budget that will enable us not only to reduce our deficit but also eventually our debt in order ot protect our country from variations in interest rates. That is why we presented a tough and demanding but certainly very courageous Budget which protects people first, as I said earlier, by making sure that the people who benefit from our programs are those who need them the most.


MESSAGE FROM THE SENATE
Mr. Deputy Speaker:: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill C-14, an Act for granting to Her Majesty certain sums of money for the Government of Canada for the financial year ending the 31st March, 1990, with one amendment.




[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.
Mr. Deputy Speaker:: We will resume debate with the Hon. Member for Okanagan-Similkameen-Merritt (Mr. Whittaker).


Mr. Jack Whittaker (Okanagan -Similkameen-Merritt):: Mr. Speaker, it is always a pleasure to get up and speak on any Bill, but in particular I am pleased to be able to speak on a measure as important as the one presently before the House. I am always awed by the surroundings and the history that this place brings to me, and I am astounded by this Government and the measure that is before us at the present time.
I am astounded because throughout the last election we were told who would be the best Party to manage the economy into the future. It has been proven, I would
May 11, 1989

suggest through this Budget, that it is certainly not the Government that sits on that side of the House.
It is certainly not the Government and the Finance Minister (Mr. Wilson) and this Prime Minister (Mr. Mulroney) who are going to lead Canada into the economic future on their white chargers. I would suggest that this Budget is nothing but a blueprint for failure.
I point to a recent Globe and Mail article which quotes the Conference Board of Canada. It states that the federal Budget could bring Canada close to a recession by the end of this year, and will virtually guarantee no economic growth during the rest of 1989.
Calling the Budget inflationary, the Conference Board chief economist, James Frank, said that job losses and larger taxes from the Budget will reduce personal disposable income by $5 billion next year, in large part through the $2.2 billion that will be collected in additional personal taxes.
That is the blueprint for the future. The Government has brought down a Budget on the backs of the small wage earners, on the backs of small business, on the backs of agriculture, on the backs of the unemployed, on the backs of the pensioners, and it expects us to believe that it is the saviour of the economic future of Canada. Nonsense. It has shown where its priorities are.
A question raised earlier by my colleague suggests that the Finance Minister back in 1985 told us that there were not enough rich. I would suggest that this Budget shows part of that agenda, that he is trying to create more rich on the backs of the poor. I suggest that we in Canada will not stand for it. We in this comer of the House will not stand for it. We intend to show those people in Canada exactly what you, the Government, is doing to them.


Mr. Horner:: What you did to Manitoba.


John R. (Jack) Whittaker: You are not kissing them before you are creating the problem.


An Hon. Member:: Shame.


Robert Nesbitt Horner: Your record is good.
The Budget-Mr. Whittaker


John R. (Jack) Whittaker: Mr. Speaker, if I might, for a minute, now that I have awakened the Member, I would like to talk a little bit about how this Budget will affect my area.
When I read the Budget I thought about my area, Okanagan-Similkameen-Merritt, and what it has. I looked at the tax increases, the two per cent increase in the federal surtax, a 15 per cent hike in unemployment insurance premiums, increases in sales and excise taxes. I understand that will pull hundreds of dollars out of taxpayers' pockets. I looked to see how they will benefit by these tax increases.
Instead, what did I find? I found a one per cent cut-back in health and welfare payments, cuts in co-op and rental housing, cuts in regional development, cuts in child care, cuts to VIA, cuts in the tourism budget, proposed cuts to crop insurance, cuts to the Federal Business Development Bank. I looked to see what was missing. There was nothing for the environment or the infrastructure so badly needed by municipalities. Then I looked to see how this will affect my area and what will be directly affected.
In the Boundary country and in the Merritt-Princeton area we have a major mining industry. I looked in the Budget and found out, yes, there are cuts there too. There are cuts to the mining exploration development area. We have forestry in Grand Forks, Midway, Greenwood, Okanagan Falls, Penticton, Princeton, and Merritt. Through these cuts I find that, yes, my areas will be hit by cuts to reforestation and cuts to regional expansion. I looked further and saw agriculture which is one of the major industries in the Okanagan part of the riding. There is nothing in the Budget to help the agricultural industry. In fact, there are major cuts once again.
There are cuts proposed to the stabilization programs and there is nothing to assist small business to produce value added products. My friend says that it is a show- and I suggest that that is correct-of harmonization under the Free Trade Agreement once again.
What is there in my area that will really be affected aside from that? Tourism is of major importance. I spoke to the Chamber of Commerce in Penticton recently. I was told that the Okanagan area has over two million tourists a year who visit and spend well over $88 million, representing 50 per cent to 60 per cent of direct and indirect hospitality jobs. Of these almost 20 per cent are tourists from the United States, Japan, Europe, and other countries. This industry will be directly affected by the $10 million in cut-backs to the tourism budget, $10

May 11, 1989
The Budget-Mr. Whittaker
million that prior had been set out for advertising and for the pursuit of tourist dollars from abroad. We are losing that under this Budget. In an area where tourism is so crucial, I suggest that that is totally unacceptable to the people of my area and certainly to the people of British Columbia who depend on tourism to a great extent for their incomes.
It surprises me again seeing this Government cutting back on the tourism budget when, as a member of the regional board of Okanagan-Similkameen, we recognized how important tourism was to our area and set aside some budget for advertising to ensure that people knew about our area.
Yet, what do we have? Instead of cutting back on the $10 million plus which the Government is spending on advertising to push some of the other programs which it cannot sell to the people and spending that money where it can be used, it is spending money on nonsense such as advertising this Budget which is indefensible. That money should be used in the tourism budget where it would create employment and productivity within our communities. It would take the people off the unemployment rolls which, incidentally, in my area are over twice the national average.
This Government, after diddling with the GATT, the Free Trade Agreement and agriculture, is now nailing coffins by pulling money out of the tourism budget. That, in our region, is unacceptable, totally unacceptable. We will fight for our rights and for the tourism budget. We will not accept without a fight what the Government is doing to the area of Okanagan-Similkameen-Merritt and the Boundary country.
I would like now to speak about small business. The small business area recognized by Statistics Canada as having created 70 per cent of all employment between 1980 and 1988. What has this Government done to assist small business, to recognize the contribution which the small business community has given to Canada since Confederation, but particularly in the last eight years? The Government has now put the unemployment insurance on the backs of the employer and employee. The Government has stepped out of the unemployment insurance program where it should be to ensure that it continues. This is another step in the harmonization of
the Free Trade Agreement. The Government is looking to please the Americans instead of looking after what we have and what we should be looking after in this country.
What else did the small business person get? The Federal Business Development Bank has helped a little bit-


Mr. James:: A mighty little bit.


John R. (Jack) Whittaker: -although it seems to look to larger business for loans. The one program that is of benefit to small business is the provision of advice on management services. I had occasion on the weekend to refer a small business person to the FBDB for that specific service.
What do we find in this Budget? A cut of $13 million out of the management service area of the Federal Business Development Bank. The one area in that bank that actually helps small business.
The small businessman often is a person without many skills who wants to be his own boss. He needs that assistance. He needs all the help that he can get. He needs someone to turn to. That service has been offered by the Federal Business Development Bank and has been suggested as a service to be added to the Farm Credit Corporation, to assist farmers in setting up their businesses.
What have we got? We have the small businessman getting the shaft once again from the Government which says it is the friend of small business. I suggest that the Government is not the friend of small business. It has been shown time and again that the agenda is a large corporate agenda which we have seen from year to year since 1984, and it is the agenda that is again before us now.
I saw with interest a recent story in The Financial Post which said that small firms may be hardest hit with the implementation of the new tax. It points out a number of things that have been of some concern to me when looking at how the tax changes will affect small business. It deals with accounts receivable for service industries and refers particularly to advertising agencies, but could also refer to lawyers, accountants and computer outfits that offer services to the public. When those companies bill for their services, they must add the 9 per cent service tax under the proposed value added tax the
May 11, 1989

Government has given notice it will bring in, and they must then remit that to the federal Government.
What happens when a small businessman has to write that off? He has to come up with that money when he bills for his services. There is not much room built in for him to defer because he is penalized. He has to come up with the money. I can tell Hon. Members, as one who has worked for small businesses, that a small business person with a marginal corporation cannot afford that extra $5,000 or $8,000. In small towns such as those I represent, he would need that money to keep his business going. He would need that money to feed and clothe his children and to pay his mortgage.
The Government does not care, I suggest, for the small business person. The Government cares only for its corporate friends.
The article also points out that probably hardest hit will be Canadian magazines which are already reporting flat incomes this year. They will have to charge tax on subscriptions which are very price sensitive. This is another example of the Government threatening a part of our culture as it did through the Free Trade Agreement.
There is one hope. The final paragraph of the article says that Saul Muskat, a Toronto accountant, points out that it is creating a whole new specialized industry. There will be a lot more work for accountants and tax lawyers. That is not good enough for those of us who care for average Canadians. We want a Budget that is fair to everyone. We want a Government that will tax large corporations and have them pay their fair share. We want a Government that will recognize that there are others in Canada than large corporate entities and wealthy land owners and employers. We want the Government to recognize that there are many of us in Canada who do not make a lot of money and who cannot afford to pay the extra taxes and have the added cut-backs.
If I might, I would move on to pensions for seniors. In 1988, the Prime Minister was quoted as saying:
Let me say a special word to the senior citizens.
The Budget-Mr. Whittaker
He said this in Summerside, Prince Edward Island, an area that he has now shafted once again. He said:
-in the future Canada will be doing more, not less, for all of you. As long as I am Prime Minister of Canada, social benefits, especially those for the elderly, will be improved, not diminished, by our government which -is committed to social justice and fairness for Canadians.
Well, what did we get this time? We got some of that social justice. We got some of that fairness for seniors. Once again, as it did in 1985, the Government is attacking the universality of social programs, just as it was predicted it would do during the election campaign and during the debate over the Free Trade Agreement. It is part of the harmonization process, as much of this Budget is. It is an outright attack on seniors and social programs. I say to the Government, shame on you.
Back in 1985, the National Pensioners and Senior Citizens Federation led a fight against the Government when it attacked the old age security. Once again, this organization is starting to mount an attack, and I add my voice of support to that group. There is an article in The Ottawa Citizen today which points out that the federation is shocked that the Government is shaking the underpinnings of the Canadian social safety net.
Les Batterson, the federation president, says that they think they have been betrayed because both the Prime Minister and the Minister of Finance indicated that there would be no tampering with social security programs and that seniors were misled by statements that were made during the election.
I feel sorry for Mrs. Mulroney. I know she is a woman beyond criticism. The only criticism I might have is that she should teach her son that he should pay a little more attention to the truth. It appears that he has been a stranger to that recently. We saw how he reacted once he proceeded to tell seniors what he would do for them. He has done it, but he did not do what he said he would do.


Jean-Guy Guilbault: Mr. Speaker, I rise on a point of order.


Mr. Deputy Speaker:: The Hon. Member for Drummond on a point of order.


Jean-Guy Guilbault: Mr. Speaker, the Hon. Member is attacking a somewhat important figure for the govern-

May 11, 1989
The Budget-Mr. Whittaker
ment of Canada. I think he is out of order. I would even ask him to apologize and to withdraw what he said.


Mr. Deputy Speaker:: A point of order was raised by the Hon. Member for Drummond as to the use of possible unparliamentary language by the Hon. Member. I will have a look at the "blues" and report back to the House. The Hon. Member has one minute to complete his speech.


John R. (Jack) Whittaker: Thank you, Mr. Speaker. There is another area I would like to touch on briefly. Once again, during the election campaign and over the prior four years, the Government told us it would look after the women of Canada. What has been done? The Government has looked after women all right. It has made major cut-backs of $2 million in women's programs. Citizenship training has been cut back. Many of these things hit at women.
During the election campaign, I met with a group of immigrant women, and one of the things these women said that there was not enough services given to women immigrants so that they could become productive members of society. What did we get in the Budget? We got the Government once again attacking that.
I want to say to the Government that it had better review what it has done in this Budget and look at what we as Canadians need. It had better look at the management of the future and come to conclusions other than the ones reached in the Budget.


Kenneth Albert James: Mr. Speaker, I would like to comment on the speech made by the Hon. Member for Okanagan- Similkameen-Merritt. I am very concerned about some of the things the Hon. Member has said. I suppose I am really concerned about his lack of interest in giving credit to the people of the tourism industry. He feels that they cannot promote their businesses on their own and that there should be all sorts of federal money going toward advertising the tourism business in British Columbia. Certainly the tourism business in Ontario has been doing a fine job. These free enterprisers and entrepreneurs have attracted people to their places of business and feel good about it. He feels there has to be all sorts of federal money going to it and that the federal Government has not done right by small business. He also suggested that we have not assisted small business.
The Hon. Member said that he worked in small business, but small business people have told us in the last four and a half years when visiting Parliament Hill that they would like to have the opportunity to be unfettered, not hemmed in, or told what to do by government. They would like to go their own way.
Also local communities have told us that individual communities like to have flexibility in their decision making with respect to how best to help small business develop in their own areas. That is being accomplished by the funds that are being directed toward the Communities Futures. The Government feels positive about this and has had a good record in this regard.
Certainly the change in UI funds can be redirected to creating jobs, most especially through the Communities Futures Program, an excellent program. Small business told those of us on the DRIE committee during 1984, 1985, 1986 and 1987 when they appeared before us that they needed that kind of flexibility. We listened to what they had to say. Perhaps the Member should go out and have a talk with the small business people.
I think it is a shame that the Member tends to confuse the issue in connection with the higher income pensioners paying back some of their Old Age Security. It certainly goes on above $50,000, which is certainly a credible amount of money to be made each year. I do not think that he should be confused. If one has $100,000 income in 1989, one will only be paying $700 of that money back. I think the record should be kept clear in that regard.
Earlier the Hon. Member for Kingston and the Islands tended to confuse the issue. I do not think it was intentional on the part of the Hon. Member for Kingston and The Islands or the Member from Okanagan, but I think the record should be made clear. It goes along with what the socialists seem to have been saying for some period of time, that high income people should be paying their fair share. In the situation faced by higher income people, along with having the universality of the program maintained, they will pay back to assist in this terrible deficit and long-term debt problem in Canada. The Member should take note of that and be careful that he speaks clearly, concisely, and accurately about such things.
May 11, 1989


John R. (Jack) Whittaker: Mr. Speaker, I am very pleased to be given the opportunity to reply. What I have heard over the last six days of budget debate involves some confusion on the government benches as opposed to those of the Opposition.
Perhaps my friend has missed the point of some of what was said not only by myself but by some of the other Members on this side of the House with respect to tourism and small business.
I have spoken over the last week and a half with many of the people involved in the tourism and small business industries in my area. I am not getting the same type of feedback as that which the Hon. Members gives the House. I am little surprised that he would tell me that, given the fact that throughout the course of time and through the lobby by the Canadian Federation of Independent Business Mr. Bulloch was constantly warning the Government about its plan for a value added tax and what it would do to small business.
In meeting with the hospitality industry people in my area just last week, a number of concerns were raised including unemployment insurance and how that was going to affect small business people. Concerns were raised over the lack of government interest in the tourism industry. On the one hand under Bill C-3 it would say that it was going to set up all these wonderful things for tourism. Then, a week later in the Budget, it slashed $10 million from the tourism promotion part of the Budget. Those are some of the concerns about which the people in my area have talked to me.
In speaking about the claw-back provision, I make very clear that I understand it. I want to ensure that the government benches understand. Government Members have set it at $50,000 this year, but what is going to happen next year? They have now booted the door open to universality. They have set their toe in and they are intending, I would submit, to blast it wide open with that one little thrust, saying that it really does not count because it is the higher income earners we are getting at. Nonsense; it is part of a larger agenda of harmonization.
They are going to knock it down as the Government, $40,000 in years to come or $10,000? What is the limit going to be? Is it now going to become a total phase out of our social security programs? It is only a start. It is that possibility to which we are objecting, and we are flagging
The Budget-Mr Whittaker
it so that the people of Canada will know that it is the start of what is to come.


Mac Harb: I have a comment, Mr. Speaker. It seems that all sides of the House, speaker after speaker, have acknowledged the fact that we do have a deficit and we do have to address it.
The difference is how we address the issue of the deficit. The Liberal Party believes that to address the deficit we have to concentrate on increased productivity.
I would like to bring to the attention of the Members of the House that Canada is one of the leading countries when it comes to export of raw material. Unfortunately we are nowhere when it comes to areas of high technology areas, or when it comes to many other areas such as our investment in education, illiteracy and so on. While we are one of the largest importers of wood, we still import saws from Italy in order to cut wood. We have a very strong mining industry and we ship to Japan, Hong Kong and elsewhere, we still import the machinery in order to dig and do such things
We have spoken about the tourism industry. Yes, it is a service industry. Unfortunately in this country, we still seem to be putting a lot of emphasis on the service sector rather than concentrating on the manufacturing end of it.
A Japanese speaker who was in this country a couple of weeks ago said that Canada, in order to be on the leading edge in every area, would have to concentrate more on manufacturing. There is no way that we can get out of this situation, unless we spend more money in the area of research and development and education and make manufacturing a priority of this country.


John R. (Jack) Whittaker: Mr. Speaker, I agree totally. Valued added products must be given priority within Canada, across the nation. We can no longer accept that we are primary industry people who ship out our products for manufacture. We have to look further into what we are doing and encourage that type of investment.
Part of the education and research funds that we have spoken about in other Bills are so important that they bring back enormous dividends to our country which we can certainly use in the future in the value added areas of our manufacturing, as well as in making Canada known throughout the world as not only a good research

May 11, 1989
The Budget-Mr. Vien
country but as the best country to which to go for research.


Mr. Deputy Speaker:: Resuming debate. The Hon. Member for Laurentides (Mr. Vien).


Mr. Jacques Vien (Laurentides):: Mr. Speaker, I am greatful for this opportunity to make my maiden speech in this House.
First of all, I wish to very sincerely thank the people of my beautiful riding of Laurentides for their trust on November 21st.
Since 1984, Mr. Speaker, the solid economic record of our Government fully demonstrates the soundness of its policies. We have created a million and a half new jobs and our economy has witnessed a quicker expansion than those of most other industrialized countries. We have achieved these goals together, both as a Government and as a nation, because we have been able to make difficult choices and to take stringent measures to deal with our economic and financial problems.
However, Mr. Speaker, these achievements are now being threatened by growing inflationary pressures both here and abroad.
As the result of these pressures, short-term interest rates are rising; they are higher today than we generally expected them to be hardly a few months ago. Early in 1988, most economic forecasters had predicted that the impact of the October 1987 krach would slow down the economic growth of industrialized nations to more sustainable levels. None of these forecasters had predicted the rapid growth and inflationary pressures which have been recorded in Canada and in other major industrialized nations.
Economic growth has been very strong, and Canada and countries abroad had to tighten their monetary policies to curb this inflation.
Failure to act now will result in a greater threat to our economic stability due to greater inflationary pressures and higher interest rates which could lead us in to a recession.
Mr. Speaker, the Minister of Finance (Mr. Wilson) has recognized that many Canadians are frustrated by the
increase in interest rates. Some are even suggesting that the Government should order the Bank of Canada to lower them. But interest rates move in relation to other economic factors, and therefore cannot be dealt with independently.
Mr. Speaker, inflationary pressures are responsible for high interest rates. To attack the symptoms instead of the causes would not solve the problem.
And we will not succeed in controlling inflation by increasing the money supply. Rampant inflation always brings about higher interest rates. Such inflationary spiral is a recipe for economic disaster.
Mr. Speaker, the Government will not make that mistake. Let us not forget the inflationary outburst and explosion in interest rates of the early eighties.
The erosion of confidence in the economy, the collapse of growth and employment in all regions of Canada and above all the immeasurable damage done to millions of Canadians.
As the Finance Minister said, he expects inflation and interest rates to slow down in the mid term. This will allow the economy to grow on average at its potential rate of 3 per cent between 1991 and 1994. But that potential growth rate will not be reached automatically.
Mr. Speaker, we must put in place firm, moderate and coherent budgetary and monetary measures that will keep us in the right direction, to bring down inflation and interest rates and prevent them from rising again. We must follow a realistic and responsible policy in which the short-and medium term-risks are well balanced.
Through its Budget, the Government is seeking to guarantee the future and not mortgage it. That is why the Budget comes firmly to grips with the main obstacle between us and that future: the problem of an increasing debt.
The measures in this Budget reflect the seriousness of the debt problem we are facing. We also tried to make sure the whole package was balanced, took into account regional considerations and fell more heavily on those most able to bear it.
Mr. Speaker, as a Government, we are acting with determination to reduce expenditures and to improve our efficiency and our operations. We also ask to all

Canadians to take a large part in solving this national problem.
We have adopted expenditure reductions affecting a wide variety of programs, from national defence to government operations. When fully implemented, these reductions will amount to $2.5 billion a year. As a result of these measures and those announced previously, program expenditures will continue to decrease significantly. By 1993-94, they will have fallen to their lowest level in a quarter of a centuiy.
Although expenditure reductions contribute significantly to meeting the Budget objectives, we also had to increase revenues.
Mr. Speaker, these measures have also been designed to weigh more heavily on those taxpayers who can afford to contribute more. The raises have been distributed in a balanced way among several sources of revenue: corporate and individual income tax, sales taxes and unemployment insurance funding. On the other hand, measures such as the doubling of the refundable sales tax credit mean we can guarantee that low-income Canadians will pay the smallest share of the tax burden.

The Government introduced the refundable sales tax credit in 1986, and has expanded the credit since then. In this Budget the Government is doubling the tax credits for adults and children. By 1990 these credits will be $140 per adult, and $70 per child.
In addition, in 1990 the income threshold up to which the full credit is provided will be raised from $16,000 to $18,000. This means that an individual with a net income of $18,000 or less will receive $140. A couple with two children would receive $420.
For the 1990 taxation year the extended credit will provide $655 million in support to lower-income Canadians. This will more than compensate recipients for the full credit for the federal sales tax increase announced in the Budget.
When the Government undertakes sales tax reform in the near future, it will be introducing a new goods and services sales tax credit that will involve a major expansion of benefits. It means that even if individuals do not pay income tax they will receive the credit in a cheque from the Government. Payments will be made regularly every three months, the first one in advance of the start-up of the new system on January 1, 1991. Lower
The Budget-Mr. Vien
and modest-income households will be better off as a result of sales tax reform.
Other tax changes to benefit middle-income households will be introduced as well. In combination, the new tax credit and other tax changes will result in a more progressive system. The Government's goal is to ensure that families earning less than $30,000 a year will be better off as a result of our sales tax reform.
[Translation}
Mr. Speaker, the tax on goods and services will benefit Canadians in all regions of the country. In fact, implementation of the goods and services tax will result in a fairer tax system, once sales tax reform is a reality, thanks to the new credit for the goods and services tax and the lowering of income tax. The Government's objective is to ensure that all these measures will leave families earning less than $30,000 a year better off once the goods and services tax is in place.
The goods and services tax will improve our international competitiveness considerably. Our export industries will be better placed, while Canadian companies will be on an equal footing with importers. It will strengthen our economy, which will attract more investors and create more jobs. A modem tax base, generating stable revenues, will help the government reduce the deficit and offer Canadians the programs they want.
The overall effect of these budgetary measures will exceed $5 billion this year and will total $9 billion next year. This year, these measures will almost compensate for the increase in interest rates and will leave the deficit at $30.5 billion. Next year, the deficit will be reduced to $28 billion, and the debt will stop growing faster than the economy. That is an important result, Mr. Speaker.
The Budget will enable us to cut the annual deficit in half, bringing it down to $15 billion by 1993-1994. As the deficit diminishes, the debt will use up a lesser proportion of our national income and interest payments will take up a lesser portion of each tax dollar.
Mr. Speaker, nobody likes tax increases. Yet the debt is a major problem because we have not yet paid in full the cost of government programs. Before 1984, successive governments had acted in such a way as to reduce the tax base. This resulted in a lack of fairness and a reduction in federal revenues.
Mr. Speaker, this government has since then taken steps to restore the integrity of the tax system. Over the last four years, we have taken a number of steps, through the budgets or otherwise, to eliminate certain tax concessions, to plug loopholes and to restrict the possibility of

May 11, 1989
The Budget-Mr. Vien
tax avoidance for corporations and upper income individuals. We have also reduced the incentives to tax avoidance through a comprehensive reform which widens the tax base and lowers tax rates.
These initiatives have transformed the tax system in a more equitable and reliable source of revenues, thus ensuring that we get the funds necessary to preserve the future of Canada. The budget reflects the seriousness of our situation. We have made difficult choices. We have tried to ensure that the budget measures are balanced, that they take into account regional variations and that they impose the heaviest burden on those who are better able to support it.


Mr. Deputy Speaker:: It being 5.45 p.m., it is my duty pursuant to Standing Order 84(6) to interrupt the proceedings and put forthwith every question necessary to dispose of the main motion now before the House.
Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


Mr. Deputy Speaker:: All those in favour of the motion will please say yea.


Some Hon. Members:: Yea.


Mr. Deputy Speaker:: All those opposed will please say nay.


Some Hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion, the yeas have it.
And more than five Members having risen:


Mr. Deputy Speaker:: Pursuant to Order made Friday, May 5, 1989, the recorded division stands deferred until six o'clock Monday, May 15, 1989.
Accordingly, this House stands adjourned until tomorrow at ten o'clock.


[Stage Direction]
The House adjourned at 5.46 p.m.
[Stage Direction]
Friday, May 12,1989