1990-06-08

Hon. Mary Collins (for the Minister of Finance) moved: that Bill C-69, an Act to amend certain statutes to enable restraint of government expenditures, be read the third time and passed.


Hon. Gilles Loiselle (Minister of State (Finance)):: Madam Speaker, I am very pleased to speak in support of Bill C-69, which implements the policy of spending restraint that we announced in the Budget of February 20.
The measures in this bill have a clear goal: controlling inflation and securing steady non-inflationary economic growth in Canada. I am sure that our friends opposite will support these objectives, especially the hon. member for Ottawa-Vanier, who is very interested in properly promoting the interests of our country. Attaining this goal will lead to the bright economic future that, of course, we all want for this country.

These measures contained in Bill C-69 are part of the February budget which, through a wide ranging expenditure control plan and with no increase in taxes, reinforces our commitment to address the fiscal challenge. The budget keeps the deficit on a downward track and we will see it cut in half in four years.
Our expenditure control plan takes real action affecting a wide range of federal program spending but it is
also sensitive to the financial circumstances of individual Canadians as well as government. Our plan is helping us to meet the fiscal challenge in a fair and consistent way.
The expenditure restraint measures must be examined as an integral part of the economic strategy we have been following since 1984, and of our response to the current fiscal economic situation. They are part of the government's consistent, comprehensive plan to ensure that Canadians benefit from a standard of living and quality of life that is second to none.
A lot of progress has been made. For example, the burden of government has been significantly reduced. The growth of spending on all government programs and services has been kept well below the growth of the economy and even below the rate of inflation. This is quite a performance.
Our progress toward a better fiscal balance has not been easy. We have all felt the impact of the measures needed to protect and strengthen our future. Many Canadians have had to face difficult adjustments, but the economic pay-off has been considerable.
The success of our economic management plan set out in 1984 is clear. It was the right policy then, and it remains the right policy now. But, as the budget warned, its continued progress is threatened.

Despite our fiscal progress, the burden of the public debt continues to grow, primarily due to the compounding interest on the original debt we inherited. To get off the debt treadmill, we must reduce the burden of high interest rates. To do this, we must deal firmly with high inflation.
The expenditure restraint measures in the February Budget are designed to do just that. I am convinced that our friends oppose, especially the hon. member who is attracting attention as he comes in, will support this policy which is so important for our country. Lower inflation and interest rates and lower deficits will be

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mutually reinforcing and lead to strong, sustained growth.
Everyone who is able must do their part to help restore the nation's finances to health. That is why our expenditure control plan has an impact on a wide range of government program spending while at the same time remaining sensitive to the financial circumstances of individual Canadians and provincial governments.
I would like to begin by going over two major elements of the plan as it is set out in the legislation.
First, federal program spending. Under the plan, 60 per cent of government program spending is affected to some degree.
To protect modest-income Canadians from the full impact of our expenditure restraint measures, we have exempted major federal transfers to persons, such as old age security, which is not affected, the guaranteed income supplement, which is not affected, spouses' allowances, which are not affected, Madam Speaker, family allowances, which are not affected, veterans' pensions and allowances and unemployment insurance benefits.
So these budgetary measures are extremely sensitive to the needs and interests of people who are less well off. I would like to emphasize one point because I know it is of concern to many individuals: no limit is placed by the expenditure control plan or by this legislation on programs such as old age security, family allowances or veterans' pensions.

The second element I want to touch on concerns transfers to the provinces. Significant deficit reduction cannot be achieved without affecting transfers to the provinces. They are simply too large a part of federal expenses to be ignored. And so this bill includes measures to bring the growth of major transfers to provinces approximately in line with general federal programs spending. This, everybody will agree, is a very reasonable measure to bring the transfers to the provinces in line with our own expenditures.
In 1990-1991 tax and cash transfers to provincial governments will total more than $35 billion. As a whole, transfers to the provinces have risen at an average annual rate of 6.5 per cent since 1984-85. At the same
time, spending on federal programs in general has been held to an average annual growth rate of 3.6 per cent. We believe the provinces as a whole are in a position to bear more of the burden of their own spending. At a time when 35 cents of every federal dollar is used to pay interest costs on the debt, the average figure for the provinces is 12 cents.
As a result of this bill transfers to provinces will grow. I will repeat that. Transfers to the provinces, as a result of this bill, will continue to grow by about 3 per cent annually over the next two years, roughly the same rate as that of total program spending for the federal government.
The reduction to transfers to the provinces represents about 1 per cent of total provincial revenue. At the same time, we recognize the special circumstances of lower-income provinces. Federal support to provinces remains large, total transfers will still increase, and the poorest provinces will receive more growth than others. For example, total entitlements for the major federal-provincial transfer programs are expected to grow an average of about 4 per cent over the next two years for the Atlantic provinces, a growth higher than our own expenditures. While, in the higher-income provinces, they are expected to average 2.3 per cent.
I want to go briefly over the three major programs under which federal support, about $36 billion in 1990-91, is given to the provinces and territories. These are: Established Programs Financing, equalization, and the Canada Assistance Plan.
Under EPF, Established Programs Financing, the federal government provides equal per capita financial assistance to all provinces through the transfer of tax points and cash payments. These transfers were originally designed to help provinces carry out their responsibilities in respect of health care and post-secondary education, but since 1977, provinces have been able to use these transfers according to their own particular priorities.
Established Programs Financing reached $20 billion in 1989-90, an average annual growth rate of more than 6 per cent. The legislation we are discussing today will hold EPF per capita transfers for the next two years to the 1989-90 level. Total transfers will continue to grow with the population increase of each province or about 1 per cent nationally.
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In addition to EPF, the federal government provides substantial additional assistance to the lower-income provinces through the equalization program. Equalization transfers have grown from over $5 billion in 1984-85 to close to $8 billion in 1989-90. They exceed Established Programs Financing as the largest form of federal support in the Atlantic provinces for example. Equalization transfers to the lower-income provinces are not affected by the budget. They are expected to increase about 6 per cent to 7 per cent annually over the next two years, considerably faster than the expected growth of total federal program spending.
Madam Speaker, I want to make two important points about the effect of this legislation on these transfers.
First, payments will not be cut. Over all, they will continue to increase.
Second, the provinces have complete control of the spending of this money. Whether all or none of it, or any proportion in between, goes to post-secondary education and health care depends on decisions made in provincial capitals, not in Ottawa. It is and remains the responsibility of the provinces themselves.
It is therefore wrong to say this legislation is intended to cut federal support for post-secondary education and health care.
Third, under the Canada Assistance Plan, the federal government provides funds to provincial and territorial governments to help them pay for social assistance benefits and services. These transfers, which are based on a 50-50 cost-sharing of eligible provincial spending, have grown at an average annual rate of about 6.6 per cent over the past five years.
The federal contribution in the form of cash and transfer of tax points has increased from $4 billion to $5.5 billion. The average rate of growth in each province has varied from 1 per cent to 3 per cent in Saskatchewan, British Columbia and Quebec to nearly 14 per cent in Ontario.
For the next two years, growth in CAP transfers will be limited to 5 per cent a year in Ontario, British Columbia and Alberta. All provinces receiving federal equalization payments, that is, all provinces whose income is less than
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these three, will be exempt from this ceiling on growth. They will continue to have open-ended access to federal dollars to meet any growth in expenditures eligible for cost-sharing under CAP. This measure provides for resumption of the present regime on April 1, 1992.
The 1990 federal Budget, Madam Speaker, will slow the growth of federal transfers in a manner which is sensitive to the situation of low-income provinces-that is very important. The impact on Established Program financing is spread broadly and evenly across all provinces. Low-income provinces will continue to receive large and growing support under equalization. Provinces receiving equalization payments, namely those with lower revenues, will be exempted from the 5 per cent growth limit on cost-sharing under the Canada Assistance Plan.
Despite the enormous difficulties we face in reducing this country's debt and deficit and improving the nation's finances, these are balanced, reasonable decisions geared to the ability to pay of provinces and individuals. We are not like the Liberal government that spent without regard to revenue. We are doing what is right for the country and we want to keep our ability to help people with programs of this kind in future. If we did not act quickly, the Government of Canada would lose its ability to help the most disadvantaged and we will never allow that to happen.
While the provinces are being asked to do their part under the Expenditure Control Plan, as I explained, it is clear that we have restrained our own costs and we will continue to do so. Over the next year, total expenditures on programs other than those that are exempt or capped will decline to a level that is $800 million below that of the current year.

These are real cuts. They reflect the fact that, after several years of restraint, there are no painless ways to cut spending. At the same time, our expenditure control plan balances prudence in managing public finances with the responsibility to protect Canadians who are least able to afford income restraint.
This bill takes a further step along the path we have been following since 1984. It does so with sensitivity toward those in our society who are less well off. It does so in a manner that respects the importance and rights of

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the provinces, and that takes account of their economic situations as well as that of the federal government.
I have every confidence that the measures in Bill C-69 are appropriate for our situation and that they are fair and effective.


Mr. John Manley (Ottawa South):: Madam Speaker, in debating Bill C-69, which the minister has explained in some detail in the past few minutes, I think we are perhaps getting to the very heart of Canadian federalism.
I suppose sometimes the people who watch our debates on television think that they are somewhat strange and maybe irrelevant. Today, more than ever, they hear us debating what sounds, I suppose, rather arcane visions of federal-provincial funding arrangements, when, a couple of blocks down the street, the First Ministers are at this moment discussing the fundamental arrangements among the provinces and the federal government, in fact, the fundamental arrangements among all Canadians whereby we live together in the country.
It would be inappropriate to engage in debate simply on this matter of Established Programs Financing and federal-provincial fiscal arrangements without a word about the more important discussions that are going on down the street, not to debate the merits of the arguments that are being put either way, but merely to say that in a way all that we argue about on Bill C-69 becomes irrelevant if the good will and the wisdom of the First Ministers on behalf of all Canadians do not find a solution to the more fundamental problems that seem to trouble us as a nation.
As we look back into the history of how we fund things like post-secondary education in Canada, we find that there is quite a sense of deja vu. Some of the current debates between the provinces and between the federal government and the provinces sound very much like the ones that occurred in 1864 and have been repeated many times in Canadian history. I think the vast majority of Canadians hope and pray for wisdom and solutions.
These are the fundamentals of our federation. In some ways, the more esoteric topics that we debate as a country about our Constitution are the frills and the extras. The federal-provincial fiscal arrangements, the way we finance the kind of country we want to be, perhaps those are the nuts and bolts. That is the essence of the Canadian federation. How do we fund the country
being and becoming the kind of country that we want it to be? How do Canadians want Canada to develop?
If we could get into a time machine and spin forward into the next century, different scenarios would present themselves; some good, some bad. If you can imagine arriving in the national capital in the year 2020, you might hope, if you could describe the kind of Canada that you want, to discover a country where the people are well educated, where the people interest themselves in examples of the highest of human culture and human awareness. You would hope to find a population that by and large understands the nature of how the world functions, how the economy functions, where the people appreciate the value of literature and art and where the people appreciate the importance that culture brings to the way they live. You would hope to find an economy where we produce high quality value-added products that we sell to the world. You would hope to find a country in which the care for those who are least able to look after themselves is exemplary, where health care is affordable and available to all.
You would hope to not find a country in which the ordinary citizen is not well educated, where illiteracy is rampant, where you find that we no longer debate the harvesting of forests on Vancouver Island because they have all been harvested, where you find that we are still surviving as a nation on the sale of the things that we can dig out of the ground, cut down, grow, or catch in the sea and where we are strictly basing our economy on the sale and production of resources, where we failed to train our people to move forward in competition in a global economy where the need to add value and to make things that the world buys is crucial.
If you look at those two scenarios, Madam Speaker, and say that we definitely want the first one, you might want to go back then and ask what policies should governments in Canada be following in order to ensure that we arrive at that first scenario and that we avoid arriving at the second one.
That in a nutshell for me expresses why the subject matter of this bill is so crucial, so important. I look at it, not strictly as the minister did in his remarks, as a means of getting our financial house in order, although it is that and I understand that, and I will add my words of
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explanation to the public about why that is the case. However, it goes beyond that.
How we spend money on post-secondary education, on health care and on assistance to the needy in Canada is of crucial importance to the kind of nation we are and are becoming. If this bill does anything, it highlights the critical necessity for Canada, the federal government, and the provincial governments, to overcome the type of debates that are currently going on down the street and to get on with, at least in my opinion, the far more important debate about what kind of country this should be and how do we get there from here. Included in the debate has to be the funding of post-secondary educational institutions, health care and assistance to the needy.
The idea that perhaps we should use these arrangements as a way of trimming back the deficit is something to which the current Minister of Finance seems to have been recently converted. At least back in 1982, when he was in opposition, he did not think that this was really the way to go about cutting back on federal spending. Let me read to you what he said in this House on March 24, 1982 in reference to cuts in Established Programs Financing:
- could have disastrous effects on the universities and on the colleges, on the hospital funding and on the operation of the hospitals. Let us not make hospitals, universities and colleges a battleground between the federal government and the provincial governments. Let us solve those problems not on the backs of hospitals and universities; let us solve those problems outside of that arena.
I agree entirely with the remarks of the Minister of Finance.
First, let me talk a bit about post-secondary education. When we talk about how important it is for Canada to emerge from this century and go forward into the next one with an economy that moves from our traditional hewers of wood and drawers of water mode into one that highlights the value-added production of new goods, new services, the ability to provide new technologies, and provide information to the world, this requires a broad base of well-educated people. We need a population that is characterized by its commitment to excellence, to its level of literacy and education. It is essential to Canada. This is not merely a provincial matter.
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When you go back in history, you discover that this is not a new debate. Back as early as the Confederation debates, 1864, one of the Fathers of Confederation, George Brown, said this about the division of powers:
In thus defining the functions of the general and local governments, it will, no doubt, be objected that we have committed certain matters of an important character to the local bodies which the people of Upper Canada would have been well content to have seen left to the general government. But if the details of the scheme are closely examined, it will be seen that we have given nothing to 1he local bodies which did not necessarily belong to the localities, except education and the rights of property, and the civil law, which we were compelled to leave to the local governments -
That comment by George Brown is very similar to one made in 1864 by Sir Arthur Hamilton Gordon, then Lieutenant-Governor of New Brunswick, who stated:
I ant fully aware of the great difficulties attending the subject of Education, but it is with extreme regret that I see it committed to the Local Legislatures. At all events, the Universities should have been placed under the guardianship of the Central Power. The local governments-
These are his words, not mine.
- needy, rapacious, and ignorant, with little money at theirdisposal, are pretty certain 1o appropriate the University Funds to what they will call more useful objects, that is to say, objects which will enable them to scatter the money among their political adherents.
That is what was said by one of the Fathers of Confederation 126 years ago.
Interestingly enough, as an historic footnote to the constitutional negotiations, the Charlottetown draft of the first constitutional arrangements left the universities under federal jurisdiction. It was only later that that was changed to leave the universities with all education in provincial jurisdiction.
It did not take very long for the federal government to become involved in post-secondary education. As early as 1874, the first military college was established, located at Kingston. In 1885 land was dedicated by the federal government for the University of Manitoba.
In 1910 we had a royal commission on industrial training and vocational education which ultimately gave rise to grants being made by the federal government to the provinces for the purposes of developing agricultural techniques and training and upgrading vocational, technical and industrial education.

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By 1916 the federal government established the National Research Council in order to assert a federal presence in research in Canada.
This basically continued along until after World War II when the federal government, with the assistance of what became the Association of Universities and Colleges of Canada, initiated a program whereby universities received $150 grants for each veteran who attended their institutions.
Therefore, the federal government, at the end of World War II, perhaps partly as a means of rewarding those who had gone to fight for Canada, acknowledged the importance of a broadly based, well-educated population. Surely, to a great extent, the success of the Canadian economy through the 1950s and 1960s reflects the fact that we had a higher than would otherwise have been the case influx of well-educated, well-trained people into the workforce, the trained veterans.
In typical Canadian fashion, we have had a whole series of royal commissions, task forces, studies, and special groups study the issue of post-secondary educational funding over the years. We had the Massey Commission in 1951. We had the study of the Bladen Commission sponsored by the Association of Universities and Colleges of Canada. We have had a series of discussions and studies about this issue, most recently in this House. We had the Breau report in 1981. We have had the Senate study it and we have had the Nielsen task force.
What continually comes across when you back through those studies and the discussions and debates that occurred around them is the fact that it was acknowledged by everyone that post-secondary education was too important to the national interest to be only left as a responsibility of the provinces.
For example, on June 15, 1951, Prime Minister St. Laurent said:
Tlie Government has also reached the conclusion that it is in the
national interest to take immediate action to assist the universities to
perform functions which are quite essential to the country.
Partly, this evolved from the fact that universities had expanded their facilities to take care of the increased
enrolment resulting from the veterans who were attending university following the war. In consequence, the expanded facilities had given rise to a greater cost of operation, larger teaching staffs, and so on. In order to maintain the increase in facilities after the veterans had gone through the system, federal participation became essential.
What began then was 16 years of payments of grants to support university education in Canada. Interestingly enough, these grants were made to all provinces except the province of Quebec, which declined to accept any federal participation in post-education within that province. In fact, the funds that would have gone to Quebec were turned over to the Association of Universities and Colleges of Canada and held in trust in the interest of the institutions in that province until 1960 when an agreement was entered into between the governments of Quebec and Canada which allowed Quebec to make the grants directly from the provincial government to its institutions within the province.
All of this went through an evolutionary period until about 1966 and 1967 when part two of the Federal-Provincial Fiscal Arrangements Act was passed to allow the federal government to make the payments to provincial governments rather than to the institutions in the provinces through the Association of Universities and Colleges of Canada.
In leading to this arrangement, we have a statement by the then Prime Minister of Canada, Lester Pearson, about the importance to Canada of post-secondary education. In 1966, he stated:
Education is, under our constitution, a matter of provincial jurisdiction. The federal government does not dispute this or wish in any way to do so. At the same time, education is obviously a matter of profound importance to the economic and social growth of the country as a whole-While education itself is provincial, the federal government accepts primary responsibility for employment and economic activity generally in the country.
He went on to state:
The preparation of our young people for productive participation in the labour force of the country is a matter of vital concern to all Canadians. We have also to keep in mind that young people of a particular province do not necessarily receive their education and training in their home province, and that people, after graduation, do not necessarily live out their lives and take up employment in the province where they received their education.
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Again, it is a very important acknowledgement of the importance of education to the well-being-economic, social and cultural-of Canada as a whole, of Canada as a nation.
What happened under the 1967 act was that the federal government committed itself to provide to the provinces, for post-secondary education, either $15 per capita of the provincial population, or 50 per cent of eligible post-secondary education expenditures incurred in the province, whichever was higher.
From 1967, for 10 years the federal government was essentially paying half of the cost of post-secondary education in the provinces. There was some revision to that in 1972 when the federal government limited its annual increase under that provision to 15 per cent, and that was pro-rated among the provinces. However, the commitment at that time was clear. Half of the cost of running the university system was federal responsibility.
That created several problems which were overcome with the 1977 arrangement which is really what we are debating today. That program, the 50 per cent support program, tended to distort provincial spending priorities because it encouraged the provinces to spend what were effectively 50-cent dollars. Every time the province spent 50 cents, the federal government, by law, was committed to throw in another 50 cents. Provinces, especially British Columbia, Quebec and, to some extent, Ontario took advantage of those 50-cent dollars in a period of a very broad expansion of the post-secondary education.
The federal government, having undertaken to pay 50 per cent, had no control over the growth of these expenditures. That is a problem clearly for any government; a lack of control.
Third, the federal taxpayer not only had no control, but not necessarily any particular awareness of what the money was going to be spent on. By the time the program was in its last years, more than $10 billion was going from the federal government with no direct control.
The most critical problem with that 50 per cent program was that it required substantial auditing requirements. In other words, in order to ensure that the provinces were receiving the correct amount of money,
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the federal government had to investigate what they were spending. This led to all kinds of complications.
Some provinces, for example Ontario, had Grade 13. Other provinces did not. To make it fair, Grade 13 had to qualify for these 50-cent dollars. That meant an argument about how much of the secondary educational system was devoted to Grade 13. Was it pro-rated in some fashion, or how was it worked out? There were even simple problems such as whether Grade 13 students used school buses and, if so, was the federal government not responsible to pay 50 cents of every dollar that was spent on school bus transportation for secondary school students in Grade 13.
Then Quebec introduced the CEGIP system which also was a quasi post-secondary educational institution. Again, there were questions about how much the federal government was obliged to contribute to that.
This led to the Established Programs Financing arrangements of 1977, which is what we are debating the amendments of today. It provided for block funding for, among other things, post-secondary education to the provinces. Those arrangements to the provinces set in course the freedom of the provinces to put the money into whatever they wanted, so much so that, according to a study prepared for the Secretary of State in 1985, some of the provinces were actually spending less on post-secondary education, in terms of the operating costs, than the federal government was giving them.
In 1984-85, according to this study, the provinces of Newfoundland, Prince Edward Island, New Brunswick, Manitoba and British Columbia were all spending less on operating their universities and colleges than they were receiving in grants from the federal government. Where the money was going was entirely up to the provincial governments. They could build roads or bridges. They could give it away. They could do whatever they wanted with it and let the post-secondary education system erode.
This itself is not a satisfactory arrangement. For this reason, I must confess to having some sympathy with the problem the federal government has in this area. To some extent, these arrangements have resulted not in nourishing the post-secondary education system, but in allowing the provincial governments an additional source

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of revenue from the federal government. Meanwhile, across Canada we see many instances of the decline of our universities and colleges.
This latter point is one that we need to be chiefly concerned about. As I said earlier, the health and well-being of the post-secondary education system in Canada is of absolutely crucial importance to our ability as a nation to move forward in the global economy. Surely to goodness, the time has come in Canada-when the First Ministers succeed, as they must down the street in finding a solution to the fundamental problems of the Constitution-for the federal and provincial governments to find an arrangement between themselves to ensure that universities and colleges in Canada are adequately and fully funded.
If we do not do that, it will inevitably lead to a country in which our people are ill-educated and ill-equipped to compete in the 21st century.
All that being said, and recognizing the problems that the federal government has, in my view, it is not enough to go ahead and cut back on EPF right now. I think the Minister of Finance had it right back in 1982 when he said that this is not the appropriate battleground for federal-provincial relations. Many of the things that have been said since the announced cut-backs bring into stark relief the problems that are occurring in our university system in Canada.
In some of our larger universities, the class sizes are enormous. The problems now are totally different from what they were a generation ago. The problems now are technological problems. For example, how do we provide in a lecture hall adequate sound systems and lighting systems so that the vast number of students who have to sit in the lecture hall can see and hear what is being said or taught? We have a need for special lighting systems so that people at the back of enormous lecture theatres can see things that are being written either on over-head projectors or in the odd case on blackboards.
In fact, students in many classes, in many subject areas, are having to go early to their lectures in order to get a seat in the lecture hall.
I am from the generation where we went late, as a matter of religion.
The Association of Universities and Colleges of Canada has stated: "It is no secret that overcrowding, meagre library budgets, outdated laboratories, deteriorating physical plants and demoralization of staff and students are all too common on Canadian campuses today. Faced with a funding squeeze, several universities have adopted enrolment restrictions and others are seriously considering such measures".
Since 1977-78, when the current EPF arrangements went into effect, the university system has received a reduction of about 20 per cent in its support per student. Not only are these facts a harbinger of ill things to come in Canada's future if we do not address them because they are of critical importance, but they also directly contradict the kinds of things this government has said.
For example, in August 1989 the Prime Minister stated: "This government will carry its fair share of the burden to ensure that all young Canadians receive a first-class education as they confront a world-class challenge". He is right. Is this the way to go about it, to cut back the one remaining method there is of assisting the provinces in adequately funding education?
The government, I am sure, is going to say that I have not got it quite right, because after all the government does fund research in the universities through the granting councils. Fair enough. The National Sciences and Engineering Research Council, the Medical Research Council and the Social Sciences and Humanities Research Council are very important. I wish I knew how much they were going to be funded next year. The government has not told them what it is going to do about the matching grants policy that expires this year.
On top of that, there are situations where the universities are going broke because of grants from these entities or from problems arising out of the network of Centres of Excellence. Why? Because the granting councils will not participate in funding the overhead for the research. In other words, they will not participate in the costs of laboratories and so on when the research grants are given.
On the one hand, the cut-back in EPF and the failure of the provinces to put what should be put into post-secondary education is stripping the universities of the resources they need to maintain first-class institutions with good equipment and top flight teachers to make
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sure we have the qualified personnel we need to go into the future.
On the other hand, the money that is coming into research is inadequate to make sure that the universities have the infrastructures and overhead costs covered to carry on the research they are being funded to perform.
We get many examples of what this means. According to an article in the Hamilton Spectator on October 18, 1989:
Tight financial situations and increasing enrolment at universities like McMaster mean faculty are forced to teach more students with fewer resources -
The result is "undergraduate students at McMaster are no longer receiving a decent undergraduate education".
As an example, Dr. Maurer, a psychology professor, said when she came to the university in 1973 she taught a third year-class of 20 students. This year that class has expanded to 170 students.
"Grading 170 10-page essays is like reading War and Peace," she said. "It's clearly impossible."
I suggest that this problem is one that transcends federal-provincial arguments. It is of such critical importance to Canada that we must address it in the context of an over-all review of how we fund post secondary education in Canada.


Madam Deputy Speaker:: I will now interrupt the hon. member. He will be able to continue after Question Period.

It being eleven o'clock, pursuant to Standing Order 30(5), the House will now proceed to Members' Statements pursuant to Standing Order 31.


STATEMENTS PURSUANT TO S. O. 31
Mr. Gabriel Desjardins (Temiscamingue):: Madam Speaker, this week for the nineteenth consecutive year is National Environment Week, from June 3 to June 9. I need hardly recall how much the environmental awareness of Canadians has grown in the past few years.
All governments have a duty to show leadership in this area and promote all environmental initiatives so that, by
the year 2000, Canada will have the best relationship with the environment of all industrialized countries.
In this connection, I would like to draw your attention to an announcement made today by the federal government that $100,000 has been earmarked under the Environmental Partners Program for a major project in the Rouyn-Noranda region. The project consists in placing 28 containers in as many schools to provide for recovery of recyclable waste.
Madam Speaker, this is a concrete example of co-operation between government and the community to provide for better management of our environment and also to ensure that our young people, the elite of tomorrow, acquire good environmental habits.


CANADIAN ENVIRONMENT WEEK
Mrs. Marlene Catterall (Ottawa West):: Madam Speaker, for Environment Week the government produced this beautiful 29-page book on what Canadians can do to help the environment.
One of the useful bits of information it contains is that a single growing tree can absorb up to 21 kilograms of carbon dioxide in a year. A major cause of destruction of trees is, of course, the excessive use of paper.
How well does Environment Canada respect its own admonition to "get involved"?
Of the 29 pages in this book, two are the covers which are on glossy paper, not recyclable; one page contains only two lines of type; there are seven pages which are blank, except for a half-line title, and not one of these pages is printed on the back.
I urge the government to heed its own message, get involved, use paper wisely and save a few trees.



Mr. J. W. Bud Bird (Fredericton-York-Sunbury):: Madam Speaker, I am also pleased to speak this morning about the environment and to join my colleague from the environment committee in bringing to the attention of Canadians the realities of Canadian Environment Week for 1990.

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I am certainly proud to represent a government which is committed to the environmental imperative as a fundamental principle of its mandate. Indeed, government decision-making has changed dramatically, as environmental considerations gain equal status with economic factors.
Both streams of policy-environment and economics-are critical for resolution before action occurs, if we are ever to truly practise the compelling concept of sustainable development.
The Green Plan consultations which are now being held across the country, constitute a responsible and comprehensive process to bring all Canadians into Canada's environmental movement. Each of us must be a part of this process. It cannot be decreed or imposed upon us, it must be shared. We must all understand the environmental implications of our daily lives.
The Green Plan program arrives in my riding of Fredericton next Monday and Tuesday where citizens will have the opportunity to help build our national environmental consensus. By developing the Green Plan together, we shall ensure its ultimate success which is so essential not just for the sake of our own future but for-


Madam Deputy Speaker:: The hon. member's time is up.


PERLEY BRIDGE
Mr. Don Boudria (Glengarry-Prescott-Russell):: Madam Speaker, on May 31, the hon. member for Argenteuil-Papineau (Ms. Bourgault) went to Grenville, in her riding, to make an announcement about the Perley Bridge on behalf of the President of the Treasury Board.
She said that Treasury Board had given the Minister of Public Works a mandate to negotiate with Ontario and Quebec representatives with a view to eventually building a new bridge. One wonders whether the Department of Public Works, which has been negotiating this dossier for the last two years, has been doing so illegally, Madam Speaker.
The hon. member also announced, and this made more sense, that funds designated for the requisite environmental assessment would be released following an agreement among the parties concerned. The hon. member also indicated that a three-party meeting was to be held today, June 8, and that the parties agreed that these funds would be released at that time.
The President of the Treasury Board should immediately authorize spending on the environmental study, even if federal-provincial negotiations are still in progress. Otherwise, we may all be faced with a crisis and have to scramble to keep up with events.


ABORTION
Mr. Jack Whittaker (Okanagan -Similkameen-Merritt):: Madam Speaker, this week doctors in Alberta joined doctors in Manitoba and Nova Scotia to say that they will stop providing full reproductive health services as soon as their waiting list is exhausted because of the government's new restrictive abortion legislation.
One doctor said: "I don't need the hassles." Another said: "I am being forced into this situation by a crummy law. As an individual I cannot fight the government. We have all tried. It is now out of our hands."
Other doctors, worried about criminal prosecutions and jail sentences, will require signed statements, witnesses and expensive psychiatric evaluations.
The government's unjust abortion legislation not only violates women's basic constitutional rights, it will result in fewer services for women who need them. This unjust law not only reduces Canadian women to second-class citizens in their own country, it tries to make criminals out of women and their doctors.
This unjust law not only violates Canada's U.N. commitments to promote women's equality, it deprives women of full personhood.
This unjust law not only ignores the real issues of unwanted pregnancies, it does nothing to promote family planning, better contraceptive research, and more supportive services for women and their children.
June 8, 1990

Madam Speaker, women are not children. Doctors are not criminals. But this government is guilty of depriving women of their basic rights.


THE SENATE
Mr. Garth Turner (Halton -Peel):: Madam Speaker, there is a place in this very building which they call the red chamber. In the Senate they pay unelected senators $62,000 a year. Last year this amounted to 68 days of work, half the number of days of two years previously.
But $62,000 is not all. There is also $9,800 in expenses, and now an extra $153 a day for every Senator showing up for a meeting.
Canadians should know who their tax dollars are supporting. I think we should have a Senator-of-the-Week contest.
The envelope, please.
This week's senator is Michael Pitfield. He is a former civil servant, with a civil service pension. He is an employee of the huge Power Corporation. He is a Senator. He earns $62,000 a year. And now he gets $153 more.
Mr. Senator, welcome to the trough.


Madam Deputy Speaker:: I believe that talking disrespectfully about the other place is not really in order.


LEBANESE REFUGEES
Mr. Mark Assad (Gatineau -La Lievre):: Madam Speaker, last week I appealed to the Minister of Employment and Immigration on behalf of Lebanese refugees who are being returned via the United States to war-torn Lebanon.
For the first time Christian and Moslem leaders representing a multitude of denominations have joined together to plead on behalf of the refugees.
I personally know some of these leaders and they are profoundly distressed by the situation of the people in Lebanon. They are calling upon Canadians who have a great reputation for humanitarian values and their government to open their hearts to these victims of war in their country, perpetrated by some of their neighbours.


MEECH LAKE ACCORD
Mr. Ken James (Parliamentary Secretary to Minister of Labour):: Madam Speaker, this past hour the 11 First Ministers began their sixth day of discussion to resolve the impasse on Meech Lake. At no time have these negotiations been more important. Few Canadians would disagree that the future of this great country of ours, as we know it, is at stake. They are watching and waiting anxiously to hear of success.
One such citizen is Tony Pacheco of Sarnia, Ontario. Yesterday he sent me a letter from which I would like to quote:
We are a country built on geographic, cultural, ethnic, and political diversity and adversity. Certainly we are proud of and celebrate our ability to forge a common purpose and still respect and cultivate our differences.
Accommodation, tolerance and compromise are the historical pillars of this country and must continue to be if Canada is to exist.
I am hopeful that in current discussions our First Ministers can embrace these principles. For his part, the Prime Minister continues to demonstrate his commitment and leadership throughout this process.
I, like a majority of Canadians and the members of this House, wish him and the premiers success in today's negotiations of constitutional change.


TRANSPORT
Mr. Chris Axworthy (Saskatoon -Clark's Crossing):: Madam Speaker, the Government of Canada yesterday decided to risk the health of air passengers and airline employees on the flimsiest of evidence. Although the Non-smokers' Rights Act passed with the support of all three political parties, the Minister of Transport has elected to ignore the will of Parliament and the Canadian people. He has decided to protect Canadian airlines from their own failure to market a unique product, smoke-free international flights, by endangering the health of thousands of Canadians. By delaying the implementation of the smoking ban on overseas flights of more than six hours, the minister is setting back the cause of public health and is discriminating against Canadian workers.

June 8, 1990
Canada has been a world leader in protecting employees and the public from the carcinogenic effects of second-hand smoke. Rather than convince the world of the benefits of breathing clean Canadian air on Canadian airlines, the minister has accepted the airlines' argument that they will lose money, even though no evidence has been produced by them to demonstrate this.
Tobacco is the only legal product that injures and kills when used exactly as directed. I call on the Minister of Nation Health and Welfare to explain the serious health dangers from tobacco smoke to his colleague, the Minister of Transport, so that he will act to protect all Canadians and re-establish Canada as an example to the world of the advantages of butting out.


THE SENATE
Mr. Lee Richardson (Calgary Southeast):: Madam Speaker, enough is enough. Earlier this week the Liberals who dominate the Senate voted to reward themselves, over and above their generous salaries, by paying themselves $153 every time they show up for work.
Canadians were rightly outraged, as so was I and every member of the Conservative caucus, including the Finance Minister, who correctly labelled the Senate's actions obscene. The so-called rationale that went into that proposal defies logic and is an insult to every hard-working Canadian.
When I read of the senators' plan I thought I had heard it all. Then along came the member for Kamloops who, in an astounding twist of the facts, accused the government yesterday of supporting the senators' proposal-


Madam Deputy Speaker:: I am sorry, I cannot let the member go on. The hon. member for Mount Royal.


EMERGENCY RADIO LICENCE FEES
Mrs. Sheila Finestone (Mount Royal):: Madam Speaker, it seems this government's grab for cash in the deficit battle knows no bounds. It continues regardless of the human and local impact. They have moved now to tax public safety by charging volunteer fire-fighters in municipalities exorbitant 1,000 per cent increases and more for licences to operate emergency radios. In my own riding, the city of Cote St. Luc could face an 1,100 per
cent fee increase because of the government's action. My colleague from Dartmouth has told us of the incredible burden this places on volunteer fire-fighters in his own area.
I warned back in 1986 that the government's Bill C-3 could lead to this but the former communications minister assured Canadians on December 1, 1986, that the changes as they affect municipalities, volunteer fire-fighters and fire departments would not be proceeded with. That has become another hollow promise. We can only hope this budget action does not cause the reduction of emergency fire, ambulance and other services.
Not only has this government imposed the highest income taxes ever, but it now has decided to tax public safety. Canadians are saying, "This has just got to stop. Enough is enough."
* *


THE SENATE
Mr. Andre Plourde (Kamouraska-Riviere-du-Loup):: Madam Speaker, a recent decision by the Senate, with its Liberal majority, to give senators a tax-free salary increase is incredible.
At a time when the federal government is trying to control public spending and keep a tight rein on inflation, the Canadian Senate has once again demonstrated it does not live in the real world.
It is absolutely incredible to see senators giving themselves $153 per day in compensation, in addition to their salaries, especially when we see how the Senate obstructs the bills of a democratically elected government.
Madam Speaker, I think the government must reject this increase. In fact, I think the Senate deserves a cut in salary or should disappear altogether.


THE ENVIRONMENT
Ms. Lynn Hunter (Saanich -Gulf Islands):: Madam Speaker, the United Nations environment program report, issued this week, once again raises the serious question of child mortality in the developing world. Pollution and other environment-related problems cause the deaths of 14 million children under the age of five each year. In the developing world alone 4.2 million
June 8, 1990

children die annually from respiratory diseases caused by air pollution.
Imagine if you can, Madam Speaker, half the population of Canada dying before Christmas from poisoned air and water, preventable diseases or lack of food. Such a situation would be unacceptable here, and it is unacceptable elsewhere.
We have heard the word "crisis" used a great deal this week. The real crisis is in the developing world where 1.4 billion children live in abject poverty. The time is long past for discussions and debate on the issue of environmental protection. We have the means to inoculate and feed the world's children. What we lack is the political will to do it.
In the minute it has taken to make this statement, 27 more children have died. We must act and act swiftly.


THE SENATE
Mr. Peter Milliken (Kingston and the Islands):: Madam Speaker, during the last few days, there has been a lot of misinformation spread concerning the Senate's proposed pay increase of $153 per day.
Everyone knows that the government controls the order of business in the other place. One of its cabinet ministers is the House Leader there. Yet, who proposed the pay increase? Was it our former colleague, Senator MacEachen?


Some hon. members:: No.


Peter Andrew Stewart Milliken: Was it the NDP senator, Brother Lawson?


Some hon. members:: No.


Peter Andrew Stewart Milliken: Was it a Liberal senator?


Some hon. members:: No.


Some hon. members:: Order.


Madam Deputy Speaker:: Order, please. Oral Question Period.
Oral Questions



ORAL QUESTION PERIOD


Hon. Herb Gray (Leader of the Opposition):: Madam Speaker, my question is directed to the Deputy Prime Minister.
This morning, Statistics Canada reported that
43.000	Canadians lost jobs in manufacturing last month. This brings to 120,000 the number of Canadians who have lost manufacturing jobs under the government since January of this year alone.
Why is the government deliberately pursuing a policy of destroying manufacturing jobs in the country?


Hon. John McDermid (Minister of State (Privatization and Regulatory Affairs)):: Madam Speaker, the government is not following the policy of deliberately destroying jobs. That is a statement that is completely inaccurate.
Five and a half years ago, the hon. member and his party predicted some disaster as far as employment is concerned when the Government of Canada brought out a program for renewal in our economy. The Minister of Finance presented that some five and a half years ago.
In that period of time, we have had unprecedented growth in the economy and in employment. Our record is very good.
At this time, the economy has slowed down somewhat. There is still growth, albeit slow growth. Over the last year, we still created a net 139,000 new jobs. Although the economy has slowed down, we are on our plan to get interest rates and inflation down. Once we get those pressures down, we will see the economy moving again in Canada.


Herbert Eser (Herb) Gray: Madam Speaker, this reply is simply incredible. According to Statistics Canada, an agency of this government, in May
43.000	workers lost their jobs in the manufacturing industry. Since January, 120,000 jobs were lost this year.

June 8, 1990
Oral Questions
I want to ask the minister whether this is a deliberate policy on the part of the government, and when the government will change its policy and introduce measures that will create manufacturing jobs instead of destroying them.


Hon. Benoit Bouchard (Minister of Industry, Science and Technology):: Madam Speaker, I would never have believed that the Leader of the Opposition would give me the chance to ask Canadians: How can he say what he says?
We want to remove a federal sales tax of 13.5 per cent that totally disturbed the manufacturing sector of the economy of Canada, and he is against the GST.

You are against the Goods and Services Tax. We want to remove the old sales tax to help Canadian manufacturers be more competitive, but no way! Madam Speaker, this party is against any measure that would let the government boost Canada's economy.


Herbert Eser (Herb) Gray: Madam Speaker, no wonder the government has no credibility, considering the reply given by the Minister of Industry, Science and Technology. It was he and his government who increased the existing tax four times since they came to power, a tax which according to him is harming our economy, and now they want to introduce a GST that will increase inflation in this country!

Yesterday, Robert Blair, chairman of Nova Corporation, said at the meeting of the Canadian Manufacturers' Association that the government's "crude and cumbersome" economic policy "has driven up the value of the Canadian dollar, hammered our exporters, and is endangering the nation's standard of living".
Will the minister admit that his policies are endangering the country's standard of living, and that the people who have to bear the brunt of his government's mismanagement are the 120,000 Canadians who have lost good manufacturing jobs since January?
Why does the minister and his government continue with these policies when he knows they are creating massive job losses and are expected to cause the loss of thousands more at plants such as Kelsey-Hayes in Windsor over the coming months?


Benoît Bouchard: Madam Speaker, I would like to go back to what the Leader of the Opposition said about the manufacturing reality of Canada.
He knows very well that, at the present time, the international economy is going toward globalization. Because a lot of Canadian industries have to rationalize their operations, we face a lot of operation on that level. As a Canadian and as a minister of the government, I would hope that the member agrees that one of the ways that we have to help the manufacturing sector is through decreasing the federal sales tax.
The hon. member does not agree with that. He does not agree that we can totally remove the manufacturers' sales tax to put in a goods and services tax, which will be applied not only to Canadian manufacturers. I do not understand him, but I know what the economy that they had in 1980-84 gave to Canadians.


MEECH LAKE ACCORD
Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Madam Speaker, my question is directed to the Deputy Prime Minister and concerns the constitutional impasse. Negotiations are entering their sixth day. The atmosphere is pretty negative, and Canadians are very worried about the course of events. I want to ask the Deputy Prime Minister whether he could give the House a progress report on the negotiations and let us know whether, should the impasse continue, the plan is to continue the negotiations over the weekend.


Hon. Don Mazankowski (Deputy Prime Minister, President of the Privy Council and Minister of Agriculture):: Mr. Speaker, obviously the discussions of the First Ministers have reached a critical stage.

June 8, 1990

As the hon. member is aware, I am sure, the talks did reconvene this morning. I am satisfied that there is still a strong will to reach a satisfactory conclusion by all First Ministers and others who are involved in the process.
We can only hope that their deliberations this morning will result in further progress toward reaching a satisfactory conclusion.


Jean-Robert Gauthier: I have a supplementary question, Madam Speaker.
Will the Deputy Prime Minister assure us that the Prime Minister will give a full accounting of the situation to the House of Commons today, or whenever the negotiations are terminated, even if it means calling back the House of Commons during the weekend?


Donald Frank Mazankowski: Madam Speaker, that has always been the Prime Minister's intention.
On previous occasions when these discussions took place, at the first opportunity, he sought to come before the House and to report in full detail. I have no reason to believe that that would not be the case on this occasion.


MANUFACTURING SECTOR
Mr. Steven W. Langdon (Essex-Windsor):: Madam Speaker, my question is directed to the Minister of Industry, Science and Technology as well.
As the minister responsible for the manufacturing sector in the country, does he not have a sense that in fact there is systematic destruction of our manufacturing base taking place right across the country? Since November, 1988 when the Conservatives were elected again,
183,000	manufacturing jobs have been eliminated. The minister can suggest all sorts of red herrings such as the manufacturers' sales tax.
Is he not prepared to admit clearly that his ministry has not taken action to protect the jobs of Canadians in the manufacturing sector and has not been able to take action against the present government's policies which are so detrimental to the manufacturing sector in Canada?
Oral Questions


John Horton McDermid: Madam Speaker, the hon. member is entirely inaccurate in what he is saying.
For example, there was just a major announcement in his own community of Windsor where Chrysler is investing some $400 million in two or three plants to upgrade and bring up to standard, which will preserve and increase employment for people in his own constituency. He knows that. For him to stand up and make a statement in the House as he did is totally wrong.
The other problem in the manufacturing sector right now is that the wage demands being asked now are inflationary. We are seeing it, and the Minister of Finance has said it many times. They are forcing Canadians to be uncompetitive.
I draw the hon. member's attention to the fact that labour costs grew 8.2 per cent last year, while productivity increased only 1.7 per cent. That is why we are uncompetitive. Wage demands must get more in line with productivity if we are going to compete. That is the message that is out there. It is inflationary to have an 8.2 per cent increase in labour costs. It causes the problems we are experiencing at the present time.


Steven W. Langdon: I have a supplementary question, Madam Speaker. I would just say that the minister should get real.
According to the latest Economist, the rate of growth of industrial production in the country is the worst among the G-7 countries for last year. We are not succeeding.
The minister has mentioned my community. Let me ask a question with respect to my community. Yesterday, over 1,500 people from Windsor, from right across the community, protested against the shutdown of Kelsey-Hayes. It was a shutdown of a company which made $8 million last year and yet has shifted three of its production lines to Missouri.
Will the government use the two million shares it owns in Kelsey-Hayes and Varity Corporation to see that these jobs are protected and saved for the future of our community?


Benoît Bouchard: Madam Speaker, I agree with the hon. member who knows very well that Varity had a covenant in that it had to protect, maintain, or create jobs in its

June 8, 1990
Oral Questions
companies. I expect that the company will live up to its commitment.
The question is not that jobs have to be protected specifically at Kelsey. Jobs have to be protected by Varity within the plants belonging to Varity. The hon. member knows that very well. The covenant will be respected.
I believe that, as far as the headquarters is concerned, the 1986 agreement determined that the number of jobs will be protected and that will be done, However, the company does not have to give the guarantee that it will be done at Kelsey, specifically.


Steven W. Langdon: Madam Speaker, the point is that this company has an important government shareholding in it. In the past, the minister responsible for small business said that the shareholding would be used to help protect jobs in this company. It has not been.
Is the minister not prepared to listen to those 1,500 people who in the streets of Windsor yesterday said: "Our jobs are being hit and our families are being hurt"? Is he not prepared to listen? Is he not prepared to act for the sake of our country? Do something.


Benoît Bouchard: Madam Speaker, I hope the member from Windsor does not want to give the House the impression that we are not sensitive to people who lose their jobs. We are as sensitive as the hon. member. We do not have the magical answers that the hon. member seems to have.
I never said that we would not be open to listening to those people.
My friend knows very well that a great many steel wheels are being replaced with aluminum wheels. This is something that creates problems in that type of industry. We are sensitive to that. We are working with the company.
We are very sensitive to what happened to the workers. It would be more sensitive to look to having an industry which could continue to be competitive with industries across the world.


ROUTE CANADA
Mr. Russell MacLellan (Cape Breton-The Sydneys):: Madam Speaker, my question is for the Minister of Transport.
When Manfred Ruhland and his partners were given Route Canada they paid $29 million, none of which was their own money. Then the government turned around and asked CN to give Route Canada $40 million so that it could lay off 1,500 workers. What a deal!
How can the government possibly say that it made a good deal when it gave away $11 million more than it got in return for a $100-million corporation?


Hon. Doug Lewis (Minister of Transport):: Madam Speaker, there are a lot of allegations and a lot of figures in the hon. member's question. Let us put everything in perspective.
The purchasers of Route Canada paid $29 million for a company with an asset base of $40 million or $50 million. The company was losing $40 million to $50 million a year. That is not much of a return on investment in any business, in any country. That is what happened.
In the efforts, CN, the company which sold the asset base, felt that selling it as a going concern would give those employees a better opportunity to see if they could make a go of it. Unfortunately, they did not make a go of it. Everybody regrets that. Nobody takes any pleasure in people losing jobs. But that is part of the competitive system that we all believe in.
CN came to the assistance of some employees who wanted to take their pensions, and they did so. I do not think CN should be chastised for that either.


Russell Gregoire MacLellan: Madam Speaker, Route Canada which was given $40 million and which got rid of 1,500 employees still could not make a go of it.
During the election campaign the government was afraid that Route Canada truckers were going to disrupt the election campaign, so it got CN to carry out negotiations with them. When the election campaign ended so did the negotiations.
Why did the government lead Route Canada workers to believe that negotiations were being carried out in
June 8, 1990

good faith when all the government wanted to do was to shut them up until the election campaign was over?


Douglas Grinslade Lewis: Madam Speaker, I think what we have to decide here is whether we take into account the unfounded allegation of my friend or a letter written on CN's letterhead to The Toronto Star in an effort to put in writing the facts as they are, not on an unfounded allegation.
In that letter it is stated: "In the process we negotiated special agreements to help ease the impact on employees not required to operate the new company profitably. We have met every one of our commitments to employees, pensioners, customers and communities, including the payment of $23 million for separation and related costs of former CN Route employees".
I ask the House and everybody watching to compare that with the unfounded allegation of my friend.


Mr. Joe Comuzzi (Thunder Bay-Nipigon):: Madam Speaker, I would like to follow up on the question that I asked in the House yesterday. It is with respect to the sworn statement of Manfred Ruhland, who stated that he had dealings in this transaction with the then Minister of Transport, Donald Mazankowski.
Will the Deputy Prime Minister tell the House if he had any dealings with Manfred Ruhland before the sale of CN Route, during the negotiating process or after CN Route was sold to Manfred Ruhland?


Douglas Grinslade Lewis: I believe, Madam Speaker, that my friend has inadvertently misread what the actual question in the alleged-heavy on the "alleged"-affidavit of the individual concerned is. I do not think he did it intentionally.
It states: "Who represented CN in the negotiations and sale of TRC?" That is not as put by my hon. friend.
If he is going to read all the names, I would hope he will pay attention to the word "maybe" in the sixth line.


Joseph R. (Joe) Comuzzi: Madam Speaker, I have read the document fairly thoroughly-


Some hon. members:: Fairly!
Oral Questions


Joseph R. (Joe) Comuzzi: I appreciate the comments of my friend with respect to that transaction. I might say that I am very pleased to hear the answer that I suspect I heard, that is, that there were no dealings. That just goes to show that this company was sold to a person, a most undesirable person, who took this company and destroyed the lives of 1,900 people.
Since we cannot always deal with legal obligations between parties, does the government not now have the moral obligation because of this transaction to look after the affairs and the pension benefits that rightly belong to those people who devoted so many years of their lives to CN Rail?


Douglas Grinslade Lewis: Madam Speaker, I want to start off by thanking my friend for withdrawing the allegation of yesterday. I think it is important to this whole affair that that be done. I appreciate that.
I think we should look at the letter in total. It lays out the facts of what kind of money was being lost. I have read a previous statement to the House so I shan't read the same statement. There is another statement that is very important. It is: "Our alternative to the sale was to close down CN Route and lay off all staff in 1985". To lay off all staff and close down was the alternative.
The letter continues: "We chose to sell to purchasers who agreed to use their best efforts to continue in business as a national common carrier. As a result, this is what happened".
"CN and no one else decided to sell its subsidiary after discussions with more than 30 companies beginning in 1985".
This letter is on CN letterhead, and I will table it. It continues: "Our negotiations on the sale were held directly with David Fingold representing himself and his brother Paul as principal purchasers. Their financial credentials were very solid".


GOODS AND SERVICES TAX
Ms. Joy Langan (Mission -Coquitlam):: Madam Speaker, three times in the recent past my leader and I have raised questions in this House with both the

June 8, 1990
Oral Questions
Minister of Finance and the Minister of National Health and Welfare about what the government plans to do to ensure that GST rebates to those on welfare will not be deducted by the provinces.
Three times we have received vague and sanctimonious answers. My provincial colleagues have been asking the same questions of ministers in their provinces.
My question is more specific. It is directed to the Minister of State for Finance.
Has the deputy minister been instructed to clarify this concern with the provincial governments at the upcoming Deputy Finance Ministers' Conference?


John Horton McDermid: Madam Speaker, I will have to take that question as notice and discuss it with the Minister of Finance. We will get an answer for the member.


Joy Langan: Madam Speaker, I am pleased to get yet another succinct reply.
I would then like to ask this question of whoever over there answers these questions. Will they give an undertaking that they will attempt to get from the provincial counterparts to the Minister of Finance an assurance in writing that the millions of Canadian on assistance will not have their GST rebates clawed back and that the matter will not be left in the laps of the gods, who in this case are the provincial finance ministers?


John Horton McDermid: Madam Speaker, the Minister of Finance has expressed his concern many, many times about the behaviour of provincial governments when benefits are provided by the federal government. There are certain jurisdictions in this country that give provinces and the federal government certain powers. We are all becoming very much more aware of that in the discussions that are proceeding at the present time.
The Minister of Finance has been very vocal in his concern that the benefits that flow from the federal government to beneficiaries in this country of ours are received by them and are not taxed back by the provincial government. He will continue to make those representations in the strongest possible manner.


MANUFACTURING SECTOR
Mr. Jim Peterson (Willowdale):: Madam Speaker, can the Minister of Industry, Science and Technology give us the name of one Canadian manufacturer who has phoned him up and said: "Keep up the good work. You are doing a great job, Minister. Your high interest rate, high dollar policies are just what we need to compete"?


Benoît Bouchard: Even in French, Madam Speaker-excuse me, obviously it would take me far too long to give the hon. member all the facts although he must be familiar with the situation that prevailed before 1984. I believe the government's record for industrial development has been excellent. The results are there. I repeat, we are now in a phase where Canadian companies must adjust to international competition and, as a result, are restructuring their operations and must also deal with anti-inflation policies. We are coping. However, I am inclined to think the hon. member was being funny when he asked his question.


James Scott (Jim) Peterson: Madam Speaker, this government's industrial policy is not funny. It involves cuts to R and D and cuts to employment and training. It involves a high interest rate, high dollar policy that is driving Canadian manufacturing jobs south of the border, just so that they can compete under free trade.
What is the result? The result is that since free trade we have lost 172,000 key manufacturing jobs.
Is it a deliberate policy of the government to drive Canadian jobs south of the border? When will it realize that its economic policies are destroying our future? When will it wake up and stand up for Canada?


Benoît Bouchard: Mr. Speaker, it is amazing that we should hear such comments in the House of Commons. Even the Premier of Ontario is promoting a free trade agreement in the United States and all across the world.


June 8, 1990

The Royal Bank said: "Trade deal fuelling investment jobs". "Free trade helping Canadian business" was another statement made. We have a lot of examples.
The premises are wrong. We want to put money into employment. The bill is being stalled in the Senate. It is a bill for money and for jobs.
The Liberals are not serious. They never had a policy. We have sound industrial and economic policies.


BILL C-21
Hon. Warren Allmand (Notre-Dame-de-Grace):: Madam Speaker, my question is for the Deputy Prime Minister or the Government House Leader.
As the minister knows, the Senate, in order to break the impasse with the House of Commons has introduced a-


Mr. Valcourt:: They voted themselves an increase. That will help the impasse. Your Liberal friends now have an incentive to come and sit down and do their jobs.


Mr. McKnight:: They are looking for more days of work so that they can get the $153.


William Warren Allmand: Madam Speaker, as I said, the Senate, in order to break the impasse with the House of Commons, has introduced a motion to refer Bill C-21 on unemployment insurance to a conference between the two Houses, which is the established way of dealing with such differences between the two Houses.


Bernard Valcourt: They have a self-interest now. We are paying them to sit down.


William Warren Allmand: As a matter of fact, there have been 10 such conferences since Confederation.
I want to ask the minister responsible if the government is now ready to respond to the Senate and participate in such a conference to resolve the differences between the two Houses.


Hon. Harvie Andre (Minister of State and Leader of the Government in the House of Commons):: Madam Speaker, you can tell from the reaction to that question that we on this side are tremendous admirers of that other place.
Oral Questions
We think they have been acting very responsibly, particularly recently.
The Senate has sent back its amendments to Bill C-21 which, incidentally, would have added $2 billion to the deficit. This House rejected those amendments and sent them back.
The Senate has sent back a message insisting on those amendments, something that is questionable, certainly from a propriety point of view, since it is this House that establishes the fiscal policy of the country and not that House.
This House has sent back an answer. It is now up to the Senate to respond.
The hon. member is asking us to rely on some arcane procedure that has never been used successfully in this country, one which has not been used since 1947.
It is unconscionable to me for the senators to continue to insist that they have the right to deny the opportunities that Bill C-21 provides to those who are unemployed, pregnant women and so on, and to demand that we take on an additional $2 billion in deficit at a time when the deficit is already causing tremendous pressures on the inflation rate and so on.
I think the responsible thing for the Senate to do is pass Bill C-21 now.


Some hon. members:: Hear, hear!


William Warren Allmand: Madam Speaker, there is overwhelming public opinion in this country against the government with respect to Bill C-21. There has been overwhelming testimony before two committees which opposes the bill. We do not accept the argument of the minister.
The established practice for resolving differences between the two Houses, and it has been done 10 times since Confederation, is to have such conferences. Am I to understand from the minister that the government refuses to enter into a conference to resolve the differences with respect to this bill? Is that the answer of the government with respect to this serious issue?


Harvie Andre: Madam Speaker, the hon. member is wrong in terms of the views

June 8, 1990
Oral Questions
of the public. Sixty-seven per cent of the public is in favour of using UIC funds for retraining, for example.
He is wrong if he suggests that the public is opposed to the reforms of the UI system that are in the bill. I think he should check his facts.
The fact that the Senate went around and heard the same group 200 times does not mean that it somehow reflects public opinion. There is something a little bit obscene about an appointed body saying that it represents the people.


Some hon. members:: Hear, hear!


Harvie Andre: If senators want to represent the people, then they should run for office and be accountable.
The reality is that every Senate scholar in recent memory who is still alive has acknowledged that Senates not behave the way this Senate is behaving.
The conferences the hon. members talks about were last held in 1947. None of them were successful. If the member were to read Beauchesne's sixth edition he would see what he thinks is the required procedure is no longer the required procedure.


Some hon. members:: Hear, hear!


THE ENVIRONMENT
Lynn Hunter: Madam Speaker, now that we have wasted more time of the House during Question Period-


Some hon. members:: Oh, oh!


Lynn Hunter: My question is for the minister responsible for the environment today, if we have one.
We on this side of the House have been calling for action in the environmental assessment review process. At present, the Export Development Corporation does not require environmental review when considering the approval of export loans.
In committee the president of the EDC stated: "If EDC were required to apply environmental standards that other export credit agencies were not, the Canadian exporter would lose the deal".
Does the minister, whoever that might be, accept the view that the bottom line is more important than the global environment?


Hon. John C. Crosbie (Minister for International Trade):: Madam Speaker, the minister, whoever that might be, is me.


Some hon. members:: Hear, hear!


John Carnell Crosbie: The Export Development Corporation is a body set up to assist Canada in its exports. It makes loans to foreign buyers and ensures exports against various risks. It assists in providing jobs here in Canada so that the orders sold to foreign buyers, assisted by our finances, are purchased from Canada so that jobs are created in Canada.
Why is it that the New Democratic Party seems to be totally against anything that is to help workers here in Canada be employed, to be creative and to be paid good wages? That is the whole purpose of the EDC.


James Scott (Jim) Peterson: Then why did you cut it back by $100 million?


John Carnell Crosbie: Madam Speaker, I wish Premier Peterson were as voluble as his brother. He makes as much sense as his brother, but he is not quite as voluble.


James Scott (Jim) Peterson: You have some wonderful brothers, John.


John Carnell Crosbie: I wish I had more of them, Madam Speaker.
If I might continue, Madam Speaker, the EDC fully complies with current federal environmental legislation which does not oblige it to undertake such screenings.
Who are we to say that we will have extra-territorial jurisdiction and to decide what projects should and should not go ahead in other countries? The effrontery of it is amazing.


Lynn Hunter: Madam Speaker, my interpretation of that answer is that the economic priorities of the government take precedence over environmental priorities. We have all known that for a long time.
The Export Development Corporation administers a multi-million dollar budget. The list of environmentally harmful projects in which the EDC is involved is as long as my arm.
It supports CANDU nuclear reactors in Argentina and Mexico, hydroelectric projects in China and India, pulp and paper mills in Indonesia.
June 8, 1990


Madam Deputy Speaker:: Is there a question?


Lynn Hunter: My question is this. Will the government commit itself today to including EDC in the pending environmental assessment review process?


John Carnell Crosbie: Madam Speaker, there will be new environmental legislation coming before the House shortly. Of course the policy that it contains will be dealt with then.
I am not surprised by the question from the hon. member because that hon. member was the one who said yesterday that Newfoundlanders were not of sufficient intelligence and qualifications to be able to take advantage of the Hibernia development and to fulfil the jobs that would-


Some hon. members:: Shame.!


Lynn Hunter: Point of order, Madam Speaker.


Madam Deputy Speaker:: The hon. member for Winnipeg-St. James.


JUSTICE
Mr. John Harvard (Winnipeg St. James):: Madam Speaker, my question is for the Minister of Justice.
There has been yet another dramatic development in the David Milgaard case. One of the chief Crown witnesses now says that he lied at the trial 20 years ago. Ron Wilson says he was pressured by police and manipulated by them.
I now want to know whether the minister takes this latest revelation seriously. I understand that the RCMP contacted Wilson only hours after he went public.
Can the minister confirm to this House that the RCMP and an official from the Department of Justice will be interviewing Ron Wilson in the next few days?


Hon. Kim Campbell (Minister of Justice and Attorney General of Canada):: Madam Speaker, I cannot make that specific undertaking because I am not aware of those specific circumstances.
I would point out that this is the hon. member who has been pressing me to make a decision on this case when in fact clearly all of the evidence that the applicant wishes
Oral Questions
to bring forward has not been brought forward. I would say that after the hon. member's last question, which I think was on about June 5, on June 6 counsel for Mr. Milgaard identified a former trial witness whom he said had relevant evidence, and this may be the person to whom he is referring.
We are taking into account all of the evidence which counsel for Mr. Milgaard wishes to bring forward. When we are assured that the case is complete from their point of view, the review will be completed and I will make the adjudication as Minister of Justice.


John Harvard: Madam Speaker, my supplementary question is for the same minister.
As the minister well knows, Ron Wilson is not the only Crown witness to have changed his story. Another witness recanted on the stand at the trial and was declared a hostile witness. In fact none of the testimony of the Crown witnesses appears to be solid at this time. This whole case against Milgaard is unravelling before our eyes.
I want to know from the minister whether the Department of Justice has interviewed all the Crown witnesses in the last few weeks or months and, if not, why not?


A. Kim Campbell: Madam Speaker, the Department of Justice has reviewed all the evidence that has been brought to its attention. A report is being prepared for my consideration. I will review it.
I do not believe that this House is the proper place to re-enact the trial of David Milgaard. I want to ensure that the case that he and his counsel bring forward to me-and it is a very serious responsibility to question the findings of not simply a trial court but an appellate court-are considered in the fairest and most dispassionate way, and not in the kind of media circus which the hon. member seems to prefer as a process in this country.


Mrs. Beryl Gaffney (Nepean):: Madam Speaker, my question is for the Minister of National Health and Welfare.

June 8, 1990
Oral Questions
We all appreciated the decision to end exposure to tobacco smoke on Canadian air carriers as an integral component of the program to reduce both health and economic costs to our nation.
Now his colleague, the Minister of Transport, is considering an extension of three years before implementation of this policy, which is clearly a cave-in to the airlines. It is jeopardizing our health objectives for air travellers and for flight attendants.
How can the minister possibly approve of his colleague taking such a backward step?


Hon. Perrin Beatty (Minister of National Health and Welfare):: Madam Speaker, if the hon. member had checked the facts, she would know that Canada is a world leader in terms of the fight against tobacco. Today, some 95 per cent of all flights by Canadian carriers are smoke-free.
Canada is the one country that is determined within three years to eliminate all tobacco usage on Canadian carriers.
Canada will be reducing by 25 per cent the seats available for smoking as of July 1 of this year.
Canada will be operating internationally with IATA to seek international co-operation to reduce and eliminate smoking on flights around the world.
Canada has spelled out to the airlines that we are serious about ensuring that they must co-operate in eliminating the use of tobacco on airlines in Canada and around the world.


Beryl Gaffney: Madam Speaker, I believe the minister has just confirmed to me that they have already approved that extension of three years.


Douglas Grinslade Lewis: That is what we said, yes.


Beryl Gaffney: What does the minister say to flight attendants and travellers who are concerned about three more years of high levels of concentration of tobacco smoke? How can the minister explain to flight attendants that money to the corporations is more important to him than their health?


Douglas Grinslade Lewis: Madam Speaker, perhaps I can assist my hon. friend in her quest for information as to how the flight attendants feel. I
could provide her with the correspondence that I got from employees of the airlines who are concerned about the fact that if this arrangement had not been made Canadian airlines would have been forced to compete on an unequal playing field, because all the other airlines in the world allow smoking and Canadian airlines are going to be smoke-free in three years.
They have asked me, as Minister of Transport, to be sure to take into account the health of workers, yes, but also the health of the airlines they work for.


ROUTE CANADA
Mr. Les Benjamin (Regina - Lumsden):: Madam Speaker, I have a couple of questions for the Minister of Transport who insists that the sale of Route Canada was purely a decision of CN and that it was done only by CN.
Would the minister tell us who was present at the negotiations before cabinet gave approval to the sale? Prior to the government approving the sale, who knew that up to 1,900 workers would be out of a job? Will the minister take some responsibility for those 1,900 workers?


Douglas Grinslade Lewis: Madam Speaker, despite the time, I am pleased to answer a question that has already been asked during the normal Question Period time.
CN and no one else decided to sell its subsidiary after discussions with more than 30 companies, beginning in 1985.


Leslie Gordon Benjamin: Madam Speaker, the government was the representative of the shareholders of Canada of Canadian National. It has the responsibility to protect the shareholders, namely the people of Canada.
The government brags about using sound business practices. Could the minister tell me what boneheads agreed to sell a company for $29 million when it was appraised by experts at $72 million? Who would be dumb enough, using sound business practices, to do that?


Douglas Grinslade Lewis: Madam Speaker, I am pleased to quote from a letter from CN to The Toronto Star
CN was a money-losing trucking subsidiary of Canadian
National Railways. Canadian National, with a debt load then
June 8, 1990

approaching S 3.5 billion, could not continue to absorb annual losses of $40 million without affecting our railway operations.
CN, and no one else, decided to sell its subsidiary after discussions with more than 30 companies, beginning in 1985. Our negotiations on the sale were held directly with David Fingold, representing himself and his brother Paul as principal purchasers. Their financial credentials were very solid.


Madam Deputy Speaker:: Order.


Douglas Grinslade Lewis: Oh, are we out of time?


Madam Deputy Speaker:: I thank the hon. minister for giving two more minutes of his precious time to the House.


PRIVILEGE
Lynn Hunter: Madam Speaker, I am rising on a question of privilege. During Question Period earlier today the Minister for International Trade accused me of making statements that were very insulting to Newfoundlanders.
I would offer him an opportunity now to retract and to apologize to me.


John Carnell Crosbie: Madam Speaker, I would certainly be glad to apologize to the hon. member if there was anything to apologize for. However, I think we should wait until Hansard is available to see exactly what the hon. member said yesterday when she was denigrating the workers and people of Newfoundland.


Madam Deputy Speaker:: The hon. Minister of Energy, Mines and Resources.


Hon. Jake Epp (Minister of Energy, Mines and Resources):: Madam Speaker, that is what happened in the debate yesterday. The hon. member strongly opposed the bill in favour of development and workers in Newfoundland. If you check page 12502, you will also find that her colleague, the member for Saskatoon-Clark's Crossing, played a very interesting game quoting a royal commission as follows:
It must be recognized that the majority of Hibernia development expenditures will be incurred outside Newfoundland. The skilled labour force in the province is limited. The number of local companies capable of significant involvement in the offshore industry is also relatively small.
Points of Order
That leaves the distinct impression that Newfoundlanders would not get benefits, they are not capable, and that is wrong.


Lynn Hunter: Madam Speaker, I would ask you to rule. I ask you to look at the speech that I made in the House yesterday. You will see that I was not talking at all in insulting terms about Newfoundlanders. I was talking about our party, as the party for all of Canada, having a right to talk about the expenditure of billions of dollars of taxpayers' money.


Madam Deputy Speaker:: I think this is actually a continuation of the debate we had yesterday.
The hon. member for Kingston and the Islands (Mr. Milliken).
>k >k *


POINTS OF ORDER
Peter Andrew Stewart Milliken: Madam Speaker, I rise on a point of order. During the statements under Standing Order 31 earlier today, Your Honour cut off me and the hon. member for Calgary Southeast in the course of our presentations, and also the hon. member for Kamouraska-Riviere-du-Loup.
I want to object to that on behalf of at least two of us. I presume that Your Honour's view was that we were making statements that were disrespectful of the other place. I deny that. My statement was not in the least disrespectful of the other place. I was simply pointing out who in the other place had moved the motion to increase the allowance paid to senators. It was, of course, the assistant government House leader in that House.
The hon. member for Calgary Southeast had not said anything in his statement that I heard that was disrespectful of the other place and none of the members on this side of the House were objecting to his statement for that reason.
I suggest that to be fair, Your Honour ought to give us additional time to repeat our statements.
Now the hon. member for Kamouraska-Riviere-du-Loup was a little close to the line, I will admit, and maybe Your Honour was correct in interrupting him. However, the two of us had been very careful to avoid speaking disrespectfully. I would not speak disrespectful-

June 8, 1990
Routine Proceedings
ly of the other place. I have defended the other place in this House on numerous occasions, to the great annoyance of the government House leader, and I would be pleased to do so again at the appropriate time.
I think the two of us are quite innocent of any wrongdoing. Our statements were in order and we ought to have been allowed to complete them.


Lee Richardson: Madam Speaker, I too would like to rise on a point of order with reference to being interrupted today during my statement pursuant to Standing Order 31 about the outrage of Canadians about the Senate rewarding themselves an extra $153 a day over and above their already generous salaries.
I referred to the Standing Orders to note that no member shall speak disrespectfully or use offensive words. I do not recall using any disrespectful words about the Senate. I did not call them our national unelected boondogglers. I did not call them appointed profiteers. I made no disrespectful mention.


Madam Deputy Speaker:: Both hon. members have risen on this point of order and referred to our Standing Order that says that no one in this House should speak disrespectfully of the other place.
I think the hon. members will accept my judgment that in either content and/or tone the remarks made today could very easily be construed as disrespectful to the other place. That was my decision at that time and I stand by it.


ROYAL CANADIAN MINT
Peter Andrew Stewart Milliken: Madam Speaker, the government House leader's office was very quick to call my office and inform me of that tabling. In fact, I have asked for another copy of it. However, I believe he will find, if he checks-and I hope he has taken the time to do so-that that is in fact the annual report of the Royal Canadian Mint. I did not ask, in my statement yesterday, for the annual report.
If the hon. member will look at page 12459 of Hansard of yesterday, he will see that I requested the capital budget summary and the corporate plan summary. Those were the two documents I requested. Those are not the documents referred to in Votes and Proceedings on the date in question.
I am informed that it was the minister's own publication that listed these as late. I realize it was his colleague, the President of the Treasury Board, who happened to point out the fact that they were late. I hope that he will check, as I am trying to do, to ascertain that the document referred to in Votes and Proceedings was in fact the annual report, which may or may not have been on time, but which is at least before the House. It is the other two documents that I asked for. I did not ask for the annual report and I hope that the minister will check this out.


Hon. Paul Dick (Minister of Supply and Services):: Madam Speaker, I think it appropriate, as the minister responsible for the Canadian Mint, to point out that the reports for which the hon. member made a request yesterday will be tabled very soon.
I know he will be extremely pleased to know that the reports, when tabled, will show that for the fifth year in a row the Mint showed a profit, this year of over $7 million.


Harvie Andre: Madam Speaker, yesterday the hon. member for Kingston and the Islands rose in some concern that the anxiously awaited reports of the Royal Canadian Mint were somehow not tabled. I just want to acquaint him with the fact that Votes and Proceedings of April 11, 1990, point out that the report of the Royal Canadian Mint was tabled in this House.
Perhaps we might both anxiously leaf through this document to see if the information he and I were both anxiously seeking is there and available for us.



ROUTINE PROCEEDINGS

['Agreed.']
Madam Deputy Speaker:: I must inform the House that there is an unfortunate error in today's Order Paper. Senate Public Bill S-14, an act respecting the laws prohibiting marriage between related persons, is incorrectly indicated as having been deemed read the first time. It was placed on the order of precedence under Private Members' Business.

June 8, 1990

In fact, the bill should have appeared on this day's Order Paper under the heading "First Reading of Senate Public Bills" in Routine Proceedings and is therefore eligible to be considered for first reading at this time.
* # *



Leslie Gordon Benjamin: Madam Speaker, the roll of petitioners gets longer and longer and goes on and on, and will continue to do so.
I wish to present a number of petitions with over 1,900 signatures of Canadians who are protesting the implementation of a goods and services tax because it is unfair to low and middle income families.
They call upon this House to reject the proposed tax, to bring in genuine tax reform based on the income tax system and to put an effective minimum tax on wealthy individuals and corporations. For this, your humble petitioners will ever pray.


Mr. Robert E. Skelly (Comox-Alberni):: Madam
Speaker, I have a petition containing close to
1,000	names from citizens in virtually every province of Canada who are opposing the cuts in funding to the Northern Native Broadcasting Access program and also to the Native Communications Program which has been cut by 100 per cent, even though that program provides a valuable service in promoting and enhancing literacy among aboriginal peoples and also in preserving and enhancing the aboriginal languages and cultures of aboriginal people.
The petitioners call on the government to consider the advisability of reinstating both the Native Communications Program and the Northern Native Broadcast Access program at full funding levels, and also to conduct consultations with groups affected before any of these types of cutbacks take place.


Robert Evans Skelly: Madam Speaker, I have another petition, again from several hundred Canadians mainly from my constituency, calling
Routine Proceedings
on the government to cancel the proposed goods and services tax.
The petitioners call on the government to reject the current proposal for the goods and services tax and to reform the taxation system so that there is an effective minimum tax on wealthy individuals and corporations.


Robert Evans Skelly: Finally, Madam Speaker, I have a petition with respect to the federal-provincial Forestry Resource Development Agreements.
The petitioners encourage the Parliament of Canada to renew this important agreement with British Columbia and therefore to provide for renewed commitment to restocking our forest land, advancing forest research, promoting silviculture, and assisting the forest industry in developing the new products and markets that will provide us with forestry jobs in the future.


Peter Andrew Stewart Milliken: Madam Speaker, I am pleased to present a petition signed by numerous residents of Newfoundland, particularly from Melrose, Bonavista, Port Rexton, Deer Lake, and Labrador City.
These persons have signed a petition objecting to the goods and services tax being imposed by the government, its thirty-second major tax increase since taking office in September, 1984.
These residents of Newfoundland, like many other Canadians, are groaning under the burden of Tory taxation. They call upon Parliament to reject this additional burden being imposed in the goods and services tax.


John Harvard: Madam Speaker, petitions against the goods and services tax continue to pour in. I have some in my hand right now.
Despite the fact that the GST legislation has passed through the House and is currently in the other place, Canadians, it is quite evident, are still very much opposed to the GST. They are still hoping that the government will come to its senses, sooner rather than later, and abolish this proposed tax.
The petition I have in my hand is certified correct as to form and content. It cites the usual strong arguments

June 8, 1990
Routine Proceedings
against the GST and calls on the government, at the eleventh hour, as it were, to put a stop to this unfair tax.


Mr. Dan Heap (Trinity-Spadina):: Madam Speaker, it is my honour and duty, under Standing Order 36, to present four different petitions. The first one is a petition with more than 890 names from many parts of Canada, but especially from Toronto and from Trinity- Spadina.
The petition opposes the goods and services tax for reasons that I will not cite. It gives specific alternatives by saying that the undersigned residents of Canada call upon Parliament to reject the current proposal for the goods and services tax; to cancel the tax breaks for rich individuals and corporations; to reduce the need for a sales tax by reducing the bank interest rate to 2 per cent, so as to reduce interest payments on the federal debt and increase small business and general employment; and to increase employment in such useful work as protection of the environment, restoration of needed roads, sewers and bridges, air traffic control, improved VIA service, and industrial research and development.
I have another petition on the same subject, Madam Speaker, which simply calls upon Parliament to reject the goods and services tax.
I have still a further petition which is much more specific. It concerns the fact that skating lessons will be taxed. The petitioners point out that the sport contributes significantly to the physical and mental health of our youth. They pray that Parliament will consider instruction in skating as an educational service and therefore exempt skating educational expenses from the proposed goods and services tax.


Daniel James Macdonnell Heap: Finally, Madam Speaker, I have over 1,000 names on a petition from all parts of Canada from people who are deeply opposed to the low-level flight training being continued by our government in Labrador and eastern Quebec.
They call upon Parliament to join with the Assembly of First Nations, the Innu of Labrador and other aboriginal peoples in opposing the use of their land for NATO-NO-RAD attack training. They demand that Canada cease NATO operations in Canada, including the proposed tactical fighter and weapons training at Goose Bay which
is considered for expansion. They demand that Parliament redirect Canada's NATO-NORAD funding toward enabling Canada's aboriginal peoples to regain control of their lands and their livelihood and toward promoting sustainable development for all Canadians.


Sheila Finestone: Madam Speaker, like my colleague, I have a series of petitions which I present to .you pursuant to Standing Order 36.
The first is a petition with respect to VIA Rail travel and the cutbacks to that service. The petitioners bring to your attention what they consider to be the shameful attack on Canada's infrastructure and the cutting back of service which enables them to travel and to meet their commitments, both to the health and welfare of their children and in the light of certain handicaps. They feel it is absolutely essential that we maintain the transportation needs of people in outlying districts.
Therefore, they call upon Parliament to maintain, improve and modernize VIA Rail services in those areas of the country where it can provide a more rapid, economical, safe, convenient, environmentally sound, and energy efficient alternative to other means of transportation.
I will not read all the whereases for you, Madam Speaker, but it is interesting that these petitions are coming in again at this time. It must be travel time for a lot of people from the Gaspe area, for example.


Sheila Finestone: Madam Speaker, I also have three different forms of petitions with respect to the goods and services tax. Again, I will not remind you, because we have heard it so often, of how unhappy the population is about the goods and services tax.
This particular petition comes from those who are involved in the distribution of cultural properties. In this instance they call upon the government and Parliament to reaffirm the historic principles embodied in the tax-free status for the printed word by retaining the zero-rate in the goods and services tax legislation and its regulations. That is with respect to the book industry.
June 8, 1990

Those who are involved in occupational therapy, physiotherapy, social services, speech language pathology, and audiology call upon the House not to impose the goods and services tax on any health care services, whether in public institutions or in the community.
Again, hundreds have signed the general petition that has been circulating calling upon the House simply to re-examine the goods and services tax and find a more fair and equitable way to improve the tax structure.


John R. (Jack) Whittaker: Madam Speaker, it is indeed a privilege and a pleasure to present, pursuant to Standing Order 36, yet another petition against the goods and services tax.
The people of British Columbia, in fact the people of Canada, have not given up hope that the government will come to its senses. They continue to sign and send in petitions against the goods and services tax, asking the government to look at reasonable alternatives that will be fair to all Canadians rather than a tax system that will simply help its corporate and wealthy friends.


QUESTIONS ON THE ORDER PAPER
Hon. Marcel Danis (Minister of State (Youth), Minister of State (Fitness and Amateur Sport) and Deputy Leader of the Government in the House):: Madam Speaker, I suggest that all questions stand.


Madam Deputy Speaker:: Shall the questions stand?


Some hon. members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that Bill C-69, An Act to
Government Orders
amend certain statutes to enable restraint of government expenditures, be read the third time and passed.
John Paul Manley: Madam Speaker, before Question Period, I was giving a few examples of the problems we find in our post-secondary education system here in Canada, and I mentioned some problems at McMaster University in Hamilton.

There are problems though throughout Canada in post-secondary education. They are a signal to us that we are at risk in Canada of imperilling our economic well-being in the future because of the failure of our system to produce trained and well educated people.
I will take you Madam Speaker, on a brief tour across Canada.
In the University of Manitoba Department of Computer Science, for example, courses for non-specialists in computer science have had their class sizes increased to over 200 people and line-ups to use computer equipment are commonplace because there is not enough equipment to go around. One computer course for non-specialists was eliminated altogether due to lack of funds. Three faculty members in that program have resigned-one to go to the United States, one to teach in high school and one to join the private sector. In all three cases, it was in order to obtain pay increases.
Another professor says that in his classes he has embarked on trying to shake down the class size, since they are so large, through a process of intimidation and refusing the students the right to ask questions so as to encourage them to drop his course.
In Newfoundland at Memorial University, Dr. Leslie Harris, the president, has recently had to announce an interim hiring freeze. He says that further measures are going to be taken to make up the difference in the short-fall in the university budget. Dr. Harris stated:
We have eliminated approximately $4 million from capital operating costs and many of the projects we have had to drop are of critical importance. These include such things as roof repairs, road improvements, classroom renovation, replacement of desks and other classroom equipment, repairs to tunnels and other necessary projects.
Dr. Harris said that inadequate funding is reflected in the ability of the administration to provide services and facilities for students. He said:

June 8, 1990
Government Orders
The fabric of the place suffers. Old plant and equipment which breaks down, the deteriorating quality of classrooms and classroom materials, desks, audio visual equipment, the lack of space for recreation and social activities-these are some of the prices we pay when we cut back.
With regard to the University of Alberta in Edmonton, a newspaper report in The Leader-Post of Regina in April of this year stated:
The University of Alberta has adopted a plan to freeze enrolment at its current level next year.
The board of governors voted in a closed meeting last week to limit enrolment for 1990-91 to the present level of 29,500 students. This means entrance requirements could be raised to a 73 per cent average mark from 70 per cent.
The problem is also reflected in the level of tuition fees in the universities. The Canadian Federation of Students has made this point and has raised the prospect that many qualified Canadian students are unable to pursue their education because of the sky-rocketing tuition fees and other costs.
For example, between 1989 and 1990-91, tuition fees have climbed at Memorial University in Newfoundland from $1,280 to $1,344; Dalhousie University, from $1,710 to $1,771; and Mount Allison in New Brunswick, from $1,935 to $2,135. Quebec is exemplary in respect of tuition fees, but even it has had a significant increase. McGill University went from $570 to $890. At McMaster in Ontario it went from $1,516 to $1,637. I could go on across the country, province by province.
If I might be permitted, I will comment on the relevant weight of tuition fees.

The Province of Quebec has set an example for the rest of Canada in the way it handles tuition fees for students. If we want our students to be well educated and well prepared for the future, we must reduce, not increase tuition fees.
Quebec has set that example; tuition fees are as little as one-third or one-quarter of what they are in other provinces. Surely, if we put a high value on education we would see to it that cost does not prevent people from pursuing their education.
Going on, George Pedersen, President of the University of Western Ontario, issued this stem warning:
The university system in Canada is in trouble. Serious trouble.
Mr. Pedersen said that the quality of instruction available to university students today is not nearly so good as that provided to their parents who attended an Ontario university 30 years ago. Class sizes are now much larger, laboratory equipment is outdated, students get more of their instruction from graduate students and part-time instructors instead of regular professors. Mr. Pederson further stated:
The reinstatement of quality in our universities is, without question,
the number one challenge to the system.
I go back to the question I posed at the very outset of my remarks. What kind of Canada do we want in the year 2020? Surely, if we want a Canada whose hallmark is a well-educated, skilled, capable population able to enter into the global competitiveness in an energetic and enthusiastic way to meet the best that the other nations of the world have to offer, we have to focus our resources on post-secondary education. It is of critical importance. It is not an option. If we think education is expensive, we ought to stand back and figure out what the cost of ignorance is.
There are other aspects of this bill that I would like to comment on as well. Before I do though, I want to restate this question because I want these remarks not to be considered as being highly partisan. I do not intend them to be highly partisan. I have already said that I understand why the government must be frustrated with what the provinces are doing in education. What I really want to stress when it comes to post-secondary education is that we need a national strategy in Canada to ensure that our post-secondary educational system is not compromised by the need to achieve fiscal responsibility at all levels of government.
This calls for very great skill and judgment on the part of the leaders of the provinces, as well as the leaders of the federal government, to find a new method of funding the universities that ensures quality and accessibility of education for all qualified Canadians. It is crucial.
In addition to reducing the transfer payments to the provinces in respect of post-secondary education, Bill C-69 has a similar effect on the transfer payments for health. Again they work in the same way, a block amount of money. Cash or tax points are transferred to the provinces on a non-accountable basis so that they can be
June 8, 1990

assisted in paying for the health care. I suggest that what we need to do is appeal to the health ministers in Canada to agree on what standards of health care are needed across Canada, and then ensure that adequate funding from the proper level of authority is available to achieve that.
I suggest that block funding is no longer working. We get many reflections of this. Some of these have come in through the testimony that was presented to the Standing Committee on Finance of this House when it examined the provisions of Bill C-69.
I would like to cite the evidence of Mrs. Carol Clemenhagen, President of the Canadian Hospital Association. She said this to the Standing Committee on Finance:
Prior to the February 20 budget, the CHA (Canadian Hospital Association) calculated that the cumulative loss the provinces have already experienced from 1986-87 to 1989-90 because of the 2 percent reduction in EPF growth was S2.6 billion, and the projected cumulative loss to the provinces from 1990-91 to 1995-96 because of the combined 3 percent reduction in EPF growth is $19.4 billion.
That is a lot of money, no matter who is counting. She goes on to say this:
Reductions in the EPF transfers challenge provincial governments either to reduce health care and post-secondary education budgets or to increase taxes. We believe a national framework of stable and adequate EPF funding is a prerequisite to achieving health goals. In the case of health manpower, cuts to EPF threaten both the health system in which health professionals work and the education system in which they are trained.
There are many examples of the way in which the strain on health budgets is affecting health care in Canada. Some of these examples came forward before the finance committee when it was considering this bill. It is interesting that governments at all levels are cutting back on funding which is going to hospitals. I think all of us are conscious of the enormous effort that the volunteer sector is now having to put into raising funds for health care in the communities across Canada; volunteer contributions of time and money are becoming crucial. In the face of that, there are government initiatives which are responsible for increasing the financial burden on hospitals. The evidence at the finance committee showed that increasingly the only option appears to be to
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divert resources from direct patient care to meet some of these regulatory requirements.
There are some examples that I can give. The workplace hazardous material information system involves an extensive, in-house training program to comply with new initiatives which took effect in 1989. There is environmental legislation, including legislation dealing with transportation of dangerous goods, very important legislation, critical legislation, and yet it is imposing an additional financial burden on the hospitals of Canada. Pay equity legislation is another example. Unless the governments, whose responsibility it is to fund a health care system, are able to come forward and to assist in bearing these burdens, the health care system is in peril.
If you would permit me one last quotation from the evidence before the finance committee, it is very striking. I am quoting from the witness, Ms. Heidemann, who appeared before the finance committee as Chairman of the Board of Directors of the Canadian Hospital Association. She said:
In some provinces, Quebec for example, the pressure has become so intense the hospital associations have expressed the desire to debate the merits of alternate sources of health care funding, including certain privatization options.
I think it is evident that the pressure on the system is inevitably going to result in poorer or more expensive or privatized service in the health field. I do not think that this is what any of us want for Canada. Again, I go back to the original question. What kind of country do we envisage for the year 2020? Where do we want to go, as a country? What kind of society do we want this to be? Surely, it is one in which we are assured that health care is adequate and generously available to all Canadians.
The other aspect of this bill that I would like to comment on briefly is the decision to put a 5 per cent limit on payments under the Canada Assistance Plan to three provinces in Canada, those three provinces being Ontario, Alberta and British Columbia. The Canada Assistance Plan is the source of assistance in our society for the poorest members of our society. CAP is not a luxury. CAP is a bare essential to ensure that everybody in our society maintains at least a minimal standard of living.

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I think that when we put this kind of limitation on CAP, what we are saying again about the kind of society we want to be in 30 years time is that we are going to leave it to everyone to fight for their own well-being, without any concern for our weakest, our poorest, our disabled, and so on.
The question I feel we need to address in asking what kind of country we want this to be is, does this kind of decision bring out the best in Canadians, or does it do otherwise.
There are always those who are going to say to us that poverty is a self-inflicted wound, that hunger, where it exists-and many deny that it exists in Canada, and they are quite wrong-can be relieved if people are only willing to work hard.
I suggest that those of us in positions of leadership have every responsibility to address those arguments and to expose them for the lies that they are. The reality of Canada today is that there are increasing examples of poverty and hunger among children especially, and we must not take measures that make it harder for those people to make do in our society. If so, we deprive ourselves because we are making this a country of much less compassion and care.
I think that deprives all of us of the satisfaction of knowing that we share not only enormous natural wealth, but we share it fairly in a way that ensures that everybody has adequate resources.
When you look at what was happening at the end of the decade of the 1980s, when you look at the share of national income, you find that high income people have increased their share of the national income beyond what it normally would have been at the start of the 1980s. Given ordinary projections, that share of national income which goes to high income people is about $4 billion more than it would have been if it had followed the same course as in 1980.
What this suggests to me is that inequalities in Canada increased over the decade of the 1980s. We are conscious of the number of people who rely on food banks for food; we are conscious of the number of single parents and of children who live in poverty in Canada. Is this the time, for whatever good fiscal reason there may be, for the federal government to signal that now they want the
poorest in Canada to look after themselves? I suggest not.
I know that the government is going to say: "Well, we didn't put this limit on the Canada Assistance Plan payments across the board. We only put it on the three richest provinces."
The data shows that the three richest provinces have most of Canada's poor people living in them. Fifty-four point nine per cent of Canada's poor individuals, and 49 per cent of Canada's poor families live in Ontario, Alberta, and British Columbia. The CAP arrangements were strictly a 50 per cent federal contribution to the costs of the social welfare system based on federal-provincial agreements.
To intervene in this is not only callous and unfeeling, not only does it send out the wrong kind of signal as I mentioned earlier but it means that, in a very cold, calculating fashion, the federal government has reneged on agreements with the provinces and is shifting the burden of its deficit on to the provincial treasurers.
This is really where I would like to finish. Underlying what we have seen in the context of Bill C-69 highlights for us the problems of funding and post-secondary education, health care, social assistance payments and other things that I have not mentioned between the federal and provincial governments.
After that, the federal government justifies these cut-backs on only one solitary ground. That ground is it wants to reduce the deficit. The reality of the situation is this. It is not benefiting Canadians as a whole one bit with these measures, even though deficit reduction is a valid and good objective. All it is doing is shifting those burdens from the federal government to the provincial governments.
These are not luxuries that we are talking about. Post-secondary education, health care and social assistance are not optional or things that we can have if we have a good day or a good year. These are essentials for our society. If we are going to continue to build the best kind of country that we want, we have to ensure the adequacy and security of our post-secondary education, health care and social assistance programs.
This may require new kinds of arrangements. In fact, I believe it does. It may require very difficult negotiations between the federal and provincial governments. I am sure it will, but it does not require the callous cutting
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back of payments to the provinces for these vital ingredients of our national life.
The present Minister of Finance was a member of the opposition when he said in 1982, long before he became Minister of Finance, that cuts to EPF could have disastrous effects on universities and colleges, on hospital funding and on the operation of hospitals. He had it right. Now he has the gall to stand in this House and say: "Well, it is all block funding anyway. The provinces do not pay their share." Maybe they do not. I might even acknowledge that.
I am not contending to defend the provincial governments in this matter. I think they bear a heavy burden of responsibility in the area of funding. I think it is also true that, when we pick these areas to reduce federal spending programs, we do it at the expense of those critical things that the provincial governments have the responsibility of providing.
In concluding, when I think of the kind of Canada that I would like to live and grow old in and that I would like to see my children grow up in, it is one in which education is considered a basic and fundamental right, where the very best education is readily available to Canadian students so that they can afford it and so that it will provide us with a base of highly qualified people to help build the strong, value-added economy that we talked about.
It is a Canada in which health care is readily available, not only adequate, but the best in the world, and again, universally affordable for everyone. It is one in which those who are too weak, too poor and too powerless to adequately care for themselves are taken care of in a compassionate and caring way.
As long as we share those values as a nation, many of our other conflicts and difficulties will find ways of sorting themselves out.


Chris Axworthy: Mr. Speaker, I am pleased to rise to participate in the debate on Bill C-69, the Government Expenditures Restraint Act.
There are two things on which I would like to concentrate my comments. The first relates to the two-year freeze on transfers to the provinces of money which has traditionally been targeted for health care and post-se-
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condaiy education. Of course, this two-year freeze means that, with the impact of inflation running at around 5 per cent a year, moneys transferred to the provinces for health care and post-secondary education will be reduced by about 5 per cent a year.
The second point I would like to discuss is the cap on the Canada Assistance Plan. The Canada Assistance Plan will increase to the richer provinces by only 5 per cent a year. This 5 per cent will cover inflation and, consequently in real terms, the financial assistance provided to the richer provinces in Canada by the federal government for the social welfare system will experience no growth whatsoever.
The government's expressed preoccupation is with controlling the deficit. The question is not whether to reduce the deficit but how to reduce it. I do not want to appear unrealistic. I do not want to appear to be overly challenging the government's pessimistic view of the importance of the deficit. I share the importance of the deficit to Canada.
The question is: How are we going to reduce the deficit? Bill C-69 represents 70 per cent of the government's deficit reduction program contained in the 1990 budget. Fully 70 per cent of the reductions in expenditures are expressed. Under this bill, who will be affected?
Those people who will be affected are the sick, because these are expenditures which have been reduced to the health care system, students and those working in our post-secondary education institutions because of cuts to post-secondary education. Third, the poorest in our society, those who are on social welfare in the provinces of British Columbia, Ontario and Alberta will be affected.
This is a disgrace. To call it, as the minister did this morning, balanced and reasonable is the rankest of hypocrisy. There have been statements by the government and indeed by the Prime Minister on enhancing and improving social services. We all recall the statements regarding the sacred trust, the need and importance of a world-class education system and a world-class health care system in Canada. We recall, too, the argument that the Prime Minister has been making since 1984 that the social system in Canada is a priority of the government and would not be cut. It would be enhanced.

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This is all well and good. The expenditures on post-secondary education, health care and social welfare should be a priority of all Canadian governments. But, actions speak louder than words. It took the Conservative government two years to turn its mind to attacking federal transfers. Perhaps it looked at the damaging cuts of previous Liberal governments, perhaps it needed to bolster its fortitude.
By 1986, the attack on funding to the provinces, which had traditionally gone to health care and post-secondary education, had begun with a vengeance. Between 1986-87 and 1994-95, if the government makes no further cuts-and we cannot rule that out-the reductions in federal transfers to the provinces for post-secondary education and health care will amount to almost $29 billion. That is according to the Library of Parliament figures, not my figures.
My province of Saskatchewan, during this eight or nine-year period, will lose $1 billion in funding from the federal government. The federal government commitment to post-secondary education and health care has been longstanding in this country. It is at least since 1912 that the federal government supported agricultural education. Since the late 1960s, it instituted the national health care system.
In 1977, the Established Programs Financing Act- that is how it is traditionally described and is what we are working under now-was passed. Although the grants under that legislation are unconditional grants to the provinces, clearly they are designed for post-secondary education and health care. The history of the 1977 act makes quite clear that governments have, over a long period of time, intended and required these moneys, prior to 1977 to be spent on health care and post-secondary education. The present government members when in opposition accepted this. Indeed the present Minister of Finance, while in opposition in 1982, said in referring to cuts in transfer payments:
The minister is proposing to cut spending in two very important areas. He is prepared to risk major cut-backs in medical care and postsecondary education. Rather than rush into this on a unilateral basis and force spending cuts and service cuts on the provinces, would the minister and the government consider entering into two or three national conferences on health and post-secondary education so that we can set out the national objectives of the various levels of government in 1hese two important areas before we cut spending, and
before we cause closures of hospitals and cut-backs in post-secondary
education?
The government members cannot have it both ways. They cannot argue as they did in 1982 that the transfers to the provinces are for health care and post-secondary education, and then in 1990 argue that transfers are not for those purposes.
The Minister of Finance, in making his statement in 1982 in response to cuts by the Liberal government of the day, could in fact be making statements which apply today. The arguments are as telling today as they were when the Minister of Finance made them in 1982. The only difference of course is that now we have a Conservative government making those cuts rather than a Liberal government making the cuts.
Indeed it is an interesting comparison to look at what Liberals say in government and in opposition, and look at what the Conservatives say in government and opposition on this particular issue, we see that the important thing is not which party you are in but whether or not you are in government. If you are in government then the cuts are made and argued for as a need to reduce the deficit, whether you are a Liberal government or a Conservative government. If you are in opposition, the cuts are criticized as being an attack on the future of Canada and the future of our health care system and post-secondary education system.
I would point out that the New Democratic Party has been consistent in its opposition to these cuts, whether they are made by Liberal governments or Conservative governments.
Why is the federal government involved in funding post-secondary education and health care in the first place? It is clear that it is in the national interest to do so and to ensure equal accessibility and high quality health care and post-secondary education.
This is as it should be. The federal government should be involved in ensuring that no matter where you live, no matter what your economic resources, you have access to appropriate health care facilities and appropriate postsecondary education opportunities.
The cuts which have taken place by Liberal and Progressive Conservative governments have indicated a lack of commitment to these national interest goals when they are in government. When in opposition they talk of the importance of adequate funding for post-se-

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condary education and health, but then when in government, in the name of deficit reduction, they make cut-backs.
Let us look briefly at the impact of these cuts. With regard to health care, we have seen line-ups for medical services. We see the British Columbia government being sued at this very moment for failure to provide appropriate health care facilities. We see patients in British Columbia and Ontario being sent to the United States for treatment and, of course, that treatment being paid for with Canadian dollars.
Patients have even died because of problems in the health care system. All the actors in the health care system, doctors, nurses, all the health care professionals, consumer goods, patients' rights groups, have all pointed out the critical condition of our health care system.
We have to add to that the fact that costs may continue to rise as a result of an aging population. Clearly, we have a critical situation in our health care system, and yet the federal government chooses today to make its third attack on its support mechanisms for health care.
It cannot be doubted that this is short-sighted and in the long run it will add both to Canada's health problems and to the costs of running our health care system.
It is clear, and everyone in the health care system points this out, that if a person is required to wait in order to obtain health care treatment, then the cost of the system increases as the illness becomes more acute.
We have major and critical problems in our health care system and yet the federal government chooses a time when those problems are acute to cut funding to the provinces for those very facilities.
In terms of post-secondary education, we have all heard considerable discussion of the critical condition of our post-secondary education system.
Dr. Pedersen, the President of the University of Western Ontario and President of the Association of Universities and Colleges of Canada has said that our post-secondary education system verges on being a national disgrace because of its inability to effectively take on the challenges of the 1990s. We know of overcrowded classrooms, we know of inadequate li-
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braries, we know of crumbling physical plants, of out of date laboratory equipment and facilities.
Universities and colleges are bursting at the seams and are finding it increasingly difficult to provide the high quality post-secondary education that the Prime Minister has recognized Canada needs and Canadians are entitled to.
Our universities receive fully 40 per cent less per full-time student than comparable U.S. institutions, and this at a time when the U.S. has begun a major effort to increase post-secondary education participation rates, even though their rates are already considerably better than ours. The United States and other countries clearly understand the importance of increasing funding to post-secondary education. As our government continues to remind us, it is one of our major competitors.
The government also talks about the importance of a level playing field, and yet in terms of federal funding for post-secondary education, the Conservative government is doing what it can to ensure that we will never reach a level playing field, that our young people will never have the same educational opportunities as their colleagues in the United States will have. At a time when the federal government should be investing more in the future, it is cutting back by billions of dollars.
At the finance committee, witnesses appeared to discuss the impact of Bill C-69, and not one witness supported this bill. They all had very interesting things to say about the impact that this bill would have. All witnesses from the health care field pointed out that these cuts in the name of restraint, in fact, will add costs to the health care system not only in the long-term, but also in the short-term, and that the short-term and long-term costs to the economy due to cuts in health care will be considerable.
Cutbacks in funding to health care can only mean quality of services will be reduced and/or quantity of services will be reduced, leading to adverse consequences to the health status of Canadians. In terms of economic impact, let alone the impact of pain and suffering, this can only lead to increased absenteeism and reduction in efficiency and effectiveness at work, in other words, to important economic consequences and economic costs.

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The Canadian Hospital Association has said that cuts could reduce the ability of provincial governments to fund medical care adequately. The Canadian Medical Association went further by saying that we were headed toward a two-tier health care system with one quality of health care in the rich provinces and a second or third rate service in the poorer provinces. We are already seeing moves toward that in health care reports coming out of some of the provinces and, in particular, coming out of Alberta. It is a departure from our traditional commitment to one health care system for all Canadians irrespective of financial abilities. It is a move away from our notion of health care as a right. The federal government, along with provincial governments, has to accept a responsibility for this in its cutbacks.
Increases in short-term and long-term costs will flow from these supposed restraints in expenditures to the health care system. It is not restraint at all, but an additional cost on the system, both now and in the future.
The representatives from the health care system also pointed out that they were considerably concerned about what they saw as the lack of understanding on the part of this government and its officials as to the impact of cut-backs to the provinces for health care expenditures. In their lobbying activities, they meet frequently with members of the government and members of the bureaucracy. They were concerned that the people with whom they met did not understand what these cutbacks would give rise to.
They did recognize and they did state that the government is fully aware, as they see it, that there is not very much fat left in the health care system. Consequently, if it cuts funds, it actually cuts into the bone of the health care system.
All the witnesses from the post-secondary education sector made the same criticisms. They pointed out that short-term and long-term costs would flow as a result of cut-backs to funding for post-secondary education. The costs to the economy would be considerable when one considers that Canadians would not be able to receive the level and quality of education they need in order to take on the challenges of the 1990s and beyond.
In other words, as far as post-secondary education cuts are concerned too, it was pointed out by those on the
front line, representatives of faculty, students and university administrations, that this would not give rise to a saving but, indeed, would give rise to increases in expenditures in the short-term and the long-term.
In his response to the committee, Dr. Pedersen stated: "The signal is that Ottawa is no longer willing to fund the core educational research activities at Canadian universities, an activity in which they have been engaged for some 30 years".
He also stated: "We say to the federal government that you cannot have it both ways, talking about the need to improve the education system while at the same time pulling the plug on federal cash transfers for post-secondary education just does not square".
Again, those witnesses who spoke upon the post-secondary education system pointed out that they felt that officials in the Department of Finance and in the government did not fully understand the impact on the economy that these cuts in post-secondary education funding would have. All witnesses pointed out the great frustration they felt at having to continue to make these points to a government that refused to listen.
In questioning the finance committee officials, it became clear that in their deliberations and in their quantifications of the impact of these so-called expenditure restraints in Bill C-69, they did not consider the economic impact that would flow as a result of young Canadians finding it impossible, as a result of cut-backs to post-secondary education, to obtain an education needed in order to take on the challenges of the next decade and beyond.
In other words, they did not consider the short-term or long-term implications to our economy of cut-backs to post-secondary education. They did not take into account the full implications of what these cuts will do.
The only conclusion one can make is that these cuts are not based upon solely a concern about funding, but more on a concern with the philosophical commitment of this government to get out of funding health care and post-secondary education. If this trend continues, in a few years the government will not be providing any funding to the provinces for health care and post-secondary education. Consequently it will be unable to use its funding as a means of persuading the provincial govern-
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ments to effectively run health care and post-secondary education. For example, it would not be able to ensure that user fees and deterrent fees did not return to the provincial health care systems. There would be no mechanism by which to penalize the provinces should that happen.
It is part of an over-all scheme of privatization, of ensuring that those who can pay get the best and those who cannot pay get the worst. It is a philosophical commitment which is pushing the costs of health care and post-secondary education on to users in our society. Canadians do not agree with or accept that philosophy. In many different ways, Canadians have told this government not to cut funding to post-secondary education and health care and yet, as with so many other things, this government refuses to listen and goes ahead against the wishes of Canadians. The government has been told of many other ways to deal with the deficit, rather than attacking the sick, students and the poorest in our society.
One last comment that I would like to make is with regard to the cap on the Canada Assistance Plan. Witnesses pointed out another interesting phenomenon. Placing restraints on the growth of assistance to Ontario, British Columbia and Alberta for social welfare support systems would stop innovation, reform and experimentation in social welfare systems in Canada and would indeed prevent the provinces from exploring ways of making the system more efficient and more effective. Consequently, we would not see improvements to the system in the future.
This is perhaps the most misguided and short-sighted piece of legislation that the government has put forward in the last two years.


Daniel James Macdonnell Heap: Worse than the GST?


Chris Axworthy: I think worse than the GST. It is at least as misguided as that. It is misguided and short-sighted because it will be a major attack on the future. It will result in a major burden of costs being transferred to the next generations. It is unwise from an economic point of view. It is unwise because it prevents this country's citizens from being healthy and well educated. It is unwise because it attacks the poorest of all Canadians.
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Finally, as I mentioned, Canadians, an overwhelming majority, some 80 per cent, have told this government not to make these particular cuts and yet it has done so anyway.
Unfortunately, Canadians will pay for this government's stupidity. The government will pay ultimately at the next election.


The Acting Speaker (Mr. Robitaille):: Resuming debate with the hon. member for Winnipeg St. James.


John Harvard: Madam Speaker, I am pleased to take part in this debate on Bill C-69. It is an important debate about a bill that raises serious concerns right across this country.
The formal title of this bill is "Government Expenditures Restraint Act". There is a saying, "What is in a name?" When it comes to this particular bill, there is a lot to this name and all of it is very bad.
The name is a euphemism for a nasty bill, a euphemism for a bill that attacks the poor and penalizes poorer provinces. It is a euphemism for a bill that only makes worse the inequities of our system.
That should not come as any great surprise, I suppose, because this Tory government does not give a hoot about social justice in Canada.
I want to zero in on one particularly pernicious provision of Bill C-69. It is the freeze on federal transfer payments to the provinces. It is nothing short of shameful, for this is the third time the government has attacked federal transfer payments to the provinces.
Let us consider the seriousness of the situation from this perspective. Let us take the time period between the fiscal year 1986-87 and fiscal year 1994-95. The cuts in that period amount to an astronomical $31 billion. If these cuts had not occurred under the government, there would have been $22.2 billion more for health care in the provinces, and $8.9 billion more for secondary education.
Let us look at the effects of this and other Tory initiatives on health care. If current government practice continues, the federal government will soon cease paying a single cent for health and education by the turn of the century. That is alarming. There will be no more federal

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funds for health and post-secondary education in about nine or ten years.
Years ago, the federal government was committed to 50-50 cost-sharing, but that was abandoned in favour of allocating more income tax points to the provinces. Now look where we are. The government is saying goodbye to health care and post-secondary education. Bill C-69 continues that trend.
What does a small province like my own province of Manitoba do when it faces a loss of federal government support of this kind? It has two choices: cut back services or raise taxes. It is estimated that the provinces would have to increase taxes on average $576 over five years to make up for the cuts proposed in Bill C-69.
If they do not raise taxes, the provinces will be forced to make cut-backs. For example, they would be forced to close hospital beds, limit costly operations, or find other reductions. There is no other way around it. Students would have to face higher tuition fees, overcrowded classrooms and other cost-cutting measures.
Freezing federal transfer payments to the provinces makes a mockery of the Prime Minister's promises. We all remember what the Prime Minister said about medicare. We all remember his description of medicare in Canada. He called it a sacred trust.
Also, I want to repeat something the Minister of Finance said eight years ago in the House of Commons on March 24, 1982 when he was in another incarnation:
Let us not make hospitals, universities and colleges a battleground
between the federal government and the provincial governments.
Let us solve these problems not on the backs of the hospitals and
universities; let us solve these problems outside of that arena.
That is what the Hon. Michael Wilson said in the House of Commons on March 24, 1982. So much for the Finance Minister's promises. So much for the Prime Minister's promises.
If broken promises are coupled with three successive reductions in the rate of growth of federal transfer payments, what does that say about the future of Canada's health care system? Well, the future looks mighty gloomy. The prognosis is not good. The Canada Health Act is fast becoming irrelevant. It is the Canada Health Act that outlawed user fees and extra billing. We all know that. We all remember that. However, there is
concern that the government has already decided it will not enforce the penalty provisions of the Canada Health Act.
Provinces that allow user fees and extra billing can have their federal health payments withheld. If the government were not to enforce the health act, in my opinion, Canada would soon drift towards a two-tier health care system. This is not far-fetched. It is a very real danger.
Already we are told of two provinces, Quebec and Alberta, which are flirting with a two-tier health care system. Earlier this year, a former Quebec Health Minister who is also a major business executive, reportedly told a Quebec Assembly committee on health care that it is time to bring the private sector into the health care field. He claimed that competition is needed to keep costs down. Perhaps that is all that was needed for a senior Quebec cabinet minister to say, a short time later, that Quebec may not be able to continue having a free universal health care system.
I submit that this is the thin edge of the wedge. Destroy universal health care, allow private sector competition ostensibly to control costs, and the country is put on the slippery slope toward a two-tier health care system. It cannot be avoided.
We have heard alarming and disturbing words from Alberta where a government task force actually advocated a two-tier system. One tier would provide basic services and it would be paid for by the government. The second tier would provide additional services-the word "additional" not defined-which would be purchased through a supplementary insurance plan.
It can be seen why we on this side view with alarm any reduction of federal government support of the health care system. If the government does not take its responsibilities seriously, and as soon as the federal government backs away from its full commitment to health care, we soon hear talk of user fees, extra billing, competition, and the like. That will lead to a balkanization of Canada's health care system where there are no national standards, no guaranteed access for the poor, and of course the loss and destruction of universality. It would be, in the end, without any doubt at all, one system for the poor and one system for the rich.
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There are powerful forces out there who would love to see this happen to satisfy some kind of crazy lust produced by a cruel ideology of the privileged few.
Michael Walker of the Fraser Institute, that nutty but dangerous right-wing think tank in Vancouver, wrote a series of articles last spring in which he claimed that the United States' health care model was superior to Canada's. Can you imagine turning something like that upside down? There are 35 million to 40 million Americans without any health insurance at all, and twice that many with only limited insurance coverage. In that country, having a catastrophic illness can destroy everything you have. Yet, somebody such as Michael Walker, who should know better, suggests that its system is superior.
Despite all that, that wretched system which does not deliver to its people, costs more per capita than does Canada's universal system. Yet there are these powerful forces in Canada, whose only battle cry is fiscal restraint, who would move our health care system closer to that of the U.S. model.
I say to the government: "Wake up, open your eyes, and smell the coffee or smell the flowers-whatever is appropriate. Freezing federal payments to the provinces is a virtual invitation to destroy medicare."
The government's backing away from payments to the provinces and medicare is consistent with what this administration has been doing since it was first elected in 1984.
The 1980s were really a lousy decade, in some ways reminiscent of the Dirty Thirties. What started as a disturbing trend at the beginning of the 1980s was greatly exacerbated by Tory policies.
I would like to make reference to a newspaper column which was written May 16 last by Frances Russell of the Winnipeg Free Press, one of Canada's leading commentators on public affairs. In her column, she makes use of facts and figures provided by the Canadian Council on Social Development, and she quotes comments made by one David Ross, an independent social economics consultant based here in the nation's capital. I want to quote
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from that column because it paints an absolutely superb picture of what has been going on in Canada in the last few years and it points the finger where it ought to be pointed-right at the Mulroney government.
The decade ended with 155,000 more Canadians unemployed than at the beginning. There were 62,000 more poor children. There was a virtual standstill in household income. Whereas average family earnings rose 27 per cent in the 1950s, 53 per cent in the 1960s and 42 per cent in the 1970s, in the 1980s they went up a meagre nine per cent, largely due to a decline in family size.
The rich got richer and the poor got poorer. The share of national income enjoyed by the lowest 29 per cent of Canadian families shrank from 10.7 per cent to 10.4 per cent. By contrast, the wealthiest 20 per cent of Canadians saw their portion rise from 42.1 per cent to 43.2 per cent.
That means, Ross says, that during the 1980s, about $4.2 billion was transferred from the poor to the rich.
Ross says the starkest images of the 1980s poverty were the homeless bedding down in shelters and the hungry queuing up at food banks. "Not since the breadlines of the 1930s has Canada witnessed such a shameful reminder of the shortcomings of the labour market and the holes in the income safety net."
Government policies were intent on heightening social and economic inequality.
"The decade was marked by the status quo or retrenchment in existing social programs. More decision-making was transferred to the marketplace. Thus began the era of trickle-down, an economic philosophy that wealth should be generated at the top simply by removing economic shackles (mainly taxes) with ensuing gains eventually trickling down to middle and lower income workers".
Ross attributes the phenomenon of homelessness and food banks to the tightening of unemployment insurance, which threw more people faster onto social assistance, and to the failure to maintain social assistance rates even at the poverty line.
No social policy area was harder hit in the 1980s than family benefits, he says. As a result of partial de-indexing, they lose 3 per cent of their value each year. Already, the worth of family allowances has shrunk 12 per cent since 1980.
The new clawback of family allowances and old age security from "rich" Canadians will work down the income scale at 3 per cent a year (again due to partial indexing) until middle and finally, lower income Canadians will be shut out.
Ross contrasts this contraction of public pension benefits with the piling on of tax breaks or private pensions, also out of the public purse-The federal government's 1985 tax reform was a further giant step back to inequality. The tax changes between 1984 and 1990 meant, for a one-earner family of four, an increase of 21 per cent at the $20,000 level, 28 percent at the $50,000 level, 3 per cent at $80,000, but a saving of 1 per cent at $100,000.
Ross is not optimistic that the 1990s will bring immediate change.

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"The liberalism of the 1970s, characterized by strong government involvement and high levels of public spending, was replaced in the 1980s by a conservative trend. The decade will be remembered for government cutbacks, privatization, concern with the deficit and market decision-making-"
That is the end of that particular series of quotes and that column says it all. It really does, it says it all.
I would submit that those who are watching the Parliamentary Channel right now, whether in Newfoundland, British Columbia, or my home province of Manitoba, will understand why we Liberals are dead set against Bill C-69. It contains just more of what we have come to expect from this government: VIA Rail services cut; postal services cut; farm support programs cut; unemployment insurance cut; native programs cut; federal transfer payments-it all depends how you express it-either frozen or cut, but either way inimical to the best interest of the provinces, inimical to the best interest of Canadians, inimical to the best interest of the health care system, and inimical to the best interest of post-secondary education in the country.
Sad to say, it is the same old story from a government that does not believe in government, that does not believe in governing. This government has completely, absolutely, without reservation, abdicated its responsibilities. I think it is time to put this government away and put it away for a long time. May it never be seen again. If it does not want to govern, if it does not want to take its responsibilities seriously, I know a group of people on this side of the House who are more than happy to take on that responsibility, more than happy to govern the country in the best interest of all Canadians and not just a privileged few. It is palpable that it is not only us who are saying this. Canadians are saying it by the millions through the polls.
Bill C-69 is a very bad bill. The government is going to regret this legislation. It will regret this legislation and the Canadian people will make absolutely sure of that.


Beryl Gaffney: Madam Speaker, I want to congratulate my colleague for a very fine speech, a speech that accurately and adequately represented the comments that we are hearing from Canadians right across the country, and certainly that I am hearing from people in my own riding of Nepean.
He talked about reduced transfer payments to the provinces for education and health, in particular. He talked about the goods and services tax, the imposition of this tax upon Canadians and how it is going to hurt them. In addition, he talked about how the cuts in transfer payments and how the GST are going to hurt the provinces. The speaker talked about the clawback, how it is going to hurt the senior residents and about the cut-backs to the native programs.
These are only a few of the cut-backs that we see in this bill. The one thing that comes to my mind when I read of the dreadful measures in Bill C-69, is that Canada, as we have known it for 123 years, is being changed. How the programs have been administered all these years also comes to mind.
In my opinion, with the federal government giving more responsibilities to the provinces, I see a serious abdication of what we have considered to be and what we have known as the federal responsibility in this country for 123 years. It is decentralizing the federal powers and putting them on the backs of the provinces. Then the provinces, in order to maintain the level of the programs that we have known, obviously will have to increase taxes at that level. I would like to have the hon. member's comments in regard to an abdication of responsibilities on behalf of the federal government.


John Harvard: Madam Speaker, I want to thank my colleague, the hon. member for Nepean. I think her beginning words were far too generous.
Let me pick up on what she said. There has been an abdication of federal government responsibility, especially the responsibility toward the provinces. My understanding of Canadian history, and, particularly, Canadian government history, is that there has been what one might call a family compact of provinces. At the centre of the compact is the federal government, the central government, that has a strong responsibility to all the provinces, especially to the poorer provinces.
The provinces cannot be left to fend for themselves. The provinces cannot be left to drift. The federal government has a responsibility to all the provinces, to the entire country, so that we, regardless of where we live, enjoy a certain basic standard of living. That is not
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going to happen under these cuts to or freezing of federal transfer payments.
As sure as God made little green apples, this is going to hurt the poorer provinces. Eventually it may even hurt rich provinces like Ontario or British Columbia, but it will hit the smaller provinces like Manitoba and Newfoundland especially hard.
What we are facing is the balkanization of Canada. In the current constitutional proposals, we see an allowance for provinces to opt out of a national scheme, and at the same time get federal money. I find that provision enormously alarming. That is going to work against the best interests of the smaller, poorer provinces.
Perhaps a rich province like Ontario can make it on its own, but the smaller provinces cannot. This calls for a strong central government that cares about all the provinces and has policies that bind the country together to make it whole. One makes the country whole in many ways. We have heard this expression very often through the Meech Lake discussions.
There is a lot of truth to it, but one does not make a country whole through only some constitutional niceties or constitutional rules. One makes it whole through social programs and federal transfer payments, which constitute very important social programs. If the federal government, at the very centre of a program diminishes it, it diminishes the country.


Don Boudria: Madam Speaker, we are this afternoon on this late spring day discussing whether or not the government should cut $8.3 billion in assistance to the provinces. My colleagues and I say no. We say the government has no moral authority, has no possible excuse or reason why it should want to cut $8.3 billion in program money to be transferred to the provinces. That is exactly what the government wants to do with Bill C-69.
On February 20, 1990 this House heard the second budget from the Minister of Finance since the November 1988 election. Contrary to the previous year's budget, this budget was all released on the same day, rather than over a series of days as was done the previous year.
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All members were sitting in this House listening attentively to the Minister of Finance. We thought we would hear words of wisdom from him. We thought we would hear a thoughtful speech on how this federal government wanted to work together with the provinces in order to provide a decent quality of assistance, not just to the provinces, but, to Canadians generally who utilize the services which are offered by the provinces. That is really the most important thing of all.
Instead, my colleagues and I were shocked to hear the following, and I quote from the minister's speech:
We have capped the growth of a number of programs at 5 per cent per year for the next two years. These include Canada Assistance Plan payments to the fiscally stronger provinces of Ontario, British Columbia and Alberta; and certain expenditures for science and technology, and Indian and Inuit programs. In the 1989 budget, defence and foreign aid expenditures were substantially reduced. In view of the tight fiscal situation, their growth will also be limited to 5 per cent from this lower expenditure base.
If that was not bad enough, he then said further:
We have held a number of programs at their 1989-90 levels for the next two years. Total per capita cash and transfers to the provinces under Established Programs Financing will be held constant.
This is newspeak, "will be held constant". That means the same as "will be frozen" but the newspeak expert across the way, the Minister of Finance who brought us other similar weasel words, this time told us that the financing will be held constant which of course, as I said previously, is a euphemism for a freeze.
This is what he announced and Canadians listened to him. At first, I suppose, one could be almost tempted to believe that these cuts were necessary. I say almost tempted, because of course no one truly believes any more what the government across the way says. In the unlikely event that some might have been tempted to slightly believe some of what the Minister of Finance said, we came to a rude awakening once we started to make the calculation and determined that provinces would have to cut back on services that they offer to Canadians, or increase their own provincial income tax or in turn, if the provinces could do neither, they would have to transfer some of those same expenditures by reducing their own transfers to municipalities.

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Madam Speaker, this expenditure restraint program, as I said earlier, announces the government's intention to freeze federal transfers to the provinces under Established Programs Financing for the next two years and, during the same period, to cap federal transfers under the Canada Assistance Plan to Ontario, British Columbia and Alberta at 5 per cent.
I would like to expand on this particular point, Madam Speaker. There are those who will say that since Ontario is richer than the other provinces, these cuts will have practically no impact. Well, that is not true. Anyone who thought that was the case is badly mistaken.
My colleague, the hon. member for Winnipeg St. James (Mr. Harvard), pointed out earlier and very eloquently, I may add, that of course the poorer provinces would be hit more severely and would possibly feel the impact even more quickly than other provinces.
Madam Speaker, although some people may think everybody in Ontario is rich, that is not the case.

I have made a comparison of electoral districts in the province of Ontario. The Minister of Finance represents the riding of Etobicoke Centre and perhaps he feels that all of Ontario is the same as his own riding. That, of course, is not so.
I have made a comparison of the riding of Etobicoke Centre and the riding of Glengarry-Prescott-Russell, which I represent. The information I am quoting is from a document entitled, Profiles: Federal Electoral Districts-1987 Representation Order: Part 2, a publication of Statistics Canada. These are quite valid, genuine Statistics Canada figures in case someone would think that I was partisan and perhaps would use statistics other than official ones.
This is what these statistics show about these electoral ridings. First of all, Etobicoke Centre has 89,160 people living in it; Glengarry-Prescott-Russell, as of the 1986 census that is, had 87,140 people. As you see, Madam Speaker, both ridings are just about the same in terms of total population.
Let us look at some statistics which indicate the general socio-economic condition of the riding that I represent and demonstrate to this House that it is not the same as the riding of the Minister of Finance, notwithstanding the fact that it is also in Ontario.
If we look at the following statistic, total population with level of schooling less than grade nine, 6,960 in the riding of Etobicoke Centre and 13,845 in Glengarry- Prescott-Russell. It is the same size in population but has twice as many people who do not have a grade nine education.
The number of people with a university degree in Etobicoke Centre is 13,255; in Glengarry-Prescott- Russell, 3,780, with the same size population, notice the difference.
Let me read the following statistic to you: total labour force 15 years of age and over, 52,000 in Etobicoke Centre, and 42,000 in Glengarry-Prescott-Russell.
As you see, Madam Speaker, not all of Ontario is the same, and perhaps the Minister of Finance should look elsewhere rather than just his own constituency when trying to determine what he thinks is good for all of us.
Let me read a few more statistics: managerial, administrative and related occupations-let us see how many have big-boss jobs in Etobicoke Centre versus Glengarry-Prescott-Russell; in Etobicoke Centre, 6,155; in Glengarry-Prescott-Russell, 2,780.
Continuing with the statistics: females in the workforce, 23,825 in Etobicoke Centre, 16,760 in Glengarry- Prescott-Russell.
The total number of occupied, private dwellings is given as 32,000 in the riding of Etobicoke Centre and
28,000	in Glengarry-Prescott-Russell. That is nearly the same, Madam Speaker.
Now let us look at the average value of a home, which is usually a fair indication of the socio-economic standing of the people: $176,149 in Etobicoke Centre and $77,036 in the riding that I represent.
The statistics show government transfer payments offered to various electoral districts and in Etobicoke Centre, 5.7 per cent of the revenue comes from government transfers. In my own riding it is 11 per cent. This clearly indicates that any cut made by the minister has an

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effect which is twice as bad in the riding that I represent than elsewhere.
I am trying to indicate that my riding needs assistance. It needs the help of this government, and it deserves the help of this government.


Beryl Gaffney: It has a right.


Don Boudria: It sure does have a right, as my colleague from Nepean said very eloquently. However, when it comes to getting what is rightfully yours, this government of course does not deliver.
I want to read about income characteristics. The average income for males with income 15 years of age and over in Etobicoke Centre, $35,916; in Glengarry- Prescott-Russell, $22,127; average income for a female in Etobicoke Centre, $17,428; in Glengarry-Prescott- Russell, $12,243.
If cuts are justified any place in Ontario, surely my colleagues in this House will agree that the riding I represent cannot afford to share in any part of the cut-backs imposed by the government across the way.
Finally, I would like to read one last statistic which will indicate beyond doubt the difference in economic situations: average family income for all census families in Etobicoke Centre, $60,725; Glengarry-Prescott-Russell, $36,771.
What we need in the area I represent is not cut-backs. What we need is not the cold, callous way of doing things which this government has shown it can do so well. What we need are programs to assist the region I represent, enabling it to gain a higher standard of living similar to that enjoyed by people elsewhere.
The riding I represent is not located thousands of miles from Parliament Hill. It may be surprising to some to know that the statistics I have just read apply only 40 miles from Parliament Hill. That is the distance to the heart of Prescott County from where we stand right now.
Under the previous Liberal administration there were a number of programs which had succeeded in attracting industries to our area and improving the living conditions. These have all been abolished by the government across the way.
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The government through these cuts will affect grants to the provinces, and if the province has to cut back, which area can afford it the least? The one that I represent and others like it.
It is all very well in the government's eye to talk about cut-backs, but I say to them that if any area is equipped to absorb them it is surely not the one I represent.
[Translation\
Madam Speaker, we must not think for one minute, just because Ontario happens to be very well off compared to other provinces, that this applies to every single person in the province of Ontario, because it certainly doesn't apply to Glengarry-Prescott-Russell. The riding I represent will certainly have trouble surviving and coping with the cutbacks the Minister of Finance gives us in his Budget and in Bill C-69.
The government sees Tory members applauding and supporting the initiatives proposed by the Minister of Finance. The Minister of Finance and the Prime Minister probably imagine the applause of Tory back-benchers reflects the feelings of Canadians in general. That is not the case, Mr. Speaker, and it is certainly not the case among the people I have the honour and the privilege to represent in this House.
What we need, Madam Speaker, is a government with heart, a government that will be mindful of the needs of Canadians on low and modest incomes, and as I pointed out earlier, there are a lot of people in my riding who belong to this group.
I want to ask the Minister of Finance to swallow his pride for a few minutes, and I even challenge him to rise in the House now, Madam Speaker, and withdraw Bill C-69. We on this side of the House, my colleagues and myself, would be delighted to give the unanimous consent that is necessary to withdraw a bill from the House of Commons. This bill will cause a lot of suffering both in provinces that are less well off and in the so-called rich provinces.
This bill certainly does not contribute to national unity because we know as long as such great regional disparities exist, they create tensions.

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Furthermore, this bill certainly does not help my constituents.
I therefore appeal once again to the Minister of Finance and to the Minister of Transport, who is known for his generosity, Madam Speaker, and ask them to withdraw this bill. We know that the transport minister is generous. The Department of Transport showed its generosity in the past when they gave a Crown corporation worth nearly $100 million to one Manfred Ruhland. We already know how generous the finance minister is. Some people, or rather a very small group of two or three rich people, benefited from his generosity in the past.
What we want, Madam Speaker, is to be sure that low-and middle-income citizens can also benefit from the generosity of the government opposite.

In closing, I ask the Minister of Transport to pretend for a minute that my constituent's names are all Manfred Ruhland, that every single one of them is called Manfred Ruhland, and let us have the Minister of Transport treat my constituents with that kind of generosity. I am not asking the Minister of Transport to give airline passes to my constituents to fly all over the world or anything like that. I am just asking him not to impose those unfair cut-backs that he is proposing to us today.
The Minister of Transport may be speaking for the Minister of Finance today, although I think the Minister of Finance who is here among us is quite able to defend himself. In any event, for some reason the Minister of Transport wants to defend the Minister of Finance. I would hope that he would stand now and withdraw this bill which is unfair, not only to less financially-able provinces, but indeed has a severe impact on all Canadians, on their health care and on their level of education. Most of all, it has a negative effect on what we are all trying to do, which is to ensure that all our citizens are able to improve themselves and participate on an equal basis in the society of tomorrow.


Robert Evans Skelly: Madam Speaker, I appreciate the presentation made by the member. I thought it was very effective, especially in the way he compared the constituencies in Ontario, and demonstrated that there are some low-income people who are going to be suffering as a result of the cuts in
transfer payments and the capping of the CAP in Ontario.
I want to talk about Manfred Ruhland. The hon. member suggested that he hoped all his constituents would receive the same treatment as Manfred Ruhland did. Unfortunately, if all his constituents were Manfred Ruhland, he would probably be representing a Tory riding. The guy who could not get a credit card most likely had a PC card.
I would like to talk about another constituency in Canada. It is a constituency all across Canada. It will be taking the hardest impact of the EPF cuts. Low-income Canadians will be taking 46 per cent of all the cuts in this budget. These are people who are living at the poverty level in Canada. There are millions of them across the country. They are single parent families headed by women, most of whom are found below the poverty level.
As you know, Madam Speaker, poverty goes hand in hand with illiteracy. The same people who tend to be poor also have difficulty with literacy skills. They will end up having difficulty as a result of the cut-backs in EPF funding. In fact, it has been pointed out that something like 6.8 million Canadians between the ages of 16 and 69 are unable to accomplish everyday tasks such as reading newspapers, making out cheques, reading bank statements and, generally speaking, functioning as normal Canadians.
These people lack the kind of literacy skills that are needed in order to function on a day-to-day basis in the modern world. All the government is giving to these people is something like $110 million over five years. Madam Speaker, you will know that in the national capital we spend $105 million a year watering lawns in the area.
Certainly, it shows what kind of priorities we attach to poverty and illiteracy in the country. We are supposed to be joining with countries internationally to conquer illiteracy. We spend five times as much watering the lawns in the national capital area as we are going to be spending on literacy this year. At the same time, we are cutting back on programs that help to support health care, the elimination of poverty and post-secondary education in the provinces across Canada.
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I think it is tragic that the Conservative government holds those kinds of priorities. I appreciate the statements that the hon. member has just made on the priorities of this Tory government.


Don Boudria: Madam Speaker, I want to take a moment and indicate to my colleague who has just spoken the fact that single parent families are a phenomenon of all our constituencies.
In the riding that I represent, there are 2,000 such families. Perhaps that number is slightly lower than the number in other electoral districts, but I invite my colleagues to compare it with the fact that the average female in my riding who is working earns $12,243 a year, something like one third of what the average female in the constituency of the Minister of Finance would earn. It has a very devastating effect.
In closing, I do indicate that, in terms of the comparison, the literacy problem is a very serious one. I do not dispute that, but I am not one who would advocate that we stop maintaining the public property around the national capital. This building, and other government buildings, are monuments to the people of Canada. We have to continue to maintain them, and not allow them to deteriorate.


Madam Deputy Speaker:: It being 2 p.m., the House will now proceed to the consideration of Private Members' Business as listed in today's Order Paper.


PRIVATE MEMBERS' BUSINESS - MOTIONS   FINANCE FEDERAL TRANSFER PAYMENTS
Chris Axworthy: That, in the opinion of this House, the government should consider the advisability of ensuring that federal transfer payments to provinces for the purposes of education and health care are spent directly on those services.
He said: Madam Speaker, I am pleased to rise to discuss the question of accountability of provincial governments for funding provided to them by the federal
Private Members' Business
government under the Established Programs Financing system for the support of health care and post-secondary education.
If I may just read my motion, I am suggesting:
-the government should consider the advisability of ensuring that federal transfer payments to provinces for the purposes of education and health care are spent directly on these services.
Essentially, this motion calls upon the government to explore making federal transfer payments to the provinces accountable for the purposes for which they are transferred. Particularly in the context of transfers under the Established Programs Financing legislation, the motion calls for ways to make sure that that part which has been traditionally transferred to the provinces to fund post-secondary education and health care is used for those purposes and not for other purposes.
As is well known, the federal government became involved in financing post-secondary education, at least by 1912, when grants were made in support of agricultural education. The involvement gradually increased from these modest beginnings with the temporary program of support for veterans returning to Canada after the Second World War.
In 1951, the federal government introduced a matching scheme of direct grants to universities. Starting at 50 cents per capita per annum, the grants rose to $5 per capita per annum by 1966.
With the 1960 Technical and Vocational Training Act, the federal government laid the foundation for the establishment of community colleges through federal-provincial agreements. The federal government paid 75 per cent of provincial expenditures for community colleges.
In 1964, the federal government became involved in student assistance when, in conjunction with the provinces, it launched the Canada Student Loans Program.
In 1967, a fiscal arrangement was entered into by the federal and provincial governments whereby federal government direct grants to universities were replaced by a shared-cost arrangement with the provinces. Under this agreement the federal government paid 50 per cent of the costs of post-secondary education institutions. At the same time, the shared-cost program for technical colleges, begun in 1960, was replaced by the direct purchase of student places at community colleges.

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Private Members' Business
In 1977, the federal government withdrew from shared-cost financing and replaced it with unconditional fiscal transfers under the EPF arrangements, the arrangements which we are now living under. As is well known, these transfers were in the form of cash and the transfer of tax room to the provinces.
During this development of funding support for postsecondary education the federal government, of course, also instituted its participation in funding research in Canada and, perhaps more important, its participation in funding health care in Canada.
I set this out not just as a walk down memory lane, but to make it clear that the federal government has long been involved in funding post-secondary education and health care in Canada.
Even though the EPF legislation introduced in 1977 provided for unconditional transfers to the provinces, both the federal government and the provincial government have been fully aware of the history and the intention for these funds to go toward health care and post-secondary education.
When present ministers were in Opposition they pointed out the importance and the fact that these funds were designated or intended for health care and post-secondary education, although they do appear to take a different point of view now.
There was no intention for such payments to be for highways or for other expenditures over which the federal government had little interest. The federal government's funding of post-secondary education and health care stems from a national interest to ensuring a high quality education system in Canada to which all Canadians have equal access, and to ensuring a high quality and accessible health care system in Canada.
The national interest in both post-secondary education and health care clearly persists today, as statements made by the Prime Ministers and others in the present government have indicated.
Much has been made of the fact that some provincial governments have been spending some of the money transferred from the federal government under the EPF program for other than post-secondary education and health care. In earlier times this was used to argue for a return to some accountability on the part of the provinces for the money transferred from the federal government. This argument at least recognized the importance of two things-federal financing, because of the national interest in high quality, accessible post-secondary education and health care on the one hand and, on the other hand, making sure that federal money designated for post-secondary education and health care was in fact used for these critically important purposes.
However, and to disastrous effect, the present Conservative government has used the problem of provincial governments using EPF funds for other than post-secondary education and health as an excuse for cutting back on the funding, thus accentuating the very serious financial problems faced by Canada's post-secondary education institutions and by our health care system. This irresponsible and short-sighted action by the Conservative government is in sharp contrast to its rhetoric about the importance of both post-secondary education and health care in Canada. It has led to a critical situation.
With regard to education, for example, Dr. George Pederson, President of the University of Western Ontario and current President of the Association of Universities and Colleges in Canada, has publicly stated that the state of Canada's universities is a national disgrace and places Canada in serious jeopardy of being unable to train Canadians to meet the demands of the country's economy in an increasingly competitive world. Without immediate and drastic corrective action, this can only lead to Canada's deterioration to Third World economic status.
Canada's post-secondary education systems and health care systems are suffering from a sharp decrease in federal government funding, inadequate provincial government financial support and misspending of federal funds intended for post-secondary education and health care to other purposes. All this has led to a critical deterioration in the ability of Canada's post-secondary education system, for example, to offer the type and quality of post-secondary education which is required today in Canada, and has led to the situation in which our health care system is unable to cope effectively with the health care needs of Canadian citizens. This is illustrated by the fact that many Canadians in British Columbia and Ontario, at least, are having to go to the United States for certain health care procedures, and
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that we have had long waiting lists at hospitals for surgery. Indeed, we have had examples of Canadians dying because of being turned away from our hospitals.
Again with regard to post-secondary education, the federal government in spite of the hope generated by the Saskatoon forum has shown no leadership whatsoever in attempting to ensure that Canada's post-secondary education system is world class, as it needs to be. In fact the federal government has instead attacked the system through major cut-backs in funding support.
The federal government has been roundly criticized by all actors in both the post-secondary education system and the health care system in Canada for its disastrous policies and lack of leadership for which future generations will pay dearly. Instead of complaining that provinces do not always spend Established Programs Financing funds on post-secondary education or health care, the federal government should take steps today to ensure that the provinces spend these dollars as required, that is, on post-secondary education and health care. It is in the national interest to do so. It is irresponsible, short-sighted, indeed, foolish and dangerous not to do so.
It would be prudent for the federal government to ensure that EPF funds intended for post-secondary education and health care are spent by the provinces on those two things.
The current pleas of the federal government are to reduce the deficit and to ensure that federal revenues are spent wisely. Surely, such arguments should also go for EPF transfers and should ensure that those transfers are indeed used for health care and post-secondary education.
Both the post-secondary education institutions in Canada and our health care system are in severe need of adequate funds to do their job adequately, as far as education institutions are concerned, to prepare Canadians for the 21st century and to ensure Canada a viable future; and as far as the health care system is concerned, to ensure that Canadians are able to lead a happy, healthy and dignified life.
Ensuring provincial accountability is a critical component of resolving the funding crunch experienced by our universities and colleges and by our health care systems.
Private Members' Business
Many have called for greater accountability on the part of the provinces.
For example, a 1980 parliamentary task force called for a tight accounting of how provinces used federal transfers. The Johnson report argued for the federal government tying its increases in federal funds to increases in provincial expenditures. Indeed, the Nielsen task force argued that there should be a different approach to the use of EPF funds and, indeed, that they should be more accountable in the hands of the provincial governments.
I will just quote briefly from the Nielsen task force. It states, in part: "We note that provincial governments would object to any new option"-that is to say a new procedure for ensuring that they spent the moneys on post-secondary education and health, as required-"because no other arrangement could likely offer them the combination of revenues and unconditionality with respect to post-secondary education that the present EPF arrangement provides. Nevertheless, in the view of the study team, it is of the greatest importance that the government develop a new direction in consultation with the provinces".
I am not alone in calling upon greater accountability. As we all know, prior to 1977 there was total accountability on the part of the provinces with their funding for post-secondary education and health care in their use of federal transfers.
If the federal government was truly committed to high-quality, accessible health care and high quality, accessible post-secondary education in Canada, then it would ensure that its financial transfers to the provinces are increased to meet the needs of universities and colleges in Canada and the needs of Canadians. It would not drastically cut funds, as it has done. It would also ensure that the moneys transferred to the provinces under EPF are in fact used for post-secondary education and health care.
It should begin discussions immediately with the provinces to ensure the accountability of federal transfers. It should use the influence it has, stemming from its spending powers, to make sure that post-secondary education and health care funds are used for those purposes.
There is no excuse for not acting on this right away. Indeed, not doing so and not transferring adequate funds

June 8, 1990
Private Members' Business
to the provinces will be disastrous to post-secondary education and health care in Canada and for Canada's future itself.


Lee Richardson: Madam Speaker, I welcome the opportunity to speak to the motion before the House.
The motion suggests that the government should ensure that federal transfers for health and education are spent directly on those services. There are a number of reasons for rejecting this motion.
Let me reiterate that supporting such a motion would be contrary to the spirit of the Established Programs Financing arrangement which the federal and provincial governments agreed to in 1977 when they moved from cost sharing to block funding for health and educational services.
Under EPF the federal government provides a contribution to provinces in respect of both health and post-secondary education. Provinces can allocate these funds according to their own priorities which may vary greatly in different parts of the country.
Requiring the provinces to provide a detailed accounting of every dollar they spend on post-secondary education and health care, as the motion suggests, would be a tiresome and unjustified administrative burden for both the provinces and the federal government. We would prefer the money went to the provision of services to Canadians, not to do unnecessary accounting.
Re-imposing conditions on the provinces with respect to how they spend EPF money would also be legally contentious. For example, at present there is no accepted definition of what constitutes post-secondary education. Attempting to arrive at a legal definition would no doubt launch the federal government into a lengthy and expensive legal wrangle.
Above all, re-imposing what would have to be detailed conditions on the provinces would reduce their flexibility in providing innovative health and education services. This would, in a very real way, inhibit the development of Canada's world-class health care system, and it would smother creativity in Canada's first-class post-secondary education system.
Canadians are proud of their health care and education systems. They are a good measure of the wealth and the compassion of our society.
Education, in particular, is increasingly important to making our way in the competitive world in the 1990s and beyond. Canada must have an education system that is responsive to change, that can adapt to help Canada meet the challenges of international competition. Education and human resource development and training will determine which countries are in the vanguard of economic development and which are in the rearguard of economic decline.
Canada already spends ample amounts on education, second only in per capita terms to Sweden among the industrialized countries. What is more important here is not money. It is value for money-it is results. We must not put policies in place that threaten to constrain innovative approaches to post-secondary education. This is obviously even more important in the field of health care where human lives are at stake.
The federal government has been and remains committed to quality education and health care in every region of Canada. While education and health generally are assigned to provincial jurisdictions under the Constitution, there has always been a federal role in these areas. Federal involvement in supporting post-secondary education can be traced back to its role of providing direct support to veterans and to universities in the post-war period. Joint health programs began with the national health grants which were part of the post-war reconstruction program.
With the development of a nation-wide health insurance system, and the rapid expansion of Canadian post-secondary education facilities in the 1950s and 1960s, the federal government's role in financing both health and post-secondary education increased dramatically.
Under cost-sharing arrangements, the federal government contributed about 50 per cent nationally of what were defined as the eligible costs of hospital insurance, medical care, and post-secondary education institutions. The cost-sharing approach was taken at a time when both health and post-secondary education programs were in a stage of major development and expansion, and when the Canadian economy was growing rapidly and governments could afford to devote large sums for these purposes.
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By the mid-1970s, it had become quite clear to both the federal and provincial governments that the costsharing approach was no longer viable. The open-ended nature of cost-sharing arrangements reduced the federal government's ability to control and predict its expenditures. Wide per capita variations in federal transfers to different provinces appeared inequitable. Cost sharing of specific expenditures led to rigidities and an inefficient allocation of resources. The arrangements were cumbersome to administer because of auditing requirements and difficulties in defining eligible expenditures. The approach encouraged expenditures at both levels of government through 50-cent dollars.
In an effort to overcome these problems, the federal and provincial governments accepted in 1977 that cost sharing would be replaced in favour of Established Programs Financing.
Let me briefly review the objectives of this financial arrangement. They are to maintain across Canada the standard of services to the public under these major programs, and to facilitate their improvement; to put the programs on a more stable footing so that both levels of government are better able to plan their expenditures; to give the provinces flexibility in the use of their own funds which they have been spending in these fields; to bring about greater equity and equality among the provinces with regard to the amount of federal funds they receive under the program; and to provide for continuing joint policy discussions relating to the health and post-secondary education fields.
Under EPF, the federal government provides equal per capita financial assistance to all provinces through the transfer of tax points and cash payments. The federal government continues to pay a substantial share of the costs of provincial health and post-secondary education programs. In 1990-91 federal EPF contributions will amount to over $20 billion.
Let me reiterate, Madam Speaker, that since 1977 the provinces have been able to use these transfers according to their particular priorities rather than in the more restricted fashion required by the previous cost-sharing arrangements. This system works well. It has given Canada a health care system that is the envy of the world. It has provided us with world-class universities and post-secondary institutions.
Private Members' Business
I would ask hon. members to bear these facts in mind when considering the motion before the House.


Don Boudria: Madam Speaker, I listened to our colleague for Calgary Southeast and might have to reconsider my position because I agree with him. I do not want to agree with Conservative members too often. You, Madam Speaker, will understand the bad precedent that that could create from time to time. However, I do agree with him this time.


Mr. Thacker:: You might even get re-elected.


Don Boudria: I hear a member across the way saying that the member for Calgary Southeast might even get re-elected.


Blaine Allen Thacker: You might even get re-elected, if you become a Conservative.


Don Boudria: I suppose there is nothing impossible, Madam Speaker. That member might get re-elected. But then again he might not, as most Tories will of course go down to defeat in the next election. It could very well be that that particular member will as well. But who knows. The voters will decide ultimately and the member from Lethbridge will find out, as we all will on election day.
I listened attentively to the proposition set forth by our colleague, the member for Saskatoon-Clark's Crossing. He said that the government should consider the advisability of ensuring that federal transfer payments to the provinces for the purposes of education and health care are spent directly on those services. The only way of achieving that, as was pointed out earlier, is to amend the cost-sharing agreements that the federal government has right now with the provinces.
Right now we operate under a block funding type of arrangement. What that means is that, if we ensure that federal transfers to the provinces go to a specific area, then we would unilaterally change the agreement we have now with the provinces. I do not agree with that proposition.
It was only moments ago that we were discussing Bill C-69. With respect to Bill C-69 I said, and colleagues from all sides of the House said, how wrong it was for the federal government to cut back unilaterally on funds going to the provinces. If it is wrong to cut back

June 8, 1990
Private Members' Business
unilaterally on funds to the provinces, I ask my colleagues this. Is it not similarly wrong to amend unilaterally the agreements we have with them?
You can see, Madam Speaker, why I am tempted here to agree with the member from Calgary Southeast. The only reason I agree with him is because he is correct, not because he is the Conservative member for Calgary Southeast. I do think he is correct in the sense that we should not be trying to impose this kind of a proposition.
If my colleague from Saskatoon-Clark's Crossing would have proposed instead that the federal government consider the advisability, when it renegotiates agreements with the provinces, of ensuring that those new agreements have a provision whereby health care dollars would be assigned specifically as opposed to the present arrangement which provides for block funding, then perhaps I would look at the issue slightly differently-
At the present time what is proposed is not that. What is proposed to me sounds very heavy-handed. It sounds very doctrinaire. I have difficulty with that kind of socialism that is so doctrinaire that it wants to impose that kind of central authority on just about everything. You can understand, Madam Speaker, how I would be hesitant to support that kind of a proposition.
Therefore, I regret to say that I cannot agree with what the hon. member is suggesting to members of the House. I usually consider the opinions of the member for Saskatoon-Clark's Crossing as being very worthy and supportable opinions, generally. I do think, particularly at this time in the history of our country-and I need not remind hon. members of what is going on right now across the street-that it certainly is not a good time to talk about making the kind of changes that are being proposed here today.
Indeed, the arrangements we have now have been in place since, I believe, 1977. Before that, post-secondary education and health care were funded by mechanisms which were different, at least very different in the case of post-secondary education in particular.
I will recognize that negotiators, when these agreements expire, may want to negotiate them federally. At that particular point, as I said previously, I would be
willing to offer my input as to how I think that should be done.
Needless to say, I do not think at the present we should be supporting the motion brought forward by our colleague for the reasons I have just described.


Mr. Rene Soetens (Ontario):: Madam Speaker, this motion that is before us brings the whole question of federal payments to the provinces and, in particular, payments under the Established Programs Financing Act. It is a very important subject.
In 1977, we saw a major change in the way in which federal assistance was delivered to the provinces. The federal and provincial governments agreed back then to replace the old shared-cost program and shared-cost method of assistance with a very different kind of program which we now know as EPF.
Through the EPF program the federal government continues to support the financing of a number of programs, including, of course, post-secondary education and health care. Provincial programs are supported through payments made directly to their governments.
The change in 1977 was to move away from the old shared-cost system, where federal assistance met up to about half the cost of certain programs, to a system of what is called block funding.
Federal assistance is now based on a formula related to the growth of the economy and of the population of each province and is therefore more equitable across the country. The provinces are happy with this arrangement. I am certainly not aware of any objections since 1977 to that arrangement, since it allows the provinces more flexibility in designing programs to use their revenues, both those raised by themselves and those provided by the federal government.
Over the years there have been changes in the EPF program, but all have respected the basic principles of that act and the agreement between the provinces and the federal government.
Most recently, the federal government has responded to our financial situation by proposing changes which ask the provinces to share in the national burden of fighting the deficit and inflation. These changes, too, respect the outlines of the EPF program.
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I want to take time now to look at these recent changes in light of our situation with respect to this motion.
At this point, it is important to remember that total federal transfers to the provinces through tax points and cash payments amount to over $35 billion. These transfers have grown at an average rate of 6.5 per cent per year since 1984-85-a rather significant growth rate. This compares to spending on federal programs which has grown in the same period by an average rate of 3.6 per cent per year. That is certainly less than the rate of inflation, but substantially less than the rate at which we have been transferring payments to the provinces.
We believe that the provinces are able to carry a larger share of the burden of their own spending, especially the more prosperous provinces.
At the present time, 35 cents of every federal revenue dollar is being used to pay interest on the accumulated federal debt, while the comparable figure for the provinces together is only 12 cents.
I have talked about more prosperous provinces sharing the burden that we at the federal level have. I would like to talk specifically about the province that I live in, the province of Ontario. I heard the doom and gloom about funding for various health care and education programs because of this cut that we have proposed in EPF. I say cut, but it really is not a cut. We are increasing transfers to the province of Ontario by over 2 per cent, almost 3 per cent.
Having said that, in all the doom and gloom that members of the Opposition have talked about, the province of Ontario this year was able to increase its spending on health care by 12.8 per cent in its budget. Where in the world is the doom and gloom that members of the Opposition are talking about?
Not only was the Government of Ontario able to increase its spending by 12.8 per cent in the field of health care, it was able to balance its budget. It was able to pay off some of its debt. All in all, it was doing a pretty remarkable job. I give it credit for that. The fact is that the province was able to raise the money. Yet here we are in the House saying that the province of Ontario could not afford to get only just under 3 per cent more from the federal government. That is nonsense.
Private Members' Business
Our expenditure control plan will limit the rate of growth of these transfers to about 3 per cent for the next two years. This is about the rate we ourselves are holding to for federal program spending. In other words, all we are asking the provinces to do is to carry the same load that we here in Ottawa are putting upon ourselves. We are asking them to do as we are doing-not more, not less.
Having said this about the provinces in general, however, we are sensitive to the fact that some provinces are not in as good a position as others. I understand that, yes, the province of Ontario was able to do some things because of some economic health that it has. As a result of our planning, our plan is sensitive to the needs of individual provinces. Federal transfers will grow by about 4 per cent a year in the next two years to those seven weaker provinces, while the stronger ones, including the province that I come from, will only grow at just over 2 per cent a year.
However, I want to underline another important aspect of our proposal. It is that the reductions we are proposing are really not reductions. They are reductions in the rate of growth, but they only amount to about 1 per cent of the provincial revenues. It is not 10 per cent, 20 per cent or 40 per cent. I realize opposition members have not used those numbers, but the hysteria they create by the way they are carrying on suggests that we are decimating provincial revenues. That is nonsense. It is about 1 per cent.
Transfers will, of course, continue to grow. The weaker provinces will benefit more than the stronger provinces. That is part of what Canada is about.
I want to look more closely now at one particular area of federal transfers, the Established Programs Financing, which is the focus of the motion that is before us today.
EPF is the single largest element of over-all federal transfers to the provinces which amount to about $36 billion in 1990-91. EPF itself has grown from $14.5 billion in 1984-85 to about $20 billion in 1989-90. That is a growth rate of over 6 per cent a year.
We at the federal level have been controlling our spending at a rate of 3.5 per cent a year. We have been transferring money to the provinces at the rate of about 6 per cent a year. They certainly have not been very hard

June 8, 1990
Private Members' Business
done by and now we are only asking them to match what we are doing.


Garth Turner: What about Ontario's spending?


René John Soetens: Ontario's spending is a very good question. It has been increasing spending over-all at a rate of just under 10 per cent a year for the entire period that we are talking about. We held ourselves to 3.5 per cent while Ontario managed to raise its spending to 10 per cent. No wonder they have an inflationary problem in southern Ontario.
I want to remind you that under this program the federal government gives assistance to the provinces both in tax points and in cash transfers. The purpose of these transfers has been to assist the provinces in providing acceptable levels of programs in certain areas.
Since 1977, however, the provinces have been able to use the money in accordance with their own priorities. They have not been dictated to by the federal government. Each and every province can set their own priorities in using the money that we have been transferring to them.
Of course, in 1977, I need not remind you, Madam Speaker, and unfortunately for Canada, there was not a Conservative government in Ottawa. An awful lot of bad things have happened since 1977 because of another government that existed in Ottawa, but in this particular case on that point that government transferred responsibility to the provinces. That, in essence, is what Canada believes in, that the provinces have the responsibility to deliver. We give them that responsibility.
Our proposals will continue to transfer under the EPF for the next two years at the same per capita rate as they got in 1989-90. It is not a new formula. It is the formula they used in last year's budget that we are asking them to use it in this year's budget and in the next year's budget.
Transfers will therefore continue to increase as provincial populations increase at an expected rate for the country as a whole of about 1 per cent. Because transfers are based on an equal per capita figure for each Canadian, the effect of our program will be equal for each and every province.
In 1992-93, the rate of growth will return to that set out in the law and in the agreements which provide for the payments to increase by the rate of inflation less than 3 per cent, as announced in the April, 1989 budget. After 1992-93, the rate of increase will not be less than the rate of inflation.
The second program under which the federal government assists the provinces is the equalization program, which provides help to provinces with weaker revenues and which may be directed to health care and post-secondary education. These payments have also grown strongly in recent years, from about $5 billion in 1984-85 to nearly $8 billion in 1989-90, a 60 per cent growth rate in about five years.
In the case of the Atlantic provinces, these payments are more important than payments under the EPF simply because of the sheer size and volume of the payments. Equalization going to the less prosperous provinces is not affected by the restraint program presented by the government. They will continue to grow at a rate between 6 per cent and 7 per cent a year, which is substantially higher than the projected rate of increase in federal program spending.
The facts I have set out in explanation of what this government is doing with respect to EPF and equalization underline the importance we attach to the goals of these programs.
While we are asking the provinces to share the burden, as I have explained previously, we are continuing to spend a great deal of money, up to $27 billion in 1990-1991, on the two programs in actual cash. That is a substantial proportion of federal government spending and an even higher proportion of spending of federal programs.
These moneys are being transferred to the provinces because we believe the provinces, which have the constitutional authority in the areas of education and health care, are the level of government best suited to make the practical decisions about what services are to be delivered and how they are to be delivered. Without an increase in the size of the federal bureaucracy, this is the most efficient and effective way to ensure that Canadians receive the services they need.
June 8, 1990

I am not persuaded that these are appropriate messages being sent today. I am glad to put on record my opposition to the motion put by members of the opposition.


Garth Turner: Madam Speaker, in addressing this particular motion I can agree with the member for Glengarry-Prescott-Russell. I think he spoke some very eloquent and intelligent words on this particular matter. I would like to compliment my friend.
When he said that this was an example of heavy-handed doctrinaire politics, he was right. This is an example of the ugly side of socialism in this country. This motion typifies the attitude, the doctrine, the belief that a federal government can walk into Canadians' lives, and provincial affairs, that the state can intervene in other jurisdictions. It is the state rearing its head, the jackboots of a central government which is totally wrong. It may be pure socialism, but it is wrong. It is wrong for Canada.
The member for Glengarry-Prescott-Russell also mentioned what is happening here in Ottawa as we attempt to achieve constitutional reform. The symbolism of what is happening as those discussions go on, compared to the political reality of this kind of a motion, shows very dramatically different styles of government. It shows a government style that this government has adopted that is conciliatory, that is negotiating, that represents that it understands that there are other interests out there, that the government needs to work with Canadians, with other associations and other governments rather than dictating to them as, perhaps, the NDP would have us do. It is clearly not right.
I do not think Canadians want anything other than a partnership. They want a partnership that works. They do not want a dictatorship.
There is one thing, however, that the member for Glengarry-Prescott-Russell said with which I must take a moment to disagree. He said that Tories will go down to defeat in the next election. Well, I do not know where he got that. Maybe it is because right now Tories have the conviction to reform the tax system. It would have been easier to leave an unfair and invisible hidden tax in place that hurts the economy. That would have been easy. In fact, for years governments have taken the
Private Members' Business
easy way out. It is not easy to take an invisible, hidden tax and make it visible. It is not easy to take a tax that consumers do not know they pay and all of a sudden tell them about it. That is tough.
Maybe he was referring to spending cuts that this government has made. Maybe he was referring to the fact that we have stood up to special interest groups. The government has admitted that it is difficult to cut off the funding once it has been started, but the government has decided to do that and maybe that is why the hon. member thinks that the Tories are unpopular right now.
Maybe it is the fact that we have reformed the unemployment insurance system to try to make it fair, to channel more money into retraining people rather than just paying them to sit at home. That is not easy either and maybe the hon. member was referring to that.
Then again, the member may have been referring to the government's stance on fighting inflation. Maybe the hon. member thinks that interest rates are too high, that maybe we should abandon the fight for long-term economic stability into which we have entered. The hon. member may have been talking about the politics of convenience rather than the politics of conviction. Politicians of convenience are there to get elected again. That is what they care about. In fact, all that politicians of convenience care about is getting elected again. But there is something more important than that.
More important than being a politician of convenience is being a politician of conviction, politicians who do not care if they are popular. Popularity comes and popularity goes, polls rise and polls fall, and at the end of the day convenience does not matter. At the end of the day you have to look back and say, when I was a member of Parliament, while I was part of the government, while I was in the House of Commons, did I just do things that would get me elected again, or did I do things that I believed in and things that I could go back and tell people that I supported?
If the hon. member wants us just to be politicians of convenience, maybe it would be easier to get elected again and again. But to be popular, Madam Speaker, is easy. I will give you a recipe for popularity right now.

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Private Members' Business
The government would scrap the GST. The government would not try to fix the constitutional impasses to which we have come. The government would print more money. The government would ignore the debt. The government would ignore the deficit. The government would ignore inflation. That would make us very popular very fast.
In the short term, we would have been politicians of convenience. We would have been politicians who became popular. We would be politicians for the short term, because that is how long the popularity would last. Very soon this country would have chaos on many fronts: social, political, economic, financial. We would have problems then that politicians who came after us would not be able to solve, and it is bad enough right now as we members of Parliament, we the government, try to cope with the problem that we inherited.
In 1984 the debt that we inherited was $170 billion. Today it is more than double, almost entirely because of interest on that debt that we inherited. If you have a mortgage on your house, Madam Speaker, and you cannot make the mortgage payments and you borrow enough to make them every year, pretty soon you are going to have a much bigger mortgage and will have a harder time paying it off. It is that simple.
We do not want to be politicians like the politicians who came before. We want to break the cycle of the last 20 years. Those of us who are in the House for the first time want to make a difference. We realize that making a difference for the future means solving the problems of the past. That is what all this is about. It is about conviction, not convenience. It is about the long term and not the short term.
We have to do things today which will have consequences throughout the 1990s. It will not be an easy decade. There are going to be lots of problems. There are going to be economic problems and environmental problems, linguistic problems and social problems. To solve all of those we have to take actions today so that we can reap the benefit in the future. This is what this government is doing now.
I have to take exception to the comments of the member for Glengarry-Prescott-Russell. I think they were ill-conceived.
We are not here to talk about that anyway, and a few words on the funding program now would be worth while. As I said, I think the philosophy of the NDP is totally wrong, but I only have two minutes now to cover this subject in my remarks, so I will not even try, Madam Speaker. Two minutes is really not enough time to deal with this, but two minutes is enough time to say that all of us here on this side of the House are trying to accomplish an agenda.
Canadians will know that right now the government is not very popular in the polls. Canadians, however, recognize in their hearts that the polls do not matter. It is very easy to say that you would support some other politician or some other political party. It is very easy when there is not an election going on. It is very easy when there are so many issues of national importance on the agenda.
But, Madam Speaker, the polls do not matter right now. They do not matter to me as the member for Halton-Peel, they do not matter to the member for Ontario and they do not matter to the member for Calgary Southeast. All of us do not care about the polls. We care about doing what is right, what is constructive and what is beneficial for our country.
We will continue to do it. We have not lost any resolve. We do not look at the polls with any alarm or with any fear. We look at them with a passing curiosity because we know that when Canadians are asked to make a decision they will have only one decision to make, and that is to support those politicians who truly fight for Canada.


Jean-Marc Robitaille: Before I begin, Madam Speaker, let me congratulate my colleague for his excellent speech. I think he conveyed his position with great maturity.
In 1977, there was a very important change in the way federal aid was given to the provinces. The federal and provincial governments agreed to replace the shared-cost assistance with a considerably different funding mechanism, now known as Established Programs Financing. Under EPF, the federal government continued to fund a large part of provincial post-secondary education and health care programs by transfer payments to the provincial governments. The difference is that starting in
June 8, 1990

1977, the federal government would no longer contribute on a 50-50 shared-cost basis with the provinces. The federal contribution would be calculated on the basis of the economic growth and population of each province. The federal government's contribution to these programs thus became more uniform across the country. The provinces were satisfied with this arrangement because it gave them much greater flexibility in using funds both from their treasury and from the federal government.
Much has happened since then and our assistance continues in spite of straitened circumstances. In the current fiscal year, transfers of tax points and cash to the provinces will total over $35 billion. On the whole, transfers to the provinces have increased at an average annual rate of 6.5 per cent since 1984-85. By comparison, spending on federal programs in general has been held to an average annual growth rate of 3.6 per cent, which is less than the rate of inflation. In general, the provinces are able to carry a bigger share of their spending, especially the provinces that are in good financial shape.
At a time when 35 cents of every dollar of federal revenue is used to pay interest costs on the debt, the average figure for the provinces is only 12 cents.
Under the Expenditure Control Plan which was part of the last budget, the tranfers to the provinces are expected to grow over the next two years by nearly 3 per cent a year, roughly the same rate as the federal government's total program spending. In other words, we are not asking the provinces to carry a burden heavier than our own. We are asking the provinces to do their part, that is all.
If I may, Madam Speaker, I should like to emphasize the federal government's contribution to the provinces, a contribution which remains very significant. The transfers generally will continue to increase and the less affluent provinces will benefit from a higher growth rate than the others. Because the transfer payments to the provinces represent very significant amounts, I should like, if I may, to deal a little more in detail with the way the governement helps all provinces.
In 1990-91, the federal government will provide nearly $36 billion in total financial support to the provinces and territories.
The greater part of this assistance comes under three major programs: Established Programs Financing,
Private Members' Business
equalization payments and the Canada Assistance Plan. Under the Established Programs Financing, the Federal Government provides equal per capita financial assistance to all provinces through the transfer of tax points and cash payments. These transfers were originally designed to help provinces carry out their responsibilities in respect of health care and post-secondary education.
Since 1977, provinces have been able to use these transfers according to their particular priorities. EPF transfers are the largest single form of federal support to provinces, and have grown from $14.5 billion in 1984-85 to about $20 billion in 1989-90, an average annual growth rate of more than 6 per cent.
In addition to Established Programs Financing, the federal government also provides substantial additional assistance to the lower income provinces to help them provide public services including health care and postsecondary education through the equalization program. Equalization transfers have grown strongly in recent years, from over $5 billion in 1984-85 to close to $8 billion in 1989-90. For example, they now exceed EPF as the largest form of federal support in the Atlantic provinces.
Under the Canada Assistance Plan (CAP), Madam Speaker, the federal government provides funds to provincial and territorial governments to help them pay for social assistance benefits and services. These transfers, which are based on 50/50 cost-sharing of eligible provincial spending, have grown at an average annual rate of about 6.7 per cent over the past five years. The federal contribution, in the form of cash and transfer of tax points, has increased from $4 billion to $5.5 billion. The average rate of growth in each province has varied from 1 to 3 per cent in Saskatchewan, British Columbia and Quebec, to about 14 per cent in Ontario.
For the next two years, growth in transfers under the Canada Assistance Plan, or CAP, will be limited to five per cent a year in the fiscally stronger provinces of Ontario, Alberta and British Columbia. Other provinces-those receiving federal equalization payments- will be exempt from this ceiling on growth. They will continue to have open-ended access to federal dollars to meet any growth in expenditures eligible for cost-sharing under CAP. Implementation of this measure will provide for resumption of the present regime on April 1, 1992.

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Private Members' Business
Mr. Speaker, I repeat that federal financial assistance to the provinces is distributed on a progressive basis. Fiscally weak provinces receive far more substantial per capita assistance than the richer provinces. The facts show, beyond a doubt, that the federal government has done its share despite a financial context, a financial situation of which everyone is well aware, and I am referring to our very substantial national debt and deficit. I believe that in times like these, we must be realistic. We must be realistic because everyone wants more assistance. Everyone wants better programs. Everyone wants an even more progressive increase in programs. However, we must consider the country's financial situation, and I believe that Canadians are very well informed in this respect and are very proud of the fact that we are able to act responsibly as a government.
As my colleague from Halton-Peel (Mr. Turner) said, we were not elected to this House or to government just to win beauty or popularity contests. We were elected to show leadership and the ability to run this country well.
I think that for this reason, Canadians will be grateful to us for having done the right thing at the right time, Madam Speaker, for having made the right decisions when they had to be made and for not trying only to win popularity contests in the short run.
Madam Speaker, thank you for your attention. [English]


Blaine Allen Thacker: Madam Speaker, it is a privilege to rise on this Private Members' Motion dealing with federal-provincial relations. I speak from some 11 years of sitting in this House and listening to the same debate over and over again. One hundred years from today members will still be debating this because the bottom line reality is that we live in a federal country with a federal power that has enormous taxing power against all Canadians in all regions of the country. It deals with provinces which represent much smaller areas, often with much less strength to be able to tax their people and industries.
Since Confederation mechanisms have been developed to transfer cash through the central Parliament back to regions that do not have the same taxing authority.
I can remember soon after 1980 sitting on a federal task force of all three parties in the House looking at the question of federal-provincial transfers. We travelled to every provincial capital and interviewed dozens of Canadians, provincial governments and officials. It became crystal clear that there is one thing that the provinces are absolutely unanimous on, and that is that if they can help it, they are not going to give up any fiscal power to the federal government and that they want more and more fiscal power back.
Indeed, the genius of Canada is that in times of crisis, war and depressions, for example, power can centralize in Ottawa as happened in World War I, World War II and during the Depression. However, during peace time there has been a steady devolution of fiscal responsibility to the provinces.
To me the most important thing for this Parliament is to ensure that we never give to the provinces that residual power that we have, i.e., peace, order and good government, so that at a time of crisis, whether an economic crisis or a political crisis such as war, power can be taken and used by Parliament.
In the meantime, during peace times, very likely the principle that the government closest to the people gives the best government is a good principle to operate by, and so we should not be frightened by that.
In terms of federal-provincial fiscal arrangements, we know from the speeches given earlier that the federal government, using its spending power, moved into areas of exclusive provincial jurisdiction. That is the real critical point. We are talking about that limited area where there is exclusive provincial jurisdiction- property civil rights and education. Property and civil rights includes hospitals.
We should not easily move into those areas and try to take them away from the provinces. Indeed, if we did, the Supreme Court would throw it out and declare any act of Parliament to be unconstitutional. So we have had to enter into arrangements.
The first one was shared cost under which the provinces would get 50 cents for every 50 cents they spent. Under that, the provinces, particularly the ones that had strong fiscal capacity, built up their hospitals, schools and colleges very fast. The weaker provinces did not have even the 50 cents so they were falling further behind.
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The result was that there was uncontrolled federal spending and the federal government had no idea how much it was going to have to budget each year. So in 1977 the government came out with block funding, the idea that the provinces would just get a certain amount and would then decide how to spend it.
It is true that some provinces have abused that formula. Indeed, there are instances where they have received under the formula more than they have actually spent, for example, on post-secondary education. Nonetheless, it gave more certainty to the federal government and so, on balance, I think that was not so unwise.
The government then moved into a formula that was based on a moving average. The result was that we in Parliament were transferring to the provinces moneys well above the annual rate of inflation. That was not right because we were then giving up the right and
Private Members' Business
responsibility of parliamentarians to act responsibly in a fiscal sense because, of course, it is the same people being taxed, whether federally or provincially. We have no more right to be irresponsible than do they. Thus, under Bill C-69 with which we just dealt, which is to try to cut back the rate of increase to the provinces, it is still going to be above the rate of inflation, but it will be a lower rate than before.


Madam Deputy Speaker:: The period for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 96(1), this item is dropped from the Order Paper.
It being three o'clock, the House stands adjourned under next Monday at 1 p.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 3.01 p.m.
[Stage Direction]
Monday, June 11, 1990