1990-02-21

Mr. Ken  Janies@Sarnia-Lambton: Mr. Speaker, yesterday's budget really reaffirms to all members of the House our government's unabridged commitment to building a strong economic future for Canada.
As part of this vision, Canada requires a dynamic and flexible economy, one responsive to the many new challenges and opportunities fostered by an intensely competitive and restructured global market-place.
Central to this economic foundation is a highly skilled and flexible labour force. We as a nation depend on our international trade. To do that, we must invest in our human resources and meet the demands of economic and technological change.
In a leadership role the new Labour Force Development Strategy clearly demonstrates our government's commitment to do just that. It reinforces private sector training and provides significant additional funds to our unemployed, social assistance recipients and displaced older workers.
I believe that this labour strategy, coupled with the unemployment insurance reforms, as well as the economic safety net we have developed, strongly demonstrates a commitment by the government to all Canadians to develop a better framework for both them and our economy to adjust to change and to new prosperity for Canada.



Hon. Lloyd Axworthy (Winnipeg South Centre):: Mr. Speaker, among the many victims of yesterday's budget was a once proud, but now embattled entity called Canada.
Over the years we have seen the independence and sovereignty of our country whittled away by the conti-nentalist philosophy of the present government.
Yesterday, this Americanization of Canada took giant strides forward with the proposed sale of both Petro-Canada and Telesat. The sale of these Crown corporations eliminates the presence of a public interest in the direction and future of this country. It eliminates the opportunity to maintain Canadian ownership and control over vital resources. It eliminates the opportunity for Canadians to plan for their future alternate energy and national communications policies.
Let us remember the spirit of 1979 when the Canadian people rose up and fought the plans by a Conservative government to get rid of Petro-Canada. Let us have the spirit of 1979 re-enacted today so that Canadians will once again fight for the right to stay free and independent.



Ms. Margaret Mitchell (Vancouver East):: The budget decision to axe construction of the Polar 8 ice-breaker is a betrayal of British Columbians and the future of the north. Three years ago the government signed an agreement committing itself to a B.C. contract while frigate contracts went to Quebec.
Axing the Polar 8 means a loss of over 1,000 direct jobs in Vancouver and Victoria, as well as many spin-off jobs. It means the end of our shipbuilding industry in B.C.
A Polar 8 class ice-breaker would have been much more than a proclamation of our sovereignty in the Arctic. It is essential for northern development, Arctic

February 21, 1990
search and rescue, scientific research and to keep northern seas open year round.
This government has betrayed British Columbians and northerners by reneging on a signed deal that was reaffirmed repeatedly by senior ministers.
B.C. Tory MPs have failed to represent British Columbians. I call on the junior Associate Minister of National Defence, who repeatedly confirmed Polar 8 would go ahead, to resign.


MINING EXPLORATION
Mr. Guy Saint-Julien (Abitibi):: Mr. Speaker, I am one of the members who worked to set up the Canadian Exploration Incentive Program in 1987-88. On December 11, 1989,1 said in this House: "The CEIP expires on December 31, 1990, and today I am worried about the survival of this program."
Yesterday, we learned in the Budget that this program was cancelled as of midnight February 19, 1990. We lose the contribution equal to 30 per cent of the cost of mining, oil and gas exploration financed by flow-through shares.
Mr. Speaker, I would like to make it clear that we are maintaining the resource deduction. Flow-through shares will continue to help mining companies that are starting up to attract investors. The tax system for expenditures makes it possible to recover all pre-production costs before a new mine starts to pay tax, and I am really disappointed about losing this program.

{English}


THE BUDGET
Mr. Fred J. Mifflin (Bonavista-Trinity-Conception):: Mr. Speaker, a most distasteful measure in the Wilson budget yesterday was the so-called management initiative to take away $35 million from Canadian veterans.
Five thousand of them under chronic care will have to pay $3,000 each, and a total of $17.3 million for their care as part of what the government euphemistically calls updating the lodging program.
In another initiative, 60,000 living at home will lose help provided for heavy housecleaning because of an $18 million cut for this key program to aging veterans to which the government refers as streamlining.
This government action flies in the face of a Remembrance Day statement by the Minister of Veterans Affairs which he opened by emphasizing "just how much is owed to those who did their duty for their country in war". Is this another sacred trust gone astray?
This is not what I call a management initiative. It is a shameful and disgraceful way to shift the burden of deficit reduction on the backs of those who can least afford it, and in this case, most specifically on the backs of those who have already more than paid their dues.
Veterans deserve better. They will fight back once again.



Mr. Peter L. McCreath (South Shore):: Mr. Speaker, the soothsayers of gloom and doom are already criticizing the federal budget, but then that was predictable.
Let's face it, if this government brought rain to end a drought, the Liberals and the NDP would complain about it.
The fact is that the Minister of Finance has done his job and done it well. Seventy per cent of the spending cuts are consumed within federal spending. Provinces whose spending growth has far exceeded that of the Government of Canada are being asked to pay their share. After all, if you are part of the problem, shouldn't you be part of the solution?
Atlantic Canadians should be pleased to see that this budget recognizes regional differences in Canada and, accordingly, has shielded Atlantic Canadians from the toughest aspects of a needed tough budget. A province like Nova Scotia need only restrain its spending in line with federal restraint and there will be no need for increased taxes at the provincial level or program cuts to go with no federal taxes.
Congratulations, Mike, on a job well done.
February 21, 1990



Mr. Chris Axworthy (Saskatoon-Clark's Crossing):: Mr. Speaker, health care and post-secondary education are the highest priorities of Canadians. Eighty-eight per cent of Canadians told this government not to cut funding to these programs. Yet yesterday's budget cut $7.6 billion from health care and post-secondary education funding anyway. The finance minister is paying for his high interest rate fixation on the backs of the sick and the students of this country. He is slashing social programs as his big business friends have told him to do. If you are sick in Newfoundland, this government is saying you do not deserve the highest quality health care. If you are a student in Saskatchewan, this government is saying you do not deserve a high quality university or college education.
The dream of equal treatment for all Canadians regardless of where they live and regardless of their financial resources is dead.
The options available to the provinces, especially the less well off provinces, are very limited. They can increase their deficits, raise taxes, cut health and education programs or privatize services. None of these options are desirable. They are the deliberate consequences of the federal government's actions in this"pass the buck" budget.
This government is cutting off funding to what it says are its own priorities. It cannot have it both ways. It is high time it came clean with Canadians.


FISHERIES
Mr. Francis G. LeBIanc (Cape Breton Highlands - Canso):: Mr. Speaker, the Canso Community Survival Thsk Force left Ottawa yesterday empty-handed and bitterly disappointed after their fruitless meeting with three members of this government: the Minister of Fisheries and Oceans, the minister responsible for ACOA and the Minister of Employment and Immigration.
The government which had promised a program of generous assistance to communities affected by the crisis in the Atlantic fisheries had not one dime of support for a community facing economic ruin. The task force suggestion that Canso receive its fair share of available fish quotas either through a community quota or a
requirement that National Sea allocate some of its fish to Canso was greeted with cold stares and deaf ears by the Minister of Fisheries.
As a further kick in the shins, the budget which the Minister of Finance read later on that afternoon, had not one word to say about the crisis-stricken Atlantic fishery.
The people in Atlantic Canada can draw only one conclusion from this pitiful display of neglect. This government has written off Atlantic Canadians and it is time for Atlantic Canadians to write off this government.


Mr. Willie Littlechild (Wetaskiwin):: Mr. Speaker, I rise in the House today to express my sincere thanks but also my deep sympathy to our parliamentary pages for a devastating loss to the members of Parliament in last night's annual hockey game.
It was a sweet victory. The hon. members from Kitchener, Victoria and Notre-Dame-de-Grace led off in a pummelling of the pages, and it was smooth-sailing from then on. Although the pages persevered, they were no match for the hon. members who were simply too fast and furious.
Even though the pages had youth on their side, it was nothing compared to the experience and the athletic bodies of the smooth skating members. The House should know that the members' team was a tremendous credit to the world of sport, hockey in particular, as they displayed sportsmanship throughout, even allowing the page from La Passe, Ontario, to score a goal.
To conclude, I have been but one thing left to say. As sweet as the victory was, hon. members look forward to next year's challenge when we will do it all again.


Some hon. members:: Hear, hear!


WILLIAMS LAKE CANADA EMPLOYMENT CENTRE
Mr. Dave Worthy (Cariboo-Chilcotin):: Mr. Speaker, it is far too often that loyal and dedicated public servants bear the brunt of much public and political criticism. This is why it is such an honour to announce here in the House that the Williams Lake Canada Employment Centre in my riding of Cariboo-Chilcotin has been

February 21, 1990
awarded the outstanding team award by Employment and Immigration Canada.
The staff of the Williams Lake CEC was chosen as having the best record in providing quality service from among the 41 centres nation wide that were nominated for the award.
Williams Lake CEC has been honoured twice in the past for awards of excellence in claims processing.
I would like to say this to Irene Ainley and her staff in Williams Lake that we always knew you were good. Now the whole country knows.


MARINE ATLANTIC
Ms. Catherine Callbeck (Malpeque):: Mr. Speaker, yesterday we learned that the subsidies to Marine Atlantic would be frozen for the next two years. This freeze will amount to a $9 million reduction to Marine Atlantic.
In addition, since 1985, this government has cut Marine Atlantic's budget by $52 million.
This Crown corporation operates on subsidies and fares, which means that if subsidies are reduced, Atlantic Canadians are faced with increased rates or decreased services. Adult ferry rates have already increased 44 per cent since 1985.
In a province like Prince Edward Island, higher transportation costs mean more expensive consumer goods and less competitive exports.
Islanders may not experience direct tax hikes from this budget, but the pain of budget cuts will dig deeply into everyone's pockets.


THE BUDGET
Mr. Stan Wilbee (Delta):: Mr. Speaker, in the wake of the excellent budget presented by our finance minister yesterday, the expected bluster and hypocritical statements of the provincial finance ministers are not surprising. I refer specifically to Ontario and British Columbia.
The B.C. finance minister has shouted loud and long that the federal government should control our spending and, of course, when we do it, he is the loudest crier.
Federal program spending was restrained to 3.6 per cent over the last five years. That is well below the rate of inflation and it beat Ontario's 9.5 per cent and B.C.'s 6.2 per cent.
The fact is that the federal payments will continue to increase for British Columbia at 2.5 per cent a year. The effect of the change is only .8 per cent to the B.C. budget.
It has been very easy for the provinces to balance their budgets when the feds pay the mortgage.
As our finance minister has stated: "The provinces are part of the problem: The provinces must be part of the solution".



Mr. Ian Waddell (Port Moody-Coquitlam):: Mr. Speaker, some months ago the premier of British Columbia, Bill Vander Zalm, called for a 25 per cent cut in federal spending. Last night he almost got his wish.
That budget hurt families in British Columbia and elsewhere in Canada. The best example of that is in housing. The Canadian federal government last year funded the production of 16,000 social housing units at a cost of $100 million. Yesterday's budget contains a cut of 15 per cent-$51 million over the next two years.
This is disastrous for families in Canada in the big urban centres. They cannot get housing. It is a double whammy, because no one believes the 11 per cent rate of interest. My constituents are paying 13 per cent to renew their mortgages.
When the electors get to Bill Vander Zalm and Brian Mulroney, they are going to give them a choice of housing. They are going to send them back to Fantasy-land.


February 21, 1990



ORAL QUESTION PERIOD


Hon. Herb Gray (Leader of the Opposition):: Mr. Speaker, I have questions for the Minister of Finance.
Canadians are coming to see that yesterday's budget is a fraud and a farce. The minister says that he has his deficit under control. That is not true. He simply transferred it to the provinces.
The minister says that there are no new taxes. That is also not true. His cuts in payments to the provinces for health and education mean that there will be higher taxes in every province for every Canadian.
Canadians will see that the minister's budget will mean shutdowns of hospitals and hospital beds, higher tuition fees, and fewer university spaces.
I want to ask the minister what assessment he has done of the impact of his budget on the number of hospital beds, the effect on tuition fees, the effect on university spaces? Or is it that the minister simply does not care what damage his budget does to Canadians?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, let me make some comments in response to the Leader of the Opposition.
First, the transfers to provinces are unconditional transfers. They can go for post-secondary education and health care, or they can go to highways or pay wages and salaries of public servants.
Since 1977 there has been no relation to what the transfers have been made for to how the transfer moneys are spent. They just go into the general revenues of the province.
The second point I would make in relation to the hon. member's question is this. Let us put the whole matter into perspective.
What we are saying to the provinces is the reduction in the growth rate of the transfers-because the transfers will continue to grow next year by an average of 3 per cent-is equivalent to a little over half of 1 per cent of
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provincial spending in year one, and a little over 1 per cent in year two.
Against that perspective the adjustment that the provinces are going to have to make is not a major one. For them to be a part of the solution to a major national problem, we believe that they should share some of that burden.


Herbert Eser (Herb) Gray: Mr. Speaker, it is still a reduction of $7.3 billion in transfers to the provinces for projects like health and education, no matter how the minister slices it.
The minister has also admitted in effect that he does not know how many hospital beds will be closed and how many university places will be lost because of his budget.
The minister will be hearing from the premiers. The minister will be hearing from student leaders and health care professionals. I would like to ask him a question about a group that does not usually have access to the minister.
The minister says that there are no tax increases in this budget. What does he call forcing sick and elderly veterans to pay a new fee of $3,000 a year for the care they are receiving from the Department of Veterans Affairs? Is this not typical of the damage and the burden the minister is placing on Canadians who can least afford it?


Michael Holcombe Wilson: Mr. Speaker, again let me put this into perspective. I do not think that there are many Canadians in this country who do not believe that we have a major fiscal problem that we must get under control, and that we are getting under control. But we need this further action to complete the job.
We have held our program spending to 3 per cent. The average increase in transfers to the provinces will be 3 per cent. The transfers to the provinces are $34 billion this year. That is in relation to our total program spending of over $100 billion. We have asked the provinces to accept one-third of our spending control program as part of their responsibility.
My friend makes some comments about the treatment of veterans. I think the veterans of this country have been treated extremely well over the years by this government and by previous governments. They will continue to be treated that way because they have given so much to the past of this country, to fighting for the

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freedoms, to doing the things that we respect very much in this country. We will continue to do that in a sensitive way and in a way that respects the interests of the veterans in Canada.


Herbert Eser (Herb) Gray: Mr. Speaker, the minister says that the veterans have given much to this country. He does not explain why he is asking them to give even more-$3,000 a year-for the care they are getting from his government.


Some hon. members:: Shame!


Herbert Eser (Herb) Gray: Mr. Speaker, I want to quote from page 3 of the Budget papers:
The economy is in a period of slower growth. That is not surprising.
Nor should we try to avoid it.
The minister seems to enjoy the fact that he is forcing the economy into a recession. He has announced increases in interest rates and in the unemployment rate. My question is, why doesn't the minister admit he is forcing our economy into a recession that Canadians do not want?


Michael Holcombe Wilson: Mr. Speaker, the Leader of the Opposition is again demonstrating that he has his head in the sand.


Some hon. members:: Oh, oh!


Michael Holcombe Wilson: We feel that it is important to be frank with Canadians, to be realistic about the economic outlook and to recognize that we must go through a period of slower growth, but a period of growth nonetheless. There will be a continued growth in employment during this period ahead.
We believe that it is important, though, for us to have this period of slower growth in order to get on top of the inflation problem that we have been suffering from for the last couple of years. My hon. friend probably disagrees with that because that is exactly what the government which he supported in the late 1970s did. It ignored the problems of inflation and the deficit.
What happened? We had unemployment of 13 per cent. We had interest rates of 20 per cent plus. We had inflation of 13 per cent plus. It was a disaster for the country.
Surely my friend can understand from the lessons of the past and remember the lessons of the past. These are the things that we are trying to avoid, and we are going to avoid them with the policies that we are following.


Mr. Brian Tobin (Humber-St. Barbe-Baie Verte):: Mr. Speaker, my question is directed to the Minister of Finance. I want to assure him that Canadians are not going to forget the lessons of the past.
In the last election campaign the Liberal party said that if re-elected the Conservative government would cut health care, cut education funding, cut regional development and increase taxes.
The Minister of Finance was pushed before the cameras during the election to call the Liberal leader of the day and this party liars for scaring Canadians.
Mr. Speaker, the truth is in this budget document. The Minister of Finance is closing hospital beds, is increasing tuition fees, is terminating regional development programs-


Some hon. members:: Oh, oh!


Brian Vincent Tobin: -is forcing tax increases on the provinces.
Why does the Minister of Finance not admit that this budget, this betrayal of Canadians, is not a blueprint for prosperity? It is a battle plan for war with the provinces and the victims are going to be the sick, the elderly, the unemployed, shamefully our veterans, our native people, our nation's youth and Canadian taxpayers.


Some hon. members:: Oh, oh!


Michael Holcombe Wilson: Mr. Speaker, in the elections of 1984 and 1988, Canadians did not forget the lessons of past, and that is why they elected this party as the government of Canada.


Some hon. members:: Hear, hear!


Michael Holcombe Wilson: They elected this party as their government because they could trust this government to face up to the problems and not tiy to shuffle them aside the way my hon. friend says we should do it.
February 21, 1990

We are being realistic with Canadians. We are not hiding from the fact that we have problems, but we are facing up to those problems in a realistic, open and honest way.
I have said many times in the past that members of the Liberal Party of Canada have no ideas on how to deal with these problems. They have no alternatives to the policies that we are putting forward. They are totally bankrupt of ideas.


Brian Vincent Tobin: Mr. Speaker, this Minister of Finance is bankrupt of integrity. He stole the last election.


Some hon. members:: Hear, hear!


Brian Vincent Tobin: Mr. Speaker, for 123 years this nation has strived to build on the principle of equality of opportunity for all Canadians. We have always believed that no matter where we live in Canada, no matter what our circumstance, we are entitled at least to equality of service in fundamental areas like education and health care.
With the stroke of a pen the Minister of Finance shattered that dream and vision yesterday.
My question is the following. Why is the Minister of Finance today telling Canadians that quality education and quality health care in future will only be available to those wealthy and privileged few Canadians who can afford it?


Michael Holcombe Wilson: Mr. Speaker, I think the hon. member forgot one thing in his comments about equality of opportunity. He forgot to say that the Liberal Party of Canada believes equality of opportunity to mean bearing an increasing burden of debt year after year after year. This budget is going to stop that.
This party also believes in the highest quality of health care and the highest quality of education that we can have in this country, but we also understand that if we have 35 per cent of every revenue dollar going to pay our interest costs, and that amount is rising, then we will not have the money. We will not have the money to spend on health care, on post-secondary education, on the environment, on native affairs, or on any of these policies. What we understand is that if we can get that 35 per cent figure down to 26 per cent, which is in our plan for the next five years, it will mean that we will have billions of dollars more money either to cut taxes, look after
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maintaining and improving these programs, or look after new initiatives such as the environment.


Ms. Audrey McLaughlin (Yukon):: Mr. Speaker, my question is directed to the Minister of Finance.
Yesterday, the Minister of Finance stated there were no tax increases in his Budget. What an odd thing to say, Mr. Speaker, when Canadian men and women still remember the de-indexation of family allowances; the threshold for the child tax credit; higher unemployment insurance premiums and, of course, the sales tax announced several months ago.
Mr. Speaker, this is only the beginning. Will the Minister of Finance rise in the House today and say that his Budget will not force the provinces and the territories to raise taxes because otherwise, health services and postsecondary education will suffer?


Michael Holcombe Wilson: Mr. Speaker, when there are no new taxes in the budget, does the hon. member suggest that I say that there are new taxes in the budget? There are not new taxes in this budget.


Some hon. members:: Hear, hear!


Michael Holcombe Wilson: She has held out all sorts of doom and gloom scenarios in the preamble to her question. What I say to her is: look at what we have done in the context of the transfers that we are making to the provinces. The transfers will continue to grow next year by 3 per cent. Federal program spending will grow by 3 per cent. We are not asking the provinces to do anything more than we are willing to do ourselves as a federal government.
Let us also recognize that the impact of the changes, the reduction in the growth rate of the transfers to the provinces, amounts to a little over half of one per cent of the provinces' program spending in year one and a little over one per cent in year two. In the context of the adjustments that have to be made today, that is certainly an amount that the provinces can easily adjust to without the doom and gloom scenarios as my hon. friend is saying.


Audrey Marlene McLaughlin: Mr. Speaker, I have a supplementary question. Obviously the Minister of Finance has not been talking to his counterparts in the provinces and the territories. Clearly it is going to be a tremendous burden, especially in those areas of Canada where it is more difficult to raise additional revenues and

February 21, 1990
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services are going to have to be cut, and the minister knows that.
It is not a small amount. If we look at the cuts to health and to post-secondary education, the accumulated cuts come up to some $11 billion. Now the provinces and territories have to shoulder those burdens.
My question to the minister is this: Would he be brave enough now to go today and explain to students who will be denied post-secondary education, explain to seniors who will not get a hospital bed and explain to children standing in line at a food bank what these cuts are going to mean and what this budget is going to do for them?


Michael Holcombe Wilson: Mr. Speaker, I do not know whether my friend can see from that far away, but I have a headline here which her House leader would probably recognize. It states: "Cut transfer payments to reduce federal debt Vander Zalm urges".


Some hon. members:: Oh, oh!


Mr. Speaker:: The hon. minister.


Michael Holcombe Wilson: Mr. Speaker, the point that Mr. Vander Zalm makes and the point that has been made by other provincial treasurers is that they have a stronger fiscal position than the Government of Canada.


Mr. Crawford:: Better management.


Michael Holcombe Wilson: My friend across the way, old fog-horn, says: "better management". Better management grew a debt that was $18 billion in 1968 to $200 billion at the end of 1984-85. The interest payments on that $200 billion worth of debt accounts for 80 per cent of the deficit this government has incurred in the last five years. That is the management that got us in the mess today.


Audrey Marlene McLaughlin: Mr. Speaker, we have seen a lot of accusations about this budget, but to see that Fantasyland is moving east will come as a surprise to a lot of Canadians.
On a more serious note, on February 21, 1945 there was the battle of the Siegfried Line during the closing
days of the Second World War. It was when the Canadian Army cracked the Siegfried Line, the last major line of Nazi resistance. Unfortunately a lot of our forces perished at that time but many survived.
My supplementary question is for the same minister. As we heard, the minister has increased fees to veterans living in long-term care institutions, people who have served their country. He is asking veterans to pay more for their meals, more for their lodging and, on top of that, he is taking another $18 million away from those veterans who want to live independently.
This minister calls this a management initiative. I would like to ask the minister if he would not take a different management initiative, cancel his $14 million GST propaganda campaign and give it to the veterans.


Hon. Gerald S. Merrithew (Minister of Veterans Affairs):: Mr. Speaker, I think it is important that we explain what has been done in the changes here. Obviously two or three issues have been misinterpreted.
First of all, none of the disability pensioners who are in hospitals or any type of institution will lose or have to pay any additional dollars because of this change.
It is important to recognize that there are 1,300 veterans in Canada who are not paying anything while all the rest of the veterans in Canada are paying. Obviously we are going to correct that inequity. The veterans agree with that, that they cannot be seen not to pay the $240 while all the rest of the veterans are paying. Veterans understand that. They do understand fair play.
The changes we brought in will bring this in line over a period of two years to what is being charged in the lowest rate of all the seniors in Canada, that is $420 a month.
Just let me explain what they charge in Saskatchewan. It is not $420 a month but $616. In the province of New Brunswick they charge $4,770.


Mr. Speaker:: I am sure these facts are important. Perhaps they should be delivered to the House in another way.
February 21, 1990


Mr. Alfonso Gagliano (Saint-Leonard):: Mr. Speaker, my question is directed to the Minister of Finance. Hospitals and emergency wards are overflowing, patients have to sleep in corridors, and waiting lists are becoming alarmingly long in Quebec. The Minister of Finance, and this includes last night's Budget, has cut $5.7 billion from payments to Quebec for health services and $2.3 billion for education. Before letting the provinces shoulder the responsibilities he has as Minister of Finance of Canada, has the minister considered the patients who have to sleep in hospital corridors, the students who will not be able to continue their studies and those who will keep going into debt in order to go to university?


Michael Holcombe Wilson: Mr. Speaker, those figures are gross exaggerations, unless they came through incorrectly on the translation.
I would say to my hon. friend that I am sure he recalls over the past couple of years, from time to time, the provinces unanimously saying to this government that they wanted interest rates down. Getting the federal government deficit down will help us get interest rates down. If the provinces want to address this problem of high interest rates, they have to be a part of the solution, and part of that solution is getting the federal deficit down.


Alfonso Gagliano: Mr. Speaker, the Minister of Finance does not resolve the problem. He is reducing the federal budget and increasing the provincial budget, so interest rates will continue to go higher.

Mr. Speaker, why should Quebecers have to pay an extra $2 billion in taxes, according to last night's Budget, in addition to the GST that will come into force on January 1, 1991? He said there were no new taxes. Did he forget the GST?


Michael Holcombe Wilson: Mr. Speaker, I still have a hard time with the arithmetic of my hon. friend.
The total savings from the change in transfer payments amount to some $600 or $700 million. How is it that the
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province of Quebec is going to be affected to the extent of $2 billion? It does not add up.


Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, my question is for the Minister of Finance. The minister will know that the situation in the health care field is of particular importance not only to the provinces but to caregivers in the system and of course to the patients who utilize the particular system.
In British Columbia where the health system is strained, 200 heart surgery patients are being diverted to Seattle, Washington.
Could the minister explain how cutting $800 million for health and education in British Columbia will enhance the health care system in British Columbia? Or, is the minister really saying but afraid to tell Canadians that these cut-backs are the beginning of the privatization of medicare in Canada?


Michael Holcombe Wilson: Mr. Speaker, my hon. friend still does not understand the message of the budget. The budget takes the steps which continue the programs we have been following over the last five years that will allow us to preserve medicare, that will allow us to preserve a strong education system, and that will help us to preserve strong regional development.
If we continue as my friends across the way would have us do to ignore the deficit problem, just shove it aside and say "let's forget about deficits", we are going to see not just 35 cents of every revenue dollar being used to pay for the interest on the debt, but that is going to go up to 40 cents and then 50 cents. Where is that going to leave medicare? Where is that going to leave post-secondary education? That is a danger of debt. That is a danger that we are trying to avoid with this budget.
I am sure I am not going to live long enough to hear one suggestion from the Liberal members opposite as to how we can cut government spending.


David Charles Dingwall: Mr. Speaker, the Minister of Finance has not denied that this is a real attempt to privatize medicare in Canada. It is very clear.
The Minister of National Health and Welfare stated on April 7, 1989, and I quote:

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We are proud of the fact that we have one of the finest health care
systems anywhere in the world. We see the excellence of this system
as one of the features which distinguished us from our neighbours to
the south.
At a time when our health care system is financially strained, I ask the Minister of Finance why he has gutted health and education budgets in Newfoundland of $162 million; Nova Scotia, $250 million; Prince Edward Island, $37 million; and New Brunswick, $206 million. Why has the Minister of Finance done this? He is exacerbating the regional disparities in this countiy.


Michael Holcombe Wilson: Mr. Speaker, this is a twisting of facts and a distortion of figures. What I am hearing today takes me right back to the election campaign and the scare tactics the hon. members opposite used.
My friend talks about regional disparities. Surely he understands what we have done in this budget. We have cut back on the growth rate of the transfers to provinces, but for the larger provinces like Ontario, British Columbia, and Alberta, the transfers will grow at 2.25 per cent. The transfers to the Atlantic provinces, one of which he represents, will grow at a rate of 4 per cent. That compares to the growth of program spending of the Government of Canada of only 3 per cent.
Surely he can understand that we have not done things that will aggravate any regional disparities as a result of this budget.


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, my question is for the Minister of Finance, not the Minister of Veterans Affairs, because the Minister of Finance is responsible for the budget. I want to know if we heard the government correctly.
We know in the budget there is no cut-back on the size of cabinet. There is no cut-back in the government advertising for the GST and other programs. Yet, the government is asking veterans who are sick and lying in hospital beds to pay an increased fee for room and board. These are people who fought for this countiy and were prepared to die for this country.
I would like to ask the Minister of Finance where are his priorities, where is his sense of fair play when he asks people who fought for this country and were prepared to put their lives on the line to pay an increased charge for
room and board. Yet, the government is not downsizing the size of the cabinet or cutting back on government advertising. Where are his priorities?


Michael Holcombe Wilson: Mr. Speaker, if the hon. member cares to look back over the last five years, he will see very clearly that on a number of occasions we have enhanced the programs in support of our veterans, because we believe in giving our veterans the best possible support they can receive.
We know we have a major debt to our veterans who fought for us during the last war, fought for our freedoms, and we are continue to meet that debt.
My colleague has just said that there is some rebalancing within the support we are providing to our veterans so that that support can be provided to our veterans in the most equitable way possible.


Lorne Edmund Nystrom: Mr. Speaker, I think the whole credibility of the government is in question here.
I would like the minister to confirm the fact that the calculations in the budget he tabled yesterday in the House of Commons were made before the end of January, before the bank rate in this country had jumped by over 1 percentage point.
Since those calculations were made before the end of January, could he now confirm that if he were to update his calculations in a fair and honest way the deficit would be over $30 billion, that the unemployment figures would be higher, and that the inflation rate would be higher?
Will the Minister of Finance confirm that those calculations were made before the end of January? Will he update the budget forecast to include the new Canadian reality of even higher interest rates in this country?


Michael Holcombe Wilson: Mr. Speaker, this budget is designed to reduce interest rates and what do we have: the hon. member fighting against a reduction in interest rates.
We believe that the projections provided in this budget are sensible, realistic projections. As I indicated in The Budget Papers, there was a survey done of private sector forecasters which came up with an interest rate average

of 11.0 per cent. Our projection is 11.1 per cent, a shade above the private sector forecast.
The hon. member talks about January. A survey was done just last week which confirmed that private sector forecast. I should remind my hon. friend that back in 1986 when we had similar circumstances, we had the same sort of bleating from the opposition benches saying that the projections were way out of whack. The projection we put in for the interest rate at that time was 9.5 per cent or 9.6 per cent. What did it come it at? It was 9.2 per cent, .4 per cent or .5 per cent below, in face of the bleating from hon. members that our projections were way out of whack.


EXTERNAL AFFAIRS
Mr. John Reimer (Kitchener):: Mr. Speaker, my question is for the Prime Minister.
Events in East and West Germany have been developing at an extraordinary pace in the past few months. Last week the Foreign Minister of West Germany, Hans Dietrich Genscher, was in Ottawa for the Open Skies Conference and met with both the Prime Minister and the Secretary of State for External Affairs. Many other meetings occurred concerning the future of Germany at that time.
Could the Prime Minister inform the House if there have been further developments since those meetings in Ottawa last week?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, I thank my hon. friend for the question. There were important discussions last week between the Secretary of State for External Affairs and Foreign Minister Genscher from the Federal Republic of Germany.
I take the opportunity on behalf of all members to issue genuine congratulations to the Secretary of State for External Affairs for his excellent chairmanship of the Open Skies Conference last week.


Some hon. members:: Hear, hear!


Martin Brian Mulroney: Further to the conversations and meetings between the Secretary of State for External Affairs and Minister Genscher, I had a telephone call this morning from Chancellor Kohl. He reviewed with me the intentions of his government in respect of unification, his views on the monetary initiatives that he feels must be taken in the relatively near future to strengthen unification, plus the role that countries such as Canada
Oral Questions
will be called upon to play as the talks in respect of unification follow their important course.
I thank my hon. friend for the question. I will be happy to report back to the House further developments on this important initiative.


THE BUDGET
Mr. Ronald J. Duhamel (St. Boniface):: Mr. Speaker, my question is for the Prime Minister. In June 1989 the Prime Minister stated, and I quote: "In our second mandate we will concentrate on long-term investment in people, skills, skills training, education, strategic technologies, research and development."
Will the Prime Minister agree with Pamela Smith, President of the Canadian Association of University Teachers, when she says: "This budget makes a mockery of the federal commitment to young women and men and to the future of this country"?


Martin Brian Mulroney: Mr. Speaker, of course not, because the truth is quite the opposite.
My hon. friend will know that in respect of the EPF transfers to the provinces, the restraint measures do not apply to the main federal programs providing direct support for Canada's educational objectives. Granting councils funding will increase from $673 million to $734 million, over 9 per cent. The Centres of Excellence will increase. Canada Scholarships will increase. Official languages in education, literacy, and education programs for native people will increase.
There will be increases in the system because this government is indeed committed not only to improving education and research and development but to doing so while containing interest rates and providing for sustained economic growth.


Ron J. Duhamel: Mr. Speaker, I am rather surprised that the Prime Minister did not refer to the $31 billion in fewer funds that will be transferred to the provinces between 1986 and 1995.

My supplementary is directed to the Prime Minister or the Minister of Finance. Before cutting funding, did these gentlemen consider how many courses will be cancelled, how many classes will be cut, and how many staff members will be laid off? How much will registra-

February 21, 1990
Oral Questions
tion fees, and thus student debt, increase? How many students will be unable to continue their education?


Michael Holcombe Wilson: Mr. Speaker, that is again another one of the scare tactics hon. members opposite are dreaming up.
On the question that my hon. friend mentioned, the transfers to the provinces under Established Programs Financing are unconditional. They do not have to go to any particular use. It is the option of the provinces to use them as they may.
As the Prime Minister has indicated, our direct funding will continue and it will not be affected. However the hon. member must understand that the transfers to the provinces have been going up and will continue to go up each year. They are going to be going up on average by 3 per cent.


Ms. Clancy:: There will $80 million less in Nova Scotia.


Michael Holcombe Wilson: Mr. Speaker, my friend from Halifax says that there will be $80 million less. If she would check the numbers she would find that the transfers to the province of Nova Scotia next year will go up in excess of 4 per cent.


Ms. Ethel Blondin (Western Arctic):: Mr. Speaker, my question is for the Minister of Finance.
Aboriginal people across Canada are shocked and appalled with the decision of the federal government to cut Indian and Inuit programs by $100 million and the Secretary of State by $44 million. This is truly a shame when throne speeches and glossy government publications brag about the federal government's commitment to self-determination of native people.
Why did the Minister of Finance impose such an unfair burden on Canada's native people? Why is the Minister of Finance punishing the native people of Canada for his own incompetent economic management?


Michael Holcombe Wilson: Mr. Speaker, I think the hon. member is exaggerating what we have done in the budget. A number of native programs will not be affected by the budget. There are some that will be limited to a 5 per cent growth rate.


Mary Catherine Clancy: Answer the question.


Michael Holcombe Wilson: My hon. friend from Halifax cannot contain her mouth. I am answering the question.


Mr. Speaker:: The Hon. member for Western Arctic.


Ethel Dorothy Blondin-Andrew: Mr. Speaker, my supplementary is for the same Minister of Finance. On February 9, the government claimed it supported International Literacy Year. It was full of rhetoric about taking a leadership role and addressing the challenge of literacy. But yesterday it cut all the northern broadcast access programs by 16 per cent and completely eliminated the native communications programs and all the native newspapers. Why has the Minister of Finance abandoned his government's commitment for native Canadians? Why is the minister being so deceitful and unfair to native Canadians?


Michael Holcombe Wilson: Mr. Speaker, let me be quite precise for my hon. friend. Funding of $24 million per year will be maintained. It will not be affected by the budget. Education programs for native peoples will not be affected. There will still be $736 million per year.


Ethel Dorothy Blondin-Andrew: I asked about this program.


Michael Holcombe Wilson: It is easier to listen when you are not talking. There will be $736 million per year spent on education programs for native peoples. We are maintaining our commitment there because we understand the needs of the native peoples for education.


Mr. Len Taylor (The Battlefords-Meadow Lake):: Mr. Speaker, the Minister of Finance knows that Petro-Can-ada was established in 1975 to serve a definitive public policy objective, building energy security for Canadians. That is no less important today than it was in 1975.
My question is directed to the Minister of Finance who yesterday announced an ad hoc privatization of this successful and necessary corporation. Can the finance minister tell us who is running the government's agenda? Why is he so determined to take this regressive step that will allow foreign-dominated huge multinationals to once again dictate the future of Canada's energy resources?
February 21, 1990


Michael Holcombe Wilson: Mr. Speaker, I think my hon. friend's imagination is running a little wild here. Petro-Canada is a successful company but it no longer serves a public policy purpose.
We believe that Petro-Canada can be a stronger, healthier, more vibrant, more productive company in the energy sector in Canada if it has access to private sector investment. With that private sector investment it can build and grow. It will still be Canadian controlled but Canadians will be able to have a direct investment in it. That will help Petro-Canada in developing further a market for its products. Surely my hon. friend would not want to hold Petro-Canada back because it doesn't have the money to grow. This way Petro-Canada will have the money to grow and be a thriving giant in the Canadian petroleum industry.


Mr. Speaker:: The hon. member for Edmonton East, a short question.


Mr. Ross Harvey (Edmonton East):: Mr. Speaker, under its expenditure control plan, the government says it is going to cut $2.1 billion in five years-not in constrained growth, not in frozen expenditures but in actual cuts and eliminations of programs and projects. Of this $2.1 billion, more than $850 million, 40 per cent-almost half-is going to be cut in Alberta.
My question is directed to the Prime Minister. Didn't any of the Alberta Tory MPs, including the Deputy Prime Minister or the Secretary of State for External Affairs, object to this incredible singling out of and attack on Alberta? Or were they just ignored?


Michael Holcombe Wilson: Mr. Speaker, let us look at the items in the expenditure control plan individually. We have treated Alberta the same way as Ontario and British Columbia.
There are three provinces in the country that are not receiving equalization. It was on that basis that we made the distinction. If we had not made that distinction I am sure that my hon. friend would be up on his feet saying that we have been hurting the weaker provinces of the country, so we made that distinction.
As far as OSLO is concerned we will continue with the engineering phase of that project but after that, because of our financial position and because of the economics of the project, we believe it is not wise for us to continue to
Privilege
support that project in providing substantial amounts of taxpayers' moneys to proceed with it.
We believe that the over-all program that we have followed, government-wide and Canada-wide is a fair and balanced program.


PRIVILEGE
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, I gave notice to the Chair earlier today that I intended to rise on a question of privilege immediately after Question Period in relation to a response given to the House, and to myself, regarding Order Paper Question No. 162, standing in my name.
I have also indicated to the Chair in writing-and I am prepared to do it again-that if you deem I have a prima facie case of privilege, I am prepared to move the appropriate motion and send the issue to a parliamentary committee.
You will recall, Mr. Speaker, that some time ago, on April 27,1987, the Government of Canada, in replying to an Order Paper question, had at that time provided information to the House which was inaccurate. It was also in relation to a question that I had asked at the time and it referred to an individual by the name of Giovanni Mowinkle concerning his invoices with the Government of Canada.
The response at that time from the government was that Mr. Mowinkle had not been hired. On April 27, 1987, the government finally admitted that, in fact, it had made a mistake or, in any case, had provided wrong information to the House.
I accepted the minister's apology and the Chair said:
I want to thank the hon. minister for being frank. As well, the House is indebted to the hon. member for Glengarry-Prescott - Russell for accepting the explanation, and accepting it in good grace.
I am sure the hon. minister will carry the message back to those who are charged with the responsibility to answer written questions, with the request that, as the hon. member for Windsor West has indicated, they read the questions carefully before providing an answer.
It was clear at that time that there was an admonishment and that the government and the officials who prepare the answers for the government were to do so in

February 21, 1990
Privilege
a manner which was more accurate than it had been in the past.
Again today, Canadians realize that information that had been given to this House only a few days ago in relation to expenditures on travel by the Prime Minister were inaccurate. Indeed, Order Paper Question No. 162, when answered in this House, stated that the cost of the trip in question to southeast Asia was in the amount of $544,000 approximately.
Today, Mr. Ross Howard of The Globe and Mail reported, and I verified this with him, that the access to information register confirmed to him that the actual amount of the expenditure was $670,000, an amount which is over 30 per cent higher than what was provided to me in terms of the Order Paper question response.
We have already been through some debate in this House as to the obligation of the government under Standing Order 39(5) to reply promptly within the 45-day limit. That, of course, was not respected. It took over 90 days for the government to provide information which has now proven to be inaccurate, but I shall not dwell on the matter of the government taking too much time to answer the question.
Instead, I want to ask for the assistance of the House, because I do believe that the privileges of all members of Parliament are affected when the government fails to provide proper information to us. Erskine May has defined the following on page 69 of the Parliamentary Practice, Twenty-first Edition:
Parliamentary privilege is the sum of the peculiar rights enjoyed
by each House collectively as a constituent part of the High Court of
Parliament, and by Members of each House individually,-
The next portion is what I feel is really relevant here:
-without which they could not discharge their functions,-
In order for us, as parliamentarians, to discharge our functions appropriately, surely it is incumbent upon the government and upon officials working for the government to provide not only the questioner, in this case myself through the Order Paper question, but the House with accurate information.
There is a further incident I want to bring to your attention which, I submit, clearly demonstrates not only the obligation that the government and officials of the government have in providing accurate information to the House, but the case has been raised in the past that
failure to do so on the part of certain individuals constituted contempt of Parliament.
I draw to your attention Maingot's Parliamentary Privilege page 198, in which Maingot states:
Similarly, should any person present documents to a committee of the House of Commons which have been forged, falsified, or fabricated with intent to deceive such committee or the House, or, to be privy to such forging or fraud, will constitute contempt of Parliament-
This was in reference to actions by the Royal Canadian Mounted Police which the House determined had acted in a manner which constituted a prima facie case of contempt when the RCMP had failed to provide accurate information to the House in an incident involving the Hon. Member for Northumberland-Durham on December 4, 1973. At that time, it was clearly demonstrated that the actions of the officials of the RCMP were in contempt of this House.
In summary, I want to indicate that I am prepared to move the appropriate motion to refer this matter to committee. The House will be aware that members are desperately trying to find out quick, timely and accurate information pursuant to the rules. The information that was provided to me was not provided in the appropriate time according to the rules, and it has now been proven beyond a shadow of a doubt, according to the access to information laws of the country, to be inaccurate.
I want to reiterate that I am prepared to move the appropriate motion to refer this matter to committee so that we can hopefully improve upon the procedure of obtaining this information so that all members and, indeed, Canadians can be properly served by this process in the future.


Mr. Albert Cooper (Parliamentary Secretary to Government House Leader):: Mr. Speaker, when I saw the article in the newspaper this morning I decided myself to look into why there would appear to be some discrepancies.
I want to say that it is very simple. If one looks at the questions asked by the hon. member, questions about which you know I have complained on several occasions regarding the detail, trivia and silly pieces of information that I felt the member was looking for, such as: "Did the Prime Minister visit Malaysia and Costa Rica in October, 1989 and, if so-" and so on into considerable detail down to how much gasoline was utilized, what the approximate number of kilometers were and how many pieces of luggage were carried along on the trip. There
February 21, 1990

were some very specific questions and we answered them in a great deal of detail.
I want to add that when we compare that to the access to information request, there is a significant difference between the two.


Don Boudria: Yes. One is the truth.


Mr. Clark (Yellowhead):: Put that on the record.


Don Boudria: I am. One is the truth.


Albert Glen Cooper: Let me just quote from that request: "the itemized costs incurred by the department relating to the Prime Minister's trip to Los Angeles, Singapore, Kuala Lampur and Costa Rica..". Already, Mr. Speaker, you can see a difference in the type of information sought. This one is much more detailed than the question put by the hon. member. It also went on to say that in addition to itemized travel expenses abroad related to this trip, please itemize other costs where possible, such as costs of advance preparation.
Neither myself, the departments nor the huge number of people involved in answering the hon. member's questions have in any way misled him or the House. I want to make the case once more that we have been down this garden path with this particular member before. He continues to ask questions that take a great deal of time to answer and a great deal of people's work and taxpayers' money. In fact, I am now working on another question for the hon. member that is already made up of over 1,300 pages of material.
The hon. member has the audacity to stand up in the House and complain because the information he gets is a little different from another request. What he has is not a question of privilege. The matter is totally out of order and it is consistent with his behaviour on other questions.


Don Boudria: Mr. Speaker, I have submitted to you that there is here a prima facie case of privilege. The member opposite has made all kinds of disparaging remarks. Of course, he has not in any way claimed that there is no question of privilege. I believe what I have submitted to you is accurate. I am comparing the
Privilege
information I received with the access to information registry.
The members across may make all kinds of accusations. That is their privilege. They may not like the questions I ask but, I am not asking the Speaker to rule as to whether or not my questions are likeable. That is an issue to be discussed at some other time. What we are discussing here today is whether or not members can be expected to obtain accurate and prompt information from the government, not information that I like or anyone else likes, but information in accordance with the rules and traditions of this House. That has not been provided in this case.
Finally, the member opposite says that the question was incomplete. I want to remind you, Sir, of my question. I asked: "What was the total cost of the trip?" Total cost includes everything, Mr. Speaker.
The member opposite cannot say that my question was not specific enough. I asked for the total of the cost. I suggest that is quite specific. I do not want to debate that point at any great length.
The Speaker should be interested as to whether or not there is a case of privilege here and whether the rules either need to be qualified or the government held to account for the fact that it cannot provide information pursuant to the rules that we already have.


Mr. Peter Milliken (Kingston and the Islands):: Mr. Speaker, it seems to me that we have some kind of a dispute here. The hon. member for Glengarry-Prescott-Russell has indicated that in his view the answer was inaccurate. The parliamentaiy secretary has given an explanation as to why the answer pursuant to the Access to Information Act was different than the answer given to the hon. member.
The rules of this House are very clear. The information to be provided to the House must be accurate and must not mislead the House. There is a suggestion that that may have happened in this case.
Given the explanations tendered by both sides, and subject to Your Honour reviewing the remarks that both members have made, it seems to me that it would be an appropriate case to refer to the committee so the committee can investigate to see whether, in fact, the answers appear to be in accordance with the rules.

February 21, 1990
Privilege


Albert Glen Cooper: Mr. Speaker, once again, I want to renew my offer. We are quite happy to have this issue go before the parliamentary committee on privileges and elections as long as it includes the types of questions that we are going to be asked to answer and the kinds of time frames that we will be required to meet. We have discussed that before. Any time the members want to have that motion, we will be happy to take it.


Mr. Speaker:: I have listened very carefully to the Hon. Member for Glengarry-Prescott-Russell, the parliamentary secretary and the helpful comments of the Hon. Member for Kingston and The Islands.
What we have here is a proposition put to the Speaker on a set of facts which are literally as follows: the Hon. Member for Glengarry-Prescott-Russell put a question on the Order Paper some long time ago. After a period of time which exceeded the time in which the rules ask that the government provide an answer, an answer was obtained and the sum total of money with respect to the voyage of the right hon. Prime Minister and others was given at a certain amount.
Later, apparently a journalist applied in whatever form the journalist chose to put his question, but he did so under the Access to Information Act. The answer came back showing a total cost exceeding that which was given to the hon. member earlier.
The hon. member has quoted some precedents. If one takes a look at the precedent which the hon. member for Glengarry-Prescott-Russell indicated was apposite to this problem I believe the question of intent was mentioned, if my notes are correct. The Parliamentary Secretary rose, and after debating for a moment or two with the hon. member on another matter which I do not have to decide, has indicated that as far as he is concerned, that in both the answers, the government was proceeding and doing the best it could to make those answers.
The two answers have come out differently. As the hon. member for Kingston and the Islands has been quick to point out, there is a difference. It is hard for me to find that the cause of that difference is such as to justify my moving the matter as a prima facie case of
privilege. There is no indication that there was some intent to deceive the House. If that were the case then I might have a very different view of it.
The Hon. Member for Kingston and the Islands has made a suggestion which might, indeed, be helpful. It is not for me to follow up and order that because I do not have the power to do so. But, if there has been a legitimate difficulty in obtaining the answer to two questions which as the hon. member for Glengarry- Prescott-Russell says-even if he concedes the questions were not phrased in exactly the same way-strove to obtain the same answer that may be something the committee would want to look into. All hon. members are affected by the accuracy of information given by the House. But that, I think, is something which the committee itself has every power to consider.
I understand the complaint brought by the hon. Member for Glengarry-Prescott-Russell, but I have to also accept the hon. parliamentary secretary's explanation. If that 'is not satisfactory in terms of giving accuracy to the House then, of course, the committee is free to have a look at it and see whether accuracy can be improved.
While there is a complaint and a difference in answers, I do not find it is a question of privilege. I thank the Hon. Member for Glengarry-Prescott-Russell for putting his argument in a clear and succinct way and for giving me adequate information beforehand which enabled me to reply quickly to the House.


Charles Joseph Clark: Mr. Speaker, it would not strike anyone as surprising that different questions would elicit different answers. The point I wanted to make is that at the end of his exchange, from his seat, the Hon. Member for Glengarry-Prescott-Russell said that one of the answers was the truth. That indicates a very clear allegation that one of them was a falsehood. I would ask him to stand in his place and withdraw that.


Don Boudria: Mr. Speaker, if one was the truth, obviously the other was inaccurate. Maybe that should be explained to the right hon. Secretary of State for External Affairs. Perhaps his colleagues can do so for him, slowly.


Mr. Speaker:: Truth is often an elusive thing. Perhaps we can agree that there were two different answers and the truth lies somewhere in between.
February 21, 1990



ROUTINE PROCEEDINGS


Hon. John McDermid (Minister of State (Privatization and Regulatory Affairs)):: Mr. Speaker, yesterday my colleague, the Minister of Finance, announced that the time had come to allow direct public ownership of Petro-Canada.
I am pleased today to give the details of the government's decision to offer the shares of Crown-owned Petro-Canada to the Canadian public. These are very important times for Petro-Canada.

The industry, including Petro-Canada, has worked together in exploration efforts that have resulted in the discovery of more than one billion barrels of estimated reserves. And today, with excess international oil supplies and more stabilized prices, the industry must look at ways of financing the development of Canada's massive reserves.

In order for Petro-Canada to be a full and participating member in the development of these reserves, it must improve its debt position to more manageable levels and it must have the financial flexibility to compete alongside its private sector counterparts.
Petro-Canada is clearly at the crossroads.
Today, Petro-Canada is an integrated oil corporation that this government directed in 1984 to operate and compete as a private company. What Petro-Canada needs today is the same ability that its very competitors do to finance its own growth.
In last April's Speech from the Throne, the government announced that it intended, and I quote: "To further privatize those Crown corporations which no longer serve a public policy role".
The future of this industry in Canada depends on the development of our vast reserves. To be a partner in these initiatives, Petro-Canada needs equity capital and
Routine Proceedings
financial freedom. In consideration of this, and in consultation with the management of the corporation, the government has decided to offer the shares of Petro-Canada to the public so that this Crown corporation can continue to grow and serve Canadians while remaining Canadian owned and Canadian controlled.
Legislation will be tabled later this year to permit the sale of Petro-Canada shares to the public. Once legislation is passed and appropriate financial and regulatory steps are taken, and with market conditions permitting, the board of directors of Petro-Canada will be asked initially to offer a treasury issue of about 15 per cent of the company to all Canadians. On completion of the initial offering, the government's holding will be reduced to about 85 per cent of the shares of Petro-Canada.

One only has to review Petro-Canada's original mandate to understand why this is the right time to give Petro-Canada a secure future as we approach the year 2000.
Many here will remember its original mandate: to engage in state-to-state trading, to give the government a window on the industry and to contribute to energy security in Canada.
Well, Mr. Speaker, in the past 14 years, Petro-Canada entered into only one state-to-state deal and it is very evident that these arrangements are no longer an important component in today's world oil market.
As for the window on the industry issue, the government understands and has available to it all the information it requires in order to provide safe and secure energy to Canadians today and into the future.
And finally, if one is concerned about Canada's energy security, they would naturally support a decision which would allow Petro-Canada to participate and develop the reserves that have been discovered in cooperation with other private sector partners.

Now is the time to give Petro-Canada the financial freedom to participate in securing Canada's energy needs into the next century and beyond. In fact, only blind devotion to state enterprise would be a reason for denying the company, and its employees, the chance it

February 21, 1990
Routine Proceedings
wants and has earned, to be Canada's independent, world-class integrated oil corporation and a source of national pride.
Full details of this initiative will be contained in the legislation and will be developed in consultation with the board of Petro-Canada. I would, however, like to inform the House today of some of the more important provisions under which this initiative will proceed.
First, legislation will allow for the sale of all Petro-Canada shares. They will be offered in a manner to ensure broad-based participation in the ownership of the company.
Second, the board of Petro-Canada will develop an employee share ownership program as part of the initial offering.
Third, no one individual will be permitted to hold more than 10 per cent of the publicly-held shares and there will be a 25 per cent restriction on the cumulative foreign ownership of publicly-held shares.
Fourth, the Minister of Privatization will retain the government's holdings and arrange a shareholder's agreement with the company indicating the government's intention to manage its shares as an investment.
The overriding principle will be that the company will operate based on sound business objectives in the same manner as any private sector company. Under this arrangement there will clearly be an arm's length relationship between the government and the corporation.
Fifth, through either the provisions of the legislation or the articles of incorporation, Petro-Canada's headquarters will remain in Calgary and the company will continue to adhere to the Employment Equity Act. Employees of the company can be assured that Petro-Canada's policies governing salaries, pensions, benefits, relationships with the unionized workforce and official languages will be continued.

Mr. Speaker, since 1984 the government has adopted a more market-oriented approach to energy policy with the dismantling of the National Energy Program. Oil and gas markets have been deregulated, special taxes on the
oil and gas industry have been lifted and the Petroleum Incentives Program has been phased out.

The government today is empowered with all the necessary legislation it requires to provide Canadians safe and secure energy into the future.
State ownership and state control no longer makes sense in this important sector.
Petro-Canada's time has come and it has earned the right to be an independent, Canadian owned, Canadian controlled national corporation without the state in the middle.
I can only say to the company and its dedicated employees who are capable and eager to meet this challenge: "You have earned and deserve this opportunity and Petro-Canada's future has never been better. Good luck. Bonne chance.


Some hon. members:: Hear, hear!


Hon. Roger C. Simmons (Burin-St. George's):: Mr. Speaker, first of all I want to thank the minister for giving me a copy of his statement a little earlier today so I had an opportunity to have a look at it. I guess my first question to the minister, on behalf of all of us on this side, is why. Why take this marvellous instrument of national policy which has served us so well for the last 16 years, and dismantle it?
Probably I have just answered my own question. That is probably why the government is doing it. One of the blind obsessions of this particular administration is to do away with anything, good or bad, but particularly if it is good, that reminds it of a past when we had sovereignty, when we were masters in our own house.
The minister says: "Sell the shares to Canadians". Who in this House is against motherhood? Of course, sell the shares to Canadians, but there is something redundant about all that. Why sell it to people who already own it?


Mr. Epp:: When were you ever at a shareholders' meeting?


Roger Simmons: As your Minister of Finance says, you learn a lot more if you listen.


Arthur Jacob (Jake) Epp: But not from you.


Roger Simmons: You could try. How would you know?
February 21, 1990

Lest it sounds like my good friend the Minister of State for Privatization and I are singing from the same hymn book when we talk about selling shares to Canadians, let it be clear what I am saying.
At the moment all Canadians own Petro-Canada. Let us be clear what he is saying. Ele wants just a handful of Canadians to own it, as in the case of Air Canada, the Pierre Jeanniots, the Claude Taylors of this world. That is what he has in mind. That is who he has in mind when he is talking about Canadians. So he and I are not singing at all from the same book on this one.
There is no economic purpose here. If only one could see some rhyme or reason to this. If the government is going to rush out and pay off a massive debt with the proceeds of this sale, one could begin to understand, even if one did not agree. But there is no rhyme or reason other than that blind obsession to separate themselves from everything that a Liberal government had to do with, even the good things, and they were mostly good things, as you know, Sir.
What are we talking about here? Are we talking about market driven decisions or public interest decisions? I believe the time has come for us to assess the future of Crown corporations such as Petro-Canada in terms of whether it serves the public interest. On that issue there can be no doubt. The public of Canada spoke loud and clear back in 1979 on that and many times since in polls. But in 1979, they gave the boot to an administration led by the gentleman from Yellowhead because it was about to tamper with an instrument called PetroCan.


Some hon. members:: Hear, hear!


Roger Simmons: Why, Mr. Speaker? The answer can be found in the Air Canada transaction. Who made the money off Air Canada? I will tell you who. The brokers on Bay Street made $32 million, that is who made the money. This scam today is a broker's dream. It is a boon to the business community, to the Bay Streets of this world.
We need this instrument of national policy in the oil area. After all, let us not forget that oil is still our most important energy commodity and will continue to be so for many years ahead.
We need it down the road for frontier development. What instrument will form that particular role if PetroCan is not there? With the dismantling and selling of PetroCan, the elimination of the incentives in yester-
Routine Proceedings
day's budget, what hope is there for the east coast development, for frontier development generally?
I suppose, in fairness, it should be said that one of the very few good ideas in this announcement is that the minister talks about employee participation. If it does come to privatization, I commend him for having that one good idea hidden away in the centre of what otherwise is a terribly bad idea.
We are losing our control in this area. We are losing our ability to effect energy supply down the road. We are losing our window on the industry. Now he has scorned that, but it does not become a bad thing just because he scorns, you see.
The Minister of Finance, during Question Period today, said: "The company no longer serves a public policy purpose". He is right, and for a very good reason, because this government would not let it serve a public policy purpose. If this government would only put its money where its mouth is when he talks about arm's length relationships, if it would only allow the instruments that we have put in place over the years to work effectively for the purpose for which they were designed, we would have less of this muddling.
If I had time, which I do not, I would talk about the government's lack of any clear policy in terms of privatization generally. It is all over the map in its mad rush to get rid of everything that the Liberal government put in place.
This is not the time for dismantling, not the time at all. This company still has a downstream role in terms of ensuring proper competition but, more to the point, it has an important upstream exploration and development role. It is a role that can only be performed by a company that is in the public domain. It has a function to serve, as I have said, as an agency of the Crown, continuing to encourage frontier petroleum exploration, development in the east coast offshore and in the north. Petro-Canada can still be a stimulus to activity in those areas.
In conclusion, there is a whole area pertaining to the question of foreign ownership. I heard what the minister said about the 25 per cent limitation and we went down that road with Air Canada until we looked at the fine print. We were told by the regulatory agencies of the government that there was nothing they could do. They had no monitoring process and they really had no way of

February 21, 1990
Routine Proceedings
determining or policing the question of 25 per cent maximum ownership.
No matter what the minister says about the headquarters remaining in Calgary and all those things, it is only a matter of time once it becomes privatized before a bunch of the boys down in Cleveland or Texas will have the final say rather than Canadians. It should be Canadians, and we plea to the government to desist now. Stop destroying a good instrument of national policy. Tell yourselves you were wrong on this and undo it. When the legislation comes in we will have more to say about this.


Some hon. members:: Hear, hear!


Leonard William (Len) Taylor: Madam Speaker, I thank the minister whose statement we just heard. The fact that he brought his statement into the House I think shows his respect for this place.
Canadians, however, will lose their last major element of corporate control over their strategic energy resources if the government succeeds in selling Petro-Canada to the private sector.
Canada is a northern, sparsely populated country that endures a long cold winter. It is essential that Canadian governments play a key role in safeguarding our energy future. The public ownership of a Crown corporation making decisions about strategic natural resources is fundamental to the management of our economy. Privatizing Petro-Canada continues what the free trade agreement began last year, giving up the public's right to influence the development of our economic future.
Petro-Canada is a crucial player in the Canadian energy sector, especially regarding the energy potential in frontier areas. It has endured numerous attacks by the Conservative Party since its creation in 1975. Even if it can be maintained, which is doubtful, control of Petro-Canada by the Canadian private sector is not good enough. There is simply no substitute for Canadian public control with accountability through Parliament.
The government has learned little about our energy resources from the experience of the seventies and eighties. The move to encourage public control over our valuable energy resources with the formation of Petro-Canada was a response to the absolutely unacceptable
levels of foreign-primarily U.S.-ownership and control over Canada's energy resources.
In the mid-seventies New Democrats fought hard to make Petro-Canada a Crown corporation. It was a move widely supported by Canadians then and, I believe, now. The reasons for making Petro-Canada a Crown corporation are as valid today as they were in 1975; that is, increased Canadian owned and controlled supplies of oil and gas, increased knowledge of the federal government in the crucial areas of oil and gas and increased Canadian participation in these domestic sectors.
On August 23, 1985, the Prime Minister stated: "It is the Conservative policy to maintain Petro-Canada." He was reacting at the time to the mood and feeling of the country, which has not changed.
It is unacceptable for this government to now proceed with the selling off of the public's oil and gas corporation. Since the Prime Minister's comments in 1985, Canadian ownership has already declined from 47.9 per cent in 1985 to 42.11 per cent last year. The target of Canadian control has been all but forgotten.
This is a free trade sell-off of the Canadian control of our gas and oil. The Canadian people do not want to give more control of Petro-Canada to the United States. Our cold climate and sparse population demand a publicly controlled presence in our energy sector.
Only Petro-Canada as a Crown corporation can ensure that jobs and sourcing go to Canadians, that security of supply is maintained for all Canadians, that profits are reinvested in Canada to benefit all Canadians and not just the shareholders, that Canadians be able to maintain equity participation in the sector now that the National Energy Board has been stripped of its regulatory powers, and that the Canadian government continues to have a window on the industry so Canadians never again have to rely exclusively on the private sector and multinationals for vital energy security.
I would like to pose a few questions which I know will be answered when the legislation is tabled and we have an opportunity to question the minister further.
What is the motivation of the government in selling off Petro-Canada? Obviously it has made its mark on the energy sector. It has made its mark on the industry and it is an influence on the sector and the Canadian popula-
February 21, 1990

tion. It is a profitable, successful corporation that is doing its part within its mandate.
What is the impact on the budget announced yesterday in this House by the Minister of Finance? There was not a penny noted in the budget. No information was available in that budget on what effect this announcement would have on our budgetary situation in Canada. Obviously the inclusion in the budget was simply an opportunity to put some comments on record. When we have an opportunity to look at the impact I think we could see a further increase in the deficit. What preparations have been made in preparing for the sale of the Crown corporation?
We noted a few things in the media. Yesterday President Hopper said the move was a surprise, not unexpected but a surprise nonetheless. Departmental officials in the lock-up yesterday said that the inclusion in the budget was hastily put together, that it was a last-minute decision.
Last night in the lobby outside the Chamber after the budget was introduced I said to the minister of privatization: "I am looking forward to seeing the legislation". He smiled at me and said: "So am I".
I would like to make two suggestions on the minister's statement. He talked about the removal of the public policy role for the Crown corporation. We recognize that the energy sector in Canada has a great need for public policy direction and that Canadians will demand that in the future just as they did in 1975.
I want to talk briefly about the financial flexibility of the corporation and the sale of shares. This can be done from the public sector. We have to recognize that the Canadian taxpayers are already the shareholders of Petro-Canada and they demand the return on their investment. If Petro-Canada is to succeed further, Canadians collectively have to benefit from the success of the corporation. The return of benefits only to those who can afford to buy the shares is totally outside of the collective need of the country. We need the benefits of the profits of Petro-Canada to help finance the shortfalls in education, health care and all those other items that this government is attacking in this budget, including the loss of environmental matters.
Routine Proceedings
They talk about no profits. A return on an investment to the shareholder is obviously a picture of profitability. If there is any return on the investment, it has to go directly to the benefit of the Canadian people who own the resource that we are using in the public sector.
New Democrats have no confidence in this government's intentions. We serve notice that we will fight this legislation to sell all or part of this important Canadian corporation.


STRIKING COMMITTEE
Albert Glen Cooper: Madam Speaker, I have the honour to present the thirty-second report of the Striking Committee.
[Editor's Note: See today's Votes and Proceedings.]


CRIMINAL RECORDS ACT
John Horton McDermid: for leave to table Bill C-64, an Act to amend the Criminal Records Act.


The Acting Speaker (Mrs. Champagne):: Shall the hon. minister have leave to introduce this bill?


Some hon. members:: Agreed.


The Acting Speaker (Mrs. Champagne):: Is it the
pleasure of the House to adopt this motion?


Some hon. members:: Agreed.


Some hon. members:: On division.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
The Acting Speaker (Mrs. Champagne):: When shall this bill be read the second time? At the next sitting of the House?


Some hon. members:: Agreed.

Routine Proceedings


BORROWING AUTHORITY ACT, 1990-91 MEASURE TO ENACT
[Stage Direction]
Hon. Jake Epp for (the Minister of Finance) moved for leave to introduce Bill C-65, an Act to provide borrowing authority.
The Acting Speaker (Mrs. Champagne):: Is it the
pleasure of the House that the hon. minister shall have leave to introduce the bill?


Some hon. members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.

Mrs. Barbara Sparrow (Calgary Southwest) moved: for leave to introduce Bill C-289, an Act to provide for the recognition of the dress uniform of the Royal Canadian Mounted Police as the symbol of the sovereignty of Canada.


The Acting Speaker (Mrs. Champagne):: Is it the
pleasure of the House that the hon. member shall have leave to introduce the bill?


Some hon. members:: Agreed.


Barbara Jane (Bobbie) Sparrow: Madam Speaker, I rise today today to introduce this Private Members' Bill and thank the hon. member for Simcoe Centre.
The RCMP represents part of the basic fabric, foundation and formation of Canada. This establishment, first known as the Northwest Mounted Police, was created in 1873, that is 117 years ago. It was created by Sir John A. Macdonald on strong recommendations from officials in the west and the northwest, and especially from Alexander Morse, the Lieutenant Governor of Manitoba and the Northwest Territories from 1872 to 1877.


Some hon. members:: Order.


Barbara Jane (Bobbie) Sparrow: The most important thing was, and is today, the instant and compelling impressiveness of the uniform. One of the truest reasons why the mounted police force has been so spectactularly successful is the uniform.


Peter Andrew Stewart Milliken: Madam Speaker, I rise on a point of order. I am sure the Chair knows that the hon. member is permitted to give a short explanation of her bill, not a lengthy speech on the the history of the RCMP. I wish she would comply with the rules.


The Acting Speaker (Mrs. Champagne):: I am sure the hon. member will describe what the bill is and not enter into debate at this time.


Barbara Jane (Bobbie) Sparrow: Madam Speaker, I certainly do know the rules. As I said, the most important thing was and is the instant compelling recognition and the impressiveness of the RCMP uniform and what it represents to Canadians from coast to coast.
It is a national symbol and it is recognized universally. That is why the purpose of this bill is to make the dress uniform of the Royal Canadian Mounted Police a symbol of the sovereignty of Canada. I will be very pleased when this bill is drawn to explain further the full reasons for that.


The Acting Speaker (Mrs. Champagne):: Is it the
pleasure of the House to adopt the motion?


Some hon. members:: On division.


Some hon. members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
Albert Glen Cooper: Madam Speaker, on a point of order, I must have missed motions. I am wondering if I can have the consent of the House to revert to motions so I can do the travel motion for some of the House's committees.


The Acting Speaker (Mrs. Champagne):: Is that agreed?


Some hon. members:: Agreed.


COMMITTEES OF THE HOUSE
Albert Glen Cooper: Madam Speaker, there have been discussions among the three parties and I am sure you will find unanimous consent for the following motion:
That the Standing Committee on Human Rights and the Status of Disabled Persons be authorized to travel to Washington for the period from Monday, March 19 to Ihesday, March 20, 1990 inclusively, in order to meet with congressmen and staff from the relevant congressional committees concerning the Americans with Disabilities Act and that the necessary staff do accompany the committee; and That the members of the Standing Committee on Agriculture be authorized to travel to Washington for the period of March 25 to

March 27, 1990, for the purpose of discussing trade issues; and that the necessary staff do accompany the committee; and
That the Standing Committee on Communications and Culture, and necessary staff, be authorized to travel to Montreal, Quebec on March 5 and 6,1990 in order to visit the facilities of Telefilm Canada, National Film Board of Canada and Videotron Ltd.; and
That the Special Committee on the Review of the Parliament of Canada Act be empowered to adjourn from place to place and that the necessary staff do accompany the committee.


Don Boudria: Madam Speaker, just to confirm that, there have been discussions as the deputy House leader has indicated, as late as yesterday, and our party is prepared to give the required unanimous consent.


The Acting Speaker (Mrs. Champagne):: The House has heard the motion. Does the hon. member have the unanimous consent of the House to move that motion?


Some hon. members:: Agreed.


The Acting Speaker (Mrs. Champagne):: Is it the
pleasure of the House to adopt the motion?


Some hon. members:: Agreed.


[Stage Direction]
Motion agreed to.
The Acting Speaker (Mrs. Champagne):: I would like to apologize to the House. I skipped by first reading of Senate public bills. I realize that there were none.
Somehow in one of the Order Papers, motions was not printed. It was not the hon. member's mistake but a very honest mistake of the Chair.


QUESTIONS ON THE ORDER PAPER
Albert Glen Cooper: Madam Speaker, I ask that all questions be allowed to stand.


The Acting Speaker (Mrs. Champagne):: Shall all questions be allowed to stand?


Some hon. members:: Agreed.
The Budget


Albert Glen Cooper: Madam Speaker, I ask that all notices of motions for the production of papers be allowed to stand.


The Acting Speaker (Mrs. Champagne):: Is that agreed?


Some hon. members:: Agreed.



GOVERNMENT ORDERS

[Stage Direction]


[Stage Direction]
The House resumed from Thesday, February 20, consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the government.
Mr. Douglas Young (Gloucester):: Madam Speaker, in participating in this budget debate, a person always has to look for inspiration, particularly after the Minister of Finance yesterday began his remarks by telling us where he thought Canada was and where it should be going. I felt really at a loss and, search as I did for inspiration, it took some time for it to come to me. I think it will take some time for Canadians to grasp fully the implications of the budget. I noticed last evening and this morning that provincial premiers, finance ministers and treasurers are beginning to understand what is taking place.
In reviewing the Minister of Finance's approach to budgets, deficit financing and interest rate policy since this government has come to power, it came to my attention that this was his sixth budget. As things often do fall into place and as I searched for this inspiration, it came to me that perhaps there were some revelations that might be available to me that I had not discovered. I went to the Bible to see if there was anything there that might reassure me that this budget would demonstrate some vision of Canada that I had not fully understood

February 21, 1990
The Budget
upon its presentation. As I say, with this sixth budget, the need to understand and to seek some revelation is uncanny because in the book of Revelations, Chapter 6, verses 1 to 8, we discuss the apocalypse.
I suggest that with the death of universality, the famine that will occur as regional development is starved for funds, the kind of war that has been declared on the middle class and on small business in this country, it was nearly prophetic that in the sixth budget to be delivered by this minister those kinds of attacks, the kind of pestilence that the GST represents will be abroad in the land. I hope that Canadians will recognize that we understand the concerns that already are beginning to be expressed as a result of this budget.
Canadians want reassurance from the Minister of Finance that the Conservative government understands the economic problems facing Canada, that it cares about these problems and that it has reasonable solutions to the problems. What the Canadian people heard yesterday from the Minister of Finance was an admission that he has failed after five years of trying to manage the financial affairs of this country.
This is the wrong budget at the wrong time. The budget is a recipe for economic disaster. The budget adds to the unfairness that has been very evident in previous budgets brought down by this Minister of Finance. The budget fails to provide the strong leadership that Canadians demand as we face the financial crisis in large part created by this government.

Taxation policies, the government's monetary policy and the cuts we find in this Budget will plunge the Canadian economy into a recession. Madam Speaker, it is one thing to reduce the deficit in a period of economic growth, it is one thing to take such measures when job creation and investment are increasing, but it is something quite different to cut programs arbitrarily when interest rates are at their highest level in eight years, when unemployment is rising, when the regional economies are in difficulty and when our exports are declining. Because of this Budget, the fear of a recession becomes a certainty.

In five and a half years the Minister of Finance has more than doubled the public debt. When he became minister the debt was around $170 billion. Today, the public debt stands at more than $351 billion and climbing by $4 million an hour. In five and one-half years the Minister of Finance has created more debt than all the ministers of finance who came before him and all the governments that came before the Mulroney government.


Mrs. McDougall:: Liberal finance ministers.


M. Douglas Young: The $351 billion of public debt accumulated means that every Canadian taxpayer now has a mortgage of some $25,000, thanks to the activity of this government.
The minister's interest in the deficit tends to change as time goes by. Two years ago, in 1988, after the minister increased the deficit, he told us not to worry, that he had things under control, everything was on target and things would be fine after his re-election and the re-election of the Mulroney government. In 1989 in his budget speech the minister again painted a very rosy picture of the deficit even though he had just increased it for the second straight year. He told us not to worry about the fact that the deficit was increasing again. He had it under control. Last year, the Finance Minister told us interest rates would fall to 10 per cent by this stage of the game, and, of course, the deficit problem would lessen.
Here we are a year later listening to the same minister make the same promises he made about the deficit last year and the year before that. There is no question that the Minister of Finance may have acquired some very, very bad habits from previous governments.


Barbara Jean McDougall: Liberal governments.


M. Douglas Young: Madam Speaker, I am not going to debate that with the hon. Minister of Employment and Immigration. The fact of the matter is that two wrongs do not make a right. I think he should learn after six years to operate on his own rather than point a finger at the past.
The minister says that interest rates will decrease from the 13 per cent range they are in now to 11 per cent and the deficit will be under control next year. "Trust me", he says. I think it is clear from the reaction of the financial circles that analysts, investors and Canadians
February 21, 1990

do not believe the minister will deliver on this prediction any more than he has in the past. Interest rates are not at 10 per cent, they are over 13 per cent, the Bank of Canada rate that is.
Not many people believe that he will be able to get the interest rates down to 11 per cent. They do not accept the minister's prediction that interest rates will fall 2.5 per cent to 3 per cent in the next six months. It just does not appear to be in the cards.
What does that mean for Canadians? Probably, that next year we will be hearing a Conservative minister of finance saying: "Oops! sorry, I goofed again, the deficit is not going down. We are still in trouble". But the Minister of Finance next year will be able to say: "It's not my fault, it is my predecessor's fault".


An hon. member:: That is what he will say.


M. Douglas Young: Yesterday in the budget speech the minister spoke glowingly of his record on deficit reduction. Let us look at that for a moment.
The deficit in 1987-88 stood at $28.1 billion. In 1988-89, it was $28.7 billion. This year it will be $30.5 billion. Now that is going down in Conservative ways of considering these things. The government has increased the deficit in the last two years, not reduced it. Those are the facts. This dismal record was achieved when the economy was still growing. Tax incomes were increased by the Conservative government in an unprecedented way. Now the minister says that next year the deficit will be $28.5 billion. That is still higher than it was two years ago. But he says: "Don't worry, we have it under control".
The minister's record does not reflect the promises he made to Canadians when he came to office more than five years ago. The minister often refers to the fiscal plan he set out in November 1984 and that he reflected in his first budget in 1985. The minister said in this this House in his budget speech in 1985- one of the problems of being around for a long time is that a lot of these things come back to haunt you-and I quote: "Our actions will directly reduce the annual deficit at the end of the decade by more than $20 billion to $17 billion".


An hon. member:: Which decade?
The Budget


M. Douglas Young: Well, that is the problem. Which decade? Which deficit? And by how much? It is clear the minister has failed to solve the deficit problem after five years. Now the minister has another plan and he hopes this one works better than the last one because he is going to switch his deficit nightmare onto the backs of the provinces. Let us raise their deficits instead, and maybe just in passing, let us foist this very, very thorny problem onto the backs of those nasty premiers who will not collect the GST for him when he wants them to do it.
Canadians have to understand what was said yesterday about taxation in this budget. We have had new taxes and we have the GST coming down the pipe. The minister said."There will be no new taxes in this budget." Canadians were very quick to respond. They know that there will be taxes that are directly the result of what the minister presented to the House yesterday. Provinces and municipalities from coast to coast will have to deal with the reality of what the minister presented yesterday.
In Newfoundland the tax increase per taxpayer, if services are kept at the same level, will be $695 a year per taxpayer.

Madam Speaker, in the province of Quebec, each taxpayer will have to pay $582 more because of the Budget tabled in the House yesterday.

In Alberta it will be $592 per taxpayer. Across the country an average of $576 will have to be paid by taxpayers to make up for the cuts announced yesterday by the Minister of Finance in transfers to the provinces. For the minister to tell us that he has followed "a sustained deficit reduction plan", that this plan is working and that all the country needs is more of the same is absolute insanity. Heaven help us if this continues.
The last thing we need from this government is more of the same policies which have brought us higher inflation, higher unemployment, higher taxes and higher deficits. The minister could have told Canadians the truth. He could have said: "I have failed. My policies were wrong. The government has lost control of the fiscal situation."

February 21, 1990
The Budget
What he did say was: "You people who have done the job right the last few years in the provinces, now you take on the burden of trying to pay for what I was unable to pay for."
The people are being punished in the provinces because they kept their house in order or they got it into order. One only has to listen to the reaction of the provinces, including my province of New Brunswick where tough decisions were taken. Difficult decisions were made and the budget was balanced. Along comes the Minister of Finance and says: "No, we are going to hit you with these kinds of reductions and we will put you in the same kind of mess that we got ourselves into."

In his economic statement in November 1984, the Minister of Finance warned that if the government did not take action, if it merely pursued the policies implemented by the previous government, government spending would reach a new record high of $137 billion by 1990. The minister was terrified of this possibility. He said it would be irresponsible, and he suggested solutions to remedy the situation, Madam Speaker. Some solution!
In 1984 during his first year as Finance Minister, the government spent $109 billion. Yesterday's Budget sets total government spending in 1990-91 at $148 billion, an increase of $39 billion since 1984, and $11 billion more than the figure the minister found absolutely unacceptable when he came to power.

The minister says that when we talk about these things that we should subtract interest payments. We should not consider those when we compare his record on spending. I wonder why we should do that. I thought, and I think most Canadians understand, that governments have to pay interest on their debt the same as we do.
The reason the minister does not want to talk about interest charges on the debt and interest rates should be obvious. It is because he knows that high interest rates that he caused are at the root of the deficit and the budgetary problem.
Consensus is very important. The Prime Minister talks about it all the time. Mind you he has forged some wicked consensus in this country recently. He has 80 per
cent of Canadians against the goods and services tax. He has the premiers of the 10 provinces against the goods and services tax. Now he has got all the premiers of the provinces and all the finance ministers and the treasurers of the province against his budget. He is succeeding, but I am not sure it is quite what he set out to do.
Believing in consensus, the Conservatives who are members of the Standing Committee on Finance, members of the New Democratic Party and ourselves agreed unanimously last spring in committee to recommend to the Minister of Finance and the government that interest rates be reduced. Everybody was in agreement. The premiers came to Ottawa and said the same thing but the finance minister and the Governor of the Bank of Canada said no. He refused to listen to his own colleagues as now he refuses to listen to Canadians. The minister's budget shows clearly that the government's problem is not only with the debt itself. It is the interest rates being charged on the debt. The minister's numbers clearly show that the Canadian government's debt is actually smaller than the U.S. government's debt in relation to the size of the economy. Yet, the Americans are surviving very nicely with substantially lower interest rates.
The difference and the reason for the pain is that Canadians are going to have to pay interest rates on our debt that are 4 per cent to 5 per cent higher than what the American government and American taxpayers are paying. Of course, these high interest rates leave the federal government with less money to spend on national priorities, if in fact they are national priorities for the government, such as health care, education, day care, the environment, and I could go on.
The Minister of Finance and the Prime Minister say they support high interest rates because it is right for Canada. They say we need to get the deficit down so that interest rates will come down. Has the Bank of Canada Governor, Mr. Crow, ever said that he would move interest rates down if the deficit was reduced? What he has said over and over again is that interest rates will remain high until we reach what he calls price stability.
Mr. Crow has said many times that inflation is the single most important barometer for setting interest rates. Let us take a look at this situation, Madam Speaker.
February 21, 1990

As inflation remains above 5 per cent, why would Mr. Crow reduce interest rates even if the deficit was reduced, if we take him at his word that inflation is what is important. This government does not care how many people lose their jobs. They are talking in their budget documents that unemployment is going to go up but that is what has to happen in order to bring inflation under control. The government does not care about how many western farmers lose their land. The government does not care about small business. Did they listen to John Bulloch and the Canadian Federation of Independent Business as they pleaded for government understanding with respect to the GST?
Does the government care about how far our exports fall, what is happening to our export trade balance? The Prime Minister and the Minister of Finance support the policy of the Bank of Canada Governor without reservation. That is the way it has to be. It appears that that is what they do, but every now and then on a Friday afternoon the Prime Minister forgets himself and says: "Oh well, interest rates will go down after the budget".


An hon. member:: The tail is wagging the dog.


M. Douglas Young: The question that has to be asked of this government is not whether Mr. Crow's policy of zero inflation makes sense at any time, but does it make sense in a period of slow growth. We would all like to have lower inflation, but achieving inflation reductions means higher interest rates, more bankruptcies, higher unemployment and lost exports. The zero inflation battle means an unacceptable level of hardship for Canadians.
We already have the highest interest rates in eight years. This is after five years of good management and good planning. They are the highest interest rates since the recession of the early 1980s and the highest inflation in six years. We have high interest rates and high inflation. It does not all fit.
Many people hear a great deal from the chairman of the finance committee. Fie says we should let the dollar fall to 78 cents. We have the Prime Minister saying that interest rates will fall. They should be falling any moment now, according to his statement a couple of weeks ago. In the middle of all of this, we have the
The Budget
Minister of Finance saying he is demonstrating good management.
We are always amazed by the creativity the Minister of Finance displays when it comes to finding new excuses for why he is keeping interest rates high and why he supports that policy. A couple of years ago when our interest rates were increasing, he said it was because the American rates were going up. A country like Canada that was intertwined and involved with the United States, through the free trade agreement and geographically, could not possibly have significantly different interest rates than those of the United States. He ridiculed anyone who suggested that maybe we should have a made-in-Canada interest rate policy. He said that an independent monetary policy was unthinkable.
Now things have changed, and the minister and the Governor of the Bank of Canada are pursuing an independent monetary policy with an enthusiasm that none of us could have dreamed possible. We do not hear the minister telling us now that we have to lower our interest rates because American rates are low. No, with Canadian interest rates now 5 per cent higher than those in the United States, the minister has adopted a policy that he said was totally wrong-headed. We are now running an independent monetary policy. Unfortunately for Canadians, it is a high interest rate policy.
The minister then went on to tell us that if we did not keep rates high, the dollar would fall. Well, last year, the dollar was up to 86 cents, so that really did not hold water too much.
He told us that inflation was out of control and he could not possibly lower interest rates then because inflation had to come down. Inflation came down from 5.4 per cent this past summer to 5.1 per cent by the end of the year.
He had to come up with something else so he told us that now interest rates have to stay high because it is necessary to keep foreign capital investment flowing into Canada.
This week the minister is back and he says that inflation is up again so we have to have a high interest rate. At the same, there has been a run on the Canadian dollar. They are spending like mad to try to prop it up.

February 21, 1990
The Budget
Madam Speaker, is it any wonder that Canadians are confused? Is it any wonder that the money markets do not know how to respond? Is it any wonder that investors are concerned about what is happening with this government?
Statistics Canada tells us that inflation in the economy in January actually fell from 5.1 per cent to 4.5 per cent. The reason the over-all inflation rate was at 5.5 per cent was because of federal sales tax increases. We have heard about no new taxes. There was a federal sales tax increase inflicted on Canadians by the minister in last year's budget and it is pushing up consumer prices. The minister hits us with more taxes which cause inflation. Then he punishes everybody for his own actions by causing interest rates to increase to their highest point in eight years.
The recent hikes in interest rates bring up a couple of questions. First, the minister has told us that when his goods and services tax takes effect in 1991-that is a new tax, incidentally, that has not passed through Parliament yet.


An hon. member:: Was that mentioned in the budget?


M. Douglas Young: No, there are no new taxes. Canadians might find themselves a little surprised on January 1,1991 unless we are able to block the goods and services tax. It certainly is a proposed new tax.
In any event, the minister says: "Don't worry. Don't worry because interest rates won't rise when the GST comes in." He says that he and Mr. Crow understand the difference between normal inflation and inflation caused by sales tax increases. So, even though the GST will push inflation up by about 1.25 per cent according to the department's figures, he and Mr. Crow will have nothing to do with raising interest rates because the inflation caused by GST is a sales tax thing and is only going to happen once.
Mr. Crow's decision to move the interest rate to 13.32 per cent last Thursday because federal sales tax increases pushed inflation up by 1 per cent in January I think demonstrates quite clearly that Mr. Wilson may understand the difference but Mr. Crow thinks that inflation is inflation is inflation, no matter where it comes from. I think we can all predict how he will react to inflation in January 1991 based on how he reacted to inflation based on sales tax increases in January 1990.
Mr. Crow and the Bank of Canada will raise the interest rate as much as he thinks it needs to be to slow the impact of the GST-induced inflation. The Minister
of Finance should stop misleading Canadians when he says that the GST will not increase interest rates. He is wrong. He knows he is wrong. The track record shows he is wrong. He should start telling Canadians what the truth is about the GST. The goods and services tax will be a new tax in 1991 that will cost Canadians money, will cause higher interest rates and will cause higher inflation. The cuts in this budget which the Minister says contains no new taxes is really in fact the price we are paying now for the GST that will come in next year. It is as simple as that. It is going to cost the government, according to its own figures, $1.8 billion just to bring in this tax.
Another question which needs to be answered is whether the tax increases which occurred in January were really necessary. According to the minister's budget documents-and this is from last year's documents-the sales tax increases on construction materials, farmers' fuel and gasoline were expected to raise about $700 million in new taxes to help reduce the deficit. The interest rate increase which was caused in part by these very same sales tax increases cost the government another $800 million in interest charges on the debt. So, overall, the new sales tax increases which took effect on January 1 of this year will actually increase the deficit by $100 million. That is Tory economics at their best; higher taxes, higher inflation, higher interest and a higher deficit.


Barbara Jean McDougall: And more and more jobs.


M. Douglas Young: Well, Madam Speaker, we have just heard from the Minister of Employment and Immigration who talks about more jobs. The fact of the matter is in the budget documents it is clear that the Minister of Finance expects fewer jobs. He is talking about an increase in the rate of unemployment in the country and says it is necessary to get inflation under control.
I do hope that the Minister of Finance has consulted at least with his colleagues on this matter because there seems to be a difference of opinion.


An hon. member:: She hasn't read the budget.


M. Douglas Young: When the minister came into office in 1984 the government collected $71 billion in taxes. That is what the take was, $71 billion. Next year the Conservative government proposes to collect $119 billion in taxes. In five and a half years taxes have gone up by $48 billion. Unbelievable. The Conservative government has subjected Canadians to 32 separate tax increases since 1984, giving, I think everyone will agree,
February 21, 1990

new meaning to the old saying that Tory times are tough times and Tory times are taxing times.
I kept listening to the minister in Question Period today talking about putting things in perspective. In 1984 when it came into power, the government collected $29 billion in personal income taxes. This year the Mulroney government proposes to collect $56 billion in personal income taxes, almost double what was collected in 1984.
When the government came into power, in the perspective of the goods and services tax combination, the manufacturers' sales tax, that famous silent killer of jobs, collected $7.7 billion for the government in 1984. This year, from the very same tax, the government proposes to collect $18.5 billion. The silent killer of jobs has moved from collecting $7.7 billion to $18.5 billion, two and a half times what they were collecting five years ago.
These people know how to tax us. The minister's new goods and services tax that he hopes will be passed by this Parliament, will collect gross revenues of about $23 billion or three times more than what they collected with the federal sales tax in 1984 when they came to power. So, you have to believe that this minister, who promised in 1984 not to raise taxes because they were already too high, has set quite a sad record during this period.
How they got there is interesting because it may serve as a precursor to what is going to happen when the new goods and services tax comes in next year if the government gets its way.
In 1984 the Tory regime raised the manufacturers' sales tax from 9 per cent to 10 per cent. In 1986, a little less than two years later, it raised it from 10 per cent to 11 per cent. Later that same year, a year when they were in a taxing mood, it raised it again from 11 per cent to 12 per cent. Then, in last year's budget, the minister raised it from 12 per cent to 13.5 per cent. Imagine, Madam Speaker, from 9 per cent to 13.5 per cent in a little over four years. Just imagine what will happen to Canada if the same kind of thing occurs with the goods and services tax and why would it not, given the record of this government?
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The government has raised sales and excise taxes on gasoline eight times since it has come to power, the last time being January 1 of this year. But there are no new taxes in this budget. It has got them all in place and it even has got the mechanism in place for the new one next year. This is a sort of a deficit reduction year through budget cuts.
In 1986 the minister eliminated the federal tax reduction for low income Canadians. He also put on what he called a temporary surtax of 3 per cent on income tax. Two and a half years later he decided the so-called temporary surtax was too temporary, so he made it permanent and raised it to 5 per cent last July.
In 1986 he decided to increase the tax on airplane flights. In 1988 he taxed cable television fees and long distance telephone calls. Now, Madam Speaker, when Bell says: "Reach out and touch someone", you know that maybe that other hand there belongs to the Minister of Finance.
In 1987 he started to tax chocolate bars because, what the heck, why leave the kids alone? When you go for it, go all the way. Now when your child reaches into his or her pocket to pay for a candy bar, guess whose hand is there? We also had the experience of the minister starting to tax soft drinks. So when your kids catch the feeling, oh, oh, you might catch the minister dipping his hand into that pocket too. They have toys since 1988, as well as paint and wallpaper.
Then, in 1989, it began to tax back family allowance and senior citizens' old age security pensions. This is a taxing government.

The GST is the end product of a so-called reform initiated by the Conservative Government, a reform that was supposed to increase sales tax and corporate income tax while reducing personal income tax. However, this reform has failed miserably, which comes as no surprise. Since 1984, the Canadian family's income tax has increased instead of going down, except for Canadians on very low incomes and, of course, the wealthier members of our society. Thx revenue from personal income tax has doubled since 1984. From now on, all Canadians will pay a surtax of at least 5 per cent on their basic tax bill, and in addition, the minister is now taxing family allowances and old age security benefits.

February 21, 1990
The Budget
It is this kind of deceitful record setting out the lack of fairness in Conservative tax reform that leaves Canadians absolutely unconvinced when the minister tries to tell them that the GST will be good for them, that they will be better off. That is the message we have been hearing. It is the message Canadians have been rejecting.
He says the GST will make low-income Canadians better off. Nobody believes that. Nobody believes the rate will state at 7 per cent very long either.
The minister said the GST will be revenue neutral, and everyone knows it is the beginning of the largest tax grab in Canadian tax history.
He told us for two years that the GST would raise $18.5 billion in 1991. In yesterday's budget he now admits what we have been saying all along: the goods and services tax will raise more revenue than we have been told it would. The minister in his own document says the GST will raise $19.5 billion, a $1 billion increase. He just happened to find it and there it is already, an extra billion dollars.

The minister told us that the GST would be visible. We know that in most cases, it will be invisible. He said the GST would be simple. Just ask Canada's small businesses, because Canada will be the only country in the world with two systems for collecting sales tax: one federal and one provincial. The Canadian Federation of Independent Business told the government that the GST would be an administrative nightmare for small businesses.
The minister promised to abolish the temporary surtaxes on personal income tax as soon as the GST was implemented. Predictably, he has now made these surtaxes a permanent fixture and increased them from 3 to 5 per cent. He promised the GST would be accompanied by lower taxes for the middle class, but once again, he broke his promise. He promised that the government would pay compensation to small businesses who would have to collect the GST. That is not the case. He promised that the GST would not be imposed on food, but, Mr. Speaker, it will be added on to the price of cookies, pies, sandwiches and practically everything else
sold in a restaurant. And we must not forget that almost half of all food product sales will be affected by the GST because the products are eaten outside the home.
For months, the Prime Minister (Mr. Mulroney) and the Minister of Finance (Mr. Wilson) kept telling Canadians that they would never bring the GST down from 9 per cent, but a few opinion polls later, the GST rate was reduced, but not enough, because Canadians still massively reject the proposed goods and services tax.
The Minister of Finance keeps telling us that the GST will not cause interest rates or inflation to go up. Nobody believes that, and nobody believes there will be no new taxes for Canadians as a result of the Budget he brought down yesterday, Madam Speaker.
The Minister of Finance and the government should realize that all Canadian taxpayers have to pay federal, provincial and municipal taxes, and for the vast majority of Canadians, the goods and services tax is the last straw. Enough is enough. People are saying this across the country. Canadians are always willing to pay their share, but they fail to understand why they should be paying more taxes, when the Auditor General told us two weeks ago that the accounts receivable for taxes and other revenue owing to the government totalled over $7 billion.

This government strategy on taxes can be summed up very simply: high, higher and highest. Canadians are saying no to the GST. My colleagues and I have collected the names of over 600,000 people on petitions, people who are saying no to the GST. My colleague from Dartmouth is heading up an electronic petition campaign, a first in this country I believe, against the GST. That campaign will be conducted between March 12 and March 16. We hope that Canadians across this country will call in and make sure they register their opposition to the goods and services tax. We in the Official Opposition are committed to stopping the tax. We hope the government will come to its senses, listen to Canadians and axe the goods and services tax.


Mr. Tbrner (Halton-Peel):: What's your alternative?


M. Douglas Young: I listen to my hon. friend who used to have a great deal to say about tax reform. I understand his concern about an alternative. Certainly

February 21, 1990

the goods and services tax is not the alternative that is going to be acceptable.


Some hon. members:: Hear, hear!


M. Douglas Young: What my hon. friend should be asking his constituents is whether they are for this alternative that his government has proposed, rather than going to people and saying: "What's your alternative?" This shoe does not fit. Canadians are not going to wear it.
It has become absolutely clear that the Conservative government is not interested in regional fairness. We face a crisis in Atlantic Canada. The Prime Minister promised to help. He came to the House and said: "Yes, we will be generous. There will be a generous aid package." Yet in the budget there was not a word about the east coast fishery and not a word about a special aid package. The bottom line yesterday for Atlantic Canadians was that there is not a penny to help them cope.
This government is getting out of the business of regional development. That is the underlying premise in the budget yesterday. It does not have enough courage to say what it is doing. It says one thing and does another. ACOA, western diversification, FEDNOR and regional development programs will no longer provide assistance to the regions in the form of grants. Oh, no, no more grants. Now we are going to lend money. Now we are going to make sure we are going to get it back. That is fine.
If you want to get out of regional development because the Americans are telling you to do it, say so. There is nothing wrong with that, if that is what you believe in. What is wrong is saying one thing and doing the other.
We well know that when the free trade agreement was being negotiated one of the targets was grants and subsidies under regional development programs. Again the Government of Canada is sacrificing the interests of the regions and sacrificing the future of Canadians because of the free trade agreement.
Simon said: "Don't worry. They are not on the table. Don't worry about unemployment insurance. We've got that taken care of. Don't worry about regional development. Don't worry about grants and subsidies." Simon
The Budget
was right. The Americans did not have to worry about them because the Conservative government got rid of them. That is absolutely disgraceful.
Now we come to the decision that was amplified today by the Minister of State for Privatization and Regulatory Affairs: the government's last-minute decision to sell Petro-Canada. That is further evidence of the absolute disintegration of this government's will to govern in Canada as a sovereign government. It is another loss of a lever that allows us to control our economic destiny.
This is in the face of increasing foreign ownership that is coming at us from every direction. We could talk about the American Express Bank proposal. We could talk about what happened with Esso and Texaco. We could talk about so many things, but now we are talking about the ownership of a key Canadian industry, a sector that is fundamental to the survival of any country that has those kinds of resources.
The government had a chance to take a strong stand and reaffirm at least a semblance of some commitment to Canada and it said no. It was a last minute, knee-jerk decision to sell Petro-Canada.
As is clear from comments made as the minister responsible for privatization spoke today, there will not be one penny's benefit to the Canadian taxpayer. More important-and Canadians have to understand this-not one cent as we sell off one of these valuable assets will be applied to the reduction of the deficit. That is because we will be giving it away the way we gave away de Havilland and wound up paying the company that bought it more than it ever expected when it first bought it.
After five and a half years and six budgets presented by this minister, our tax system is more unfair than ever before. Basic services that average Canadians have come to rely upon over the years are being eliminated.
Canadians, including seniors, have to pay tax on interest they earn on their savings even though those amounts of interest may be less than $1,000. Canadians have had unemployment insurance benefits cut and threatened, premiums have increased and the Government of Canada has withdrawn from participating in the UI program other than to say what we can do. There is control but no money.

February 21, 1990
The Budget
According to a study conducted by the well respected Institute for Research on Public Policy, targets for the minister's income tax reform have been low income and middle class Canadians. The only people who will be paying lower income taxes are those with incomes less than $10,000 and those with incomes over $100,000. Wealthy Canadians with incomes over $100,000 are paying $1,570 less in income tax today than when the finance minister took office in 1984.
The bottom line is that the middle class has been the favourite target of the finance minister's tax increases. The tax reform program imposed by this minister has been nothing but an all-out attack on the middle class of this country. They understand it. If members to your right, Madam Speaker, do not understand what is happening to the middle class in this country, the people who are paying the burden understand it. It is reflected every time you turn around anywhere you travel in this country.
Personal income tax revenues have increased three times faster than corporate income taxes since 1984. The Conservative government is now proposing to implement the goods and services tax which as my colleague from Ottawa South has said in this House is the single largest tax holiday afforded to corporations in the history of this country that he has been able to unearth-$6 billion in taxes being transferred from corporations to consumers.
This kind of thing is being done in this context. As the minister said today, let us put it in perspective. Some 1.4 million Canadians have not been able to provide enough food for themselves and their families in the last year. They have had to rely on food banks across this country. That is something that many of us never, ever dreamt that we would ever see again. One million Canadian children live in poverty. People know that something has to be done, but this mean-spirited budget focuses on the most vulnerable segments of our society. It does not go after the fat; it goes after the poor, the homeless, the elderly, the youth, and the sick. Even native people have not escaped the cuts in this budget.


Mr. Fontana:: Don't forget the veterans.


M. Douglas Young: Some 5,000 veterans, more or less, as my colleague from London East says, are being asked to make further sacrifices. I guess somebody thinks they have not done enough. They are going to have to pay $3,000 a year to lay in their sick beds.
It is a tragedy that people do not understand what the policies of this government are doing to Canadians. They seem to be completely oblivious to the economic chaos, the fiscal problems, the basic unfairness, and the human suffering that their policies are creating.


Garth Turner: What would you do?


M. Douglas Young: The hon. member asks what would I do. I think the answer to that is that Canadian people would love to have a choice, to see what in fact we would do, if they only had an opportunity. In every poll whether it is on the GST or the budget, on every issue that is put before Canadians today the one thing that they are nearly unanimous on is that they want nothing more to do with this government.


Some hon. members:: Hear, hear!


M. Douglas Young: The reason for that is that this government has broken promise after promise. It has failed to meet one commitment after another. It has committed to reducing the deficit; the finance minister said it so often. Then he changed his mind and the deficit increases. He says that policies will result in lower interest rates, but they are the highest in eight years. He then contradicts the Prime Minister who said that after the budget things will be much better and interest rates will drop. The minister and his government have set an all-time record for saying one thing and doing another.
Canadians are uneasy because there are so many things about this government they cannot understand. They just cannot follow the reasoning or logic if in fact there is any reason or logic.
The economy appears to be in danger of moving into a recession, and some people would argue that we are already there. The finance minister says in his budget documents that we are going to have negative growth in 1991 for one quarter and maybe for a second quarter. It becomes a theoretical argument whether or not we are into a recession, but does it make sense to be slashing programs and imposing the goods and services tax, a brand new tax of 7 per cent, on Canadians?


Garth Turner: What about the debt?


M. Douglas Young: The member talks about the debt. We know that Canadians from coast to coast are talking about the debt, a debt that went from $170 billion to over $350 billion in five years. Why would they not be talking about the debt? It is the kind of debt accumulation that has never been seen in the history of this country. That is why they are talking about it.
The alternative for the federal government to the debt in large part which it created is to turn it over to the provinces and the municipalities. The government says: "Let's not take responsibility for it ourselves. Let's not be strong enough, confident enough and forthright enough to say we caused it. We will take care of it. We will take the heat. Let's slough it off on the 10 provinces and the territories".
With the challenges facing youth today should we be cutting summer employment programs? Should we be telling the young people in this country: "Forget it, there is no job for you this summer"?
What about research and development? How are we going to compete? We are talking about level playing fields. We are imposing a goods and services tax at 7 per cent that our biggest competitor to the south does not have. We are cutting the opportunities to be able to compete on a level playing field.
What about the lack of commitment even to talk about the crisis in the Atlantic fishery? How did it come to pass that with all the members from the west who sit to your right, Madam Speaker, there was not even a passing comment on what is happening to western farmers?


An hon. member:: And British Columbians.


M. Douglas Young: What has happened to British Columbians? The Polar 8 was not just an ice-breaker; it was a symbol. I know that the premier of British Columbia, his finance minister and British Columbians generally will be able to make the argument not just on the basis of economic necessity but on the kinds of things that contribute to further alienation of that great province and the people who live in it.
What about the reduction in money available to provinces for health care? When I am here in Ontario I read the press concerning what is happening with respect to waiting lists and people going to the U.S., people who
The Budget
can afford to pay for their own operations leaving the country because the waiting lists are so long.
Is this the time to be saying to veterans who need health care: "It is going to cost you $3,000 a year. If you have a spouse that kind of money comes out of your budget. You have not done enough for Canada. We are going to squeeze a bit more out of you"? Is that the kind of Canada that is part of the vision of the finance minister and this government?
What about small business? It has been a very dependable ally of this government for years.
What I am concerned about is the suggestion by members of the government that anyone who raises these questions does not understand. Who is a better friend of this government than the president of the Canadian Federation of Independent Business, John Bulloch? What does he say about the goods and services tax? He says that it is a nightmare on main street.


Mr.   Timer@Halton-Peel: He likes the budget.


M. Douglas Young: The hon. member says that he likes the budget. That is not at all what he said. He does not like the budget. He likes some parts of it, but he does not like the budget.
The selective kind of response we get is that if you are against the goods and services tax, if you are against what this government does, it is because you do not understand what it are trying to do. Why does the government not give John Bulloch and the Canadian Federation of Independent Business and its 80,000 members an opportunity to tell it what they really think about the goods and services tax?
Why not go to Alberta, which I will be doing on March 5 to debate the Minister of Finance, where a few hundred people will have an opportunity to sit in the public forum we will be involved in that evening? The finance minister and I are going to spend a lot of money to get to Alberta. It would be nice for Albertans to be able to get to a nice big meeting, in a nice public place where it does not cost $100 to be able to attend by invitation only.
It would be nice to have Mr. Bulloch and my hon. friend who has been interjecting attend that meeting, as well as to invite the leader of the Reform Party and some people from New Democratic Party. Mainly the people of Alberta should be invited to make sure that they understand what the goods and services tax is all about

The Budget
from the Conservative point of view. That would he a very helpful exercise in making sure that Albertans and Canadians generally understand what the tax is all about.
There are many questions that Canadians had before this budget was presented, and there are still many questions to be answered. But the hon. member has a point. What is that we must do?
I believe, as we have heard many times as we crossed the country with the Standing Committee on Finance, that we do have to get involved in real and meaningful tax reform. It is no longer a question of passing the buck. It is our buck. The buck stops here, whether it is federal, provincial or municipal.
As the mayor of Vancouver suggested at our hearing in Vancouver, we have to look at what the impact is of tax reform, not to have federal unilateral tax reform and some provincial machinations and then the municipalities pick up whatever is left as it trickles down. We need to look at what we are doing in terms of our taxation policy, our spending policy. How does monetary policy integrate into what we are trying to achieve in this country? We have to get along. We have to be able to talk. The great conciliator has blown it. Where are the premiers as we talk about economic matters in this country, never mind the other issues? On straight economic matters where are the provinces?
Are we going to have a country with 10 economies, 10 provinces, where all the provinces will be judged like this: "Are you making money this year? Do you have a budget this year? Do you have a little more capacity to pay"? Is this the kind of Canada that we are trying to develop, instead of a cohesive, national approach to our problems in our economy? Are we saying: "Let's break it all up into little pieces and let's deal with each province as a separate entity"?
We understand the jurisdictional problems that are involved. Confederation has survived for over 100 years. This is a veiy different kind of approach.
Too often the federal government has raised taxes and got involved in budget cuts without fully recognizing the impact on provincial governments and municipal governments. We need to get involved in a very serious reform of government activity from the point of view of taxation, spending and monetary policy.
[Translation)
When they look at the government's record, after five and half years in power, Canadians certainly have the right to be discouraged. They know perfectly well that we have to be competitive on international markets and that we have to improve job creation and the training of our workforce. They know perfectly well that Canada has to keep playing a leading role in connection with the dramatic changes that are taking place in the world.

(3) for its continuing policies of high interest rates and slow growth that can only deepen a Tory made-in-Canada recession.


Some hon. members:: Hear, hear!


The Acting Speaker (Mrs. Champagne):: I wish to inform the House that because of the ministerial statement Government Orders will be extended by 26 minutes starting at six o'clock.
The Chair recognizes the parliamentary secretary on a point of order.


Mr. Vincent:: Madam Speaker, I think we should ask for the unanimous consent of the House to allow the Leader of the New Democratic Party to finish her speech, and if she needs more time, I think we can count on that unanimous consent.


The Acting Speaker (Mrs. Champagne):: The House has heard the suggestion made by the parliamentary secretary. Is there unanimous consent?


Peter Andrew Stewart Milliken: We are happy to co-operate and give our consent to the suggestion made by the member speaking for the government.
I may say that if the government is in a mood to hand out money we would be pleased to have it distributed equally to all sides of the House.


Audrey Marlene McLaughlin: Madam Speaker, I welcome the opportunity today to speak on the finance minister's budget. I welcome it more than ever because what this country needs is a serious debate about economic policy.


Some hon. members:: Hear, hear!


Audrey Marlene McLaughlin: From coast to coast to coast Canadians know that something has gone seriously wrong with the economy of this country. This budget represents a culmination of six years of economic mismanagement.
When we think the government has outdone itself, when we think that it will not introduce any more harmful and short-sighted policies, when we think that there will be a vision, that there will be some new ideas we see, once again, that the old party has old ideas, fighting yesterday's battle with yesterday's solutions in the 1990s.
The Budget
What we need is a serious debate. Contrary to what the government would like to see, that debate must involve all Canadians. That means women's groups and aboriginal groups, environmentalists, social justice advocates-all advocacy groups. It is no coincidence that this government is cutting $23 million from advocacy groups.
This finance minister and this government are attempting each year to silence more voices, the voices of aboriginal people, the voices of senior citizens, the voices of women. The voices in society who have the most to lose are silenced by this budget.
But one voice is being heard loud and clear. That is the voice of a senior citizen, a veteran who has served his country. His voice is in response to the fact that he is going to have to pay $6 extra a day as a result of this minister's budget, $6 a day in a budget measured in billions. So what does one of those veteran residents in the Rideau Veterans Home have to say? Mr. Trailing states: "After all the boys have done for this country they get stepped on and insulted". Then he refers to the finance minister and states: "I would like to take on that guy. We are a special breed and all he gives us is a big foot on our neck".
That may sum up the feelings of many Canadians about this budget. So this government is going to get a vigorous debate from the New Democratic Party and I would say from Canadians from coast to coast to coast.
What we are going to be saying to this government is that we are weary of broken promises. We are weary of deception. If, for example, this government says it is going to save the environment and provide a better future for our children, then the government should do it. Do not deliver a budget reacting to yesterday. Deliver a budget that deals with the issues of tomorrow that leads us boldly into the 1990s.
The fact is that this budget is like an old grade B movie. The present finance minister has given Canadians a budget of out-of-control interest rates, escalating unemployment, a budget that is destined to lead this country into further recession. This is a budget for an army fighting a cold war that no longer exists. It is a budget that ignores an environmental crisis that very much does exist.
There is no vision here. There is no grasp of the challenges confronting us. This government is reacting to yesterday instead of building for tomorrow. There is

February 21, 1990
The Budget
not one new idea in this budget, not one. That is shameful because there is so much to do.
We in the New Democratic Party say it is time for this government to deal with the challenges that confront Canadians. It is time for real leadership for a change.

Let's take a look at the contents of the Budget, Madam Speaker. Let's see who are the losers and who are the winners. It is easy to see who the winners are. They are the corporations and wealthy citizens who do not pay their fair share of income tax. They are the companies that make profits by polluting our environment. They are the communications consultants who get millions of dollars worth of contracts from the government to sell Canadians unsatisfactory policies. They are the brokers who will make a pile of money on the sale of Petro-Canada and Telesat. The list of losers is much longer. It includes all those who use the health care system. It includes young people, the elderly, the homeless, Native people, women, Canadians in our poorest regions, fishermen, farmers, the unemployed and the children who will be left with a polluted environment. Instead of a clean environment, we now have a polluted one.
In other words, the Budget affects all low- and middle-income Canadians, whether they live in Canso or Kelowna, in Quebec City or Whitehorse. They will have to pay more taxes, while services offered by the government are gradually disappearing.

Let us make no mistake about this, taxes are going to increase. There are taxes in this budget. Canadians can read between the lines. They have not forgotten the goods and services tax. They know they could pay hundreds of dollars next year because of the new sales tax. They know that when the federal government puts in less money for health and education and for post-secondary services, the provinces and the territories have to put in more.
That translates into higher provincial and territorial taxes. Canadians can count on that. They know they cannot count on the word of this government.
The reaction from provincial premiers and finance ministers has been swift and brutal. The Nova Scotia finance minister said last night that this budget would cost his province $80 million over the next two years; Ontario $480 million. In B.C. it will cost $120 million next year alone. All the provincial governments said plain and simple they are going to have to raise taxes or reduce their commitment to medicare and education.
What this government is doing is reducing the options for Canadians for the future. Those provinces that are poorer or have smaller populations particularly simply do not have the resource base and the revenue base to compensate. It is a complete abdication of federal leadership. It is cowardly and it is shameful.

Reductions in medicare and post-secondary education are perfect examples of broken promises. Here is what the Prime Minister said in the last election campaign: "As long as I am Prime Minister of Canada, social benefits will be improved, not diminished, by our government, which is committed to promoting social justice and equity." He did say "improved", Madam Speaker. He did not say "diminished".
Let us now take a look at the Budget. Funds to the provinces and territories for medicare and post-secondary education will be reduced by $7.3 billion over five years. This is in addition to the reductions announced last year.


An hon. member:: That's incredible!


Audrey Marlene McLaughlin: Government cuts for health care are another attack on medicare. It affects millions of Canadians, Mr. Speaker. Imagine the crowded emergency room corridors, the closed hospital wards, the waiting lists for major surgery that are growing all the time. The Government of Quebec is even talking about charging for some medical services.

Imagine, Mr. Speaker, the average Canadian family since 1984 has paid 67 per cent more in sales taxes and every year the amount of income that they have available gets less and less. Imagine that average Canadian family now with the reduction in health services having to worry about whether their child can have an operation that is
February 21, 1990

needed. We are getting closer and closer to the American way and we won't stand for it.
The New Democratic Party created medicare in this country. We are not going to stand by and watch this government destroy it. We are going to fight this every step of the way.


Some hon. members:: Hear, hear!


Audrey Marlene McLaughlin: I am dumbfounded, Mr. Speaker, to see the government take such short-sighted action as to reduce funding for post-secondary education. For example, the Canadian Association of University Teachers estimates that these cuts will amount to $3.1 billion.
Obviously all sensible Canadians consider our young people to be our most important resource to maintain a sound economy.
We must first invest in our young people and give them the training they need, if they are to meet the challenges of tomorrow. Education is the key to a prosperous and durable future.
I would like to mention one more aspect which concerns federal transfer payments to the provinces and the territories, Mr. Speaker, and it is a very important one. Cuts in government spending on health care and education will gradually create two societies: one rich and one poor. A few provinces and territories may be able to compensate for federal cutbacks, but it will be impossible for the poorest provinces and territories to do the same.

In those provinces that cannot make up the shortfall, services will suffer. Do we want to see a Canada where Newfoundlanders, for example, may have less adequate hospital facilities than Ontarians? Where Saskatchewanians will have higher tuitions, overcrowding and ill-equipped labs at their universities.
Where is the national standard here? Canada is about equality. It is about regional justice. We cannot continue to ask the poorest regions of this country to pay the cost of this government's economic mismanagement.
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The creation of one Canada which is rich and another Canada which is poor is unacceptable and it must be stopped and it must be stopped now.
As we analyze the budget, we see once again that, like the goods and services tax, this budget is designed to take the most from those who have the least, from those who are the least able to speak up and have their voices heard.
These cuts, like so many that preceded them, are directed to those people in our society who need the help from all their fellow Canadians the most. Look at the hundreds of millions of dollars cut in the Canada Assistance Plan funding for Alberta, for B.C. and Ontario. The Canada Assistance Plan funds welfare, child care, and other programs to meet the needs of the poor.
The poor in these provinces need these programs just as much as the poor in other parts of the country. When you are poor, you are poor, and it does not matter where you live.
One has to wonder if any members of this government ever go and walk one of the city streets, because if they did they would see the increasing numbers of homeless in those streets. Yet, what does this government do? It cuts social housing expenditures. That is a crime.
If members of this government were to go to many of the communities across Canada they would see first hand what we should be doing. What we should be doing in this House is saying to aboriginal Canadians: "We are here to ensure that you have the power to control your own lives as first nations of this country, that you deserve our respect, and we are going to support you in your aims and objectives." What does this government do? It cuts Indian and Inuit programs by $50 million this year and another $50 million next year, just the way that last year this government cut aboriginal post-secondary education. A fact is a fact, Mr Speaker. This government's treatment of Canada's first nations is shameful.
I mentioned earlier probably the most heartless, the most insensitive and the most unnecessary cuts in this budget are the cuts to veterans, to the men and women who have served our country, cuts to their long term care and lodging, increasing the cost of every meal and increasing the cost of their rooms. This is a remarkably

February 21, 1990
The Budget
cruel expression of our gratitude to veterans for their service to their country.
We have to contrast the $17 million that this move will save Canadians with the $14 million that this government will spend to sell a tax with a propaganda program, the goods and services tax, that we already know 80 per cent of Canadians do not want and do not want to hear about from this government.
We have been proud over the years that we are a country that values equality in justice. But this government is even going to put the cap on that, making sure that some $86 million will be cut from legal aid, those very services that ensure that Canadians have access to having their rights addressed. Again, low income Canadians will suffer the most because often it is they who rely on legal aid.
We have had a very important inquiry in this country on native justice. This is going to seriously affect the rights of native people to access to justice in our society. So on the one hand while we are giving platitudes about how we believe in native justice and how we believe that every Canadian should have a right to fair and equal justice in this country, on the other hand we are cutting the ways for them to have those rights and this will not be tolerated.

Mr. Speaker, the government has also imposed cuts on Telefilm Canada and the CBC. The CBC is one of our major national institutions, and both the French and English networks contribute to national unity by strengthening ties between Canadians. If the Conservatives want this Crown corporation to close down, they are on the right track.
A number of questions come to mind, Mr. Speaker. When will the government stop undermining our sovereignty? When will it stop destroying our cultural institutions? And when will it stop attacking the poor and the most vulnerable in this country?

This government has shown once again by this budget that it has not moved at all into the 1990s, that it has not in any way attempted to address the situation that is happening internationally by making any plans to bring our troops home from Europe. Their cold war mindset has once again prevented them from a forward initiative.
Instead, this government has axed the Polar 8 icebreaker, which is so crucial to protecting the sovereignty of the North. The question that arises is when is this government going to stop selling our sovereignty? When is it going to stop destroying our cultural institutions? When is it going to stop punishing the disadvantaged in this country?
Just as important as what is in the budget is what is not. There is nothing in this budget for women. There is nothing for shelters for battered women. No real commitment to pay equity in the Public Service and the private sector. No program to educate police and judges on women's issues. No relief for older women living in poverty. None of it is there.
There is not one word about child care. Talk about a broken promise, Mr. Speaker. While one million Canadian children require child care, and are not able to get it, this government is silent. Women are never going to be able to attain equality until Canadians have access to affordable quality child care, and the lack of that kind of care, sadly, seems to suit this government just fine.
The minister responsible for the Status of Women should take a good look at her record. It is a miserable record. The move toward equality has been stopped and reversed and the only new initiative that there has been is the recriminalization of abortion. What this government is saying is that we will not make the effort to treat women with dignity, but we can find the time to treat them like criminals.
Another item in this budget which is extremely disappointing is the fact that the regions of this country have been totally ignored. Despite the debates we have had in this House about the crisis in the Atlantic region, despite the serious situation of farmers, we see nothing in this budget to help farmers, the Atlantic region and other regions in this country. This budget comes back empty-handed. There is not one new dollar in regional development money. This government has done a masterful job in creating a crisis in Atlantic Canada and doing nothing to resolve it. There is no emergency relief package for the Atlantic and nothing for workers in the fisheries.

The province of Quebec alone will lose $220 million in transfer payments during 1990-91. In addition to cutbacks in health care and education, Quebec will be affected by cuts in subsidized housing, in funding for the

February 21, 1990

CBC and in exploration incentive programs. We also note there are is no new measures to stimulate economic development in this province.

This budget offers absolutely no relief for northern Canadians. In Whitehorse, one of the cities that is generally studied to see the cost of an average food basket, the food basket is fully one third higher than any other city in Canada. That does not tell the real tale, because if you went further north into the eastern Arctic and smaller communities north of my home community, that would be doubled and tripled. What do we see in this budget? We see cuts to Indian and Inuit programs. Cuts to health and post-secondary education. The cancellation of the Polar 8 ice-breaker. An end to the Canadian exploration initiative program. Once again, the interests of the north are overlooked.
I just learned this morning from the National Executive of the Native Communications Program that their funding is in serious jeopardy. The Northern Native Broadcast Access Program will be cut by some 15 to 16 per cent. These are programs that have been praised by UNESCO and by CIDA, known around the world for their high quality. What do these programs do? These programs give a voice to aboriginal people and they do even more.
I would just like to cite an example of a radio station serving northern Ontario, it is the Waterway Radio Service, where trail radios are used in remote communities by hunters and trappers to call for help in emergency situations. Every year hundreds of lives are saved by the trail radio service. There are 30 community radio stations that will no longer receive regular maintenance and could be drastically cut by these cuts to this budget. This is equally true for other native communications that are going to be hit by this cost reduction. It could very much affect the kinds of broadcasting, award winning broadcasting. The Inuit Broadcasting Corporation wins awards around the world. But we are going to cut it. CFWE in Lac-la-Biche, Alberta; SHON-FM in Whitehorse and CKNM in Yellowknife, among others, will be permanently crippled by these reductions.
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Surely, we have a responsibility to ensure that Canada's First Nations have a system of communication, of support which will enable them to continue to advance toward their goals. I would say as well, that much of these native communications systems not just serve aboriginal people, they serve the whole community. In my community alone, this system of communication serves the whole community. So we are cutting a service to many of the northern and remote areas of this country that serves all residents of those areas.
This is a serious attack on Canada's aboriginal people and it will be devastating for many of the communities.
The finance minister, as I mentioned earlier, has also chosen to ignore the devastation facing prairie farmers. Nothing is being done to avert the farm crisis. We have family farms there that are in a situation of Third World debt. They are not going to be able to get out of it.
As we sit here today, a country that loses sovereignty over its food supply loses its sovereignty, Mr. Speaker. The family farm is threatened, rural communities are threatened. Last year 25,000 people were forced to leave Saskatchewan. For the good of this country, we must save our family farms. We have to keep our farmers on the land. It is our legacy to the children and we must do that. But this budget does not even begin to do it.
We see a budget that projects an increase in unemployment. It is almost unbelievable that we have a budget that states that there are going to be more unemployed. There is no retraining funding, no jobs strategies, nothing in this budget to help the 1.25 million Canadians who are unemployed. Not only is this government doing nothing, but as I say it is predicting higher unemployment, an unemployment rate of 8.5 per cent over the next couple of years. That is 100,000 additional unemployed each year.
This government seems to feel that work is a luxury, that somehow in hard times we just kind of do away with it. But this is about families. This is about the dignity of work, the dignity of families, people contributing in a productive way to our society. Unemployment is about causing family breakdown, social problems and losing all of the productivity that the unemployed could be giving to our society.

February 21, 1990
The Budget
But to the finance minister unemployment is just another economic indicator. It is not an economic indicator. It is people. It is bread and butter on the table, it is dignity, it is respect and we owe it to this country to have a policy of full employment not a policy of high unemployment.
As an aside, whatever happened to the jobs that were to be created by the free trade deal? There do not seem to be any. The only job that this government created is one, a con job, and the biggest con job that this country has ever seen.

The destruction of unemployment insurance, the pressure to lower wages, the use of the unemployed to fight inflation, the lack of new initiatives in the Budget to help unemployed Canadians workall show the government's insensitivity to unemployment.
The Minister of Finance (Mr. Wilson) must realize that if he wants a sound economy, he must invest in the people of this country. That means creating jobs. The NDP maintains that all Canadians are entitled to a job. An unemployment rate of 8.5 per cent is totally unacceptable. It is even scandalous!

In this budget, this government has ignored a very important crisis facing Canadians, one that over 80 per cent of Canadians have identified as a priority concern to them, to their children and to the future. That is the environment. By failing to deal in any way in this budget with the environment, this government has failed Canadians. There is perhaps nothing in the budget that so clearly represents the lack of vision of this country than the inactivity concerning the environment. Nothing shows more clearly how this government is out of touch not only with the problems in Canada, but with our commitments to the international community.
It is not as though this government does not talk about the environment. We have heard many promises regarding the environment. The Minister of the Environment promised a tough environmental agenda for Canada that would include concrete measures and funding to support them. The environment minister promised that it would
be a green budget. My colleague says that we have word inflation, more words but no action on the environment.
There is no intention in this budget to make the condition of our environment a priority. By addressing environmental initiatives, of course, we would create more jobs. But the government plans this budget on increased unemployment, not on planning for the future.
There is not one cent in this budget for alternative energy, research into clean technologies, conservation or recycling. There is not one new initiative to deal with ozone layer depletion or global warming.
This budget demonstrates how ineffective the environment minister has been in promoting his agenda. It demonstrates how little real commitment this government has to the environment. It is a total sham when it comes to action.
Canadians who care about the future of this country and care about our environment must speak out, and write to the Minister of Finance and Minister of Environment to say they want economic planning that plans for the future, that plans for our children and our grandchildren. That is what we want to see in the budget.

The Minister of Finance must now recognize that the most important deficit facing Canadians is the environmental deficit. It is growing all the time. It is a threat to our children. And unlike other deficits, it cannot be repaid.
We must stop it without further delay. Now, Madam Speaker, not in ten years.
Canada has no economic future if our children cannot breathe without danger and if they have nothing to drink and eat.

In conclusion, I want to make several points. The Minister of Finance was very specific with dollar figures in his budget when it came to the kinds of cuts that would take place in social programs and health programs. We know it is going to be some $7.3 billion in five years. There will be cuts to health and post-secondary education, cuts to those things that are an investment in the future. There will be cuts to science and technology, which affects our very ability to compete in a changing world.
February 21, 1990

Those figures are very precise. There are precise figures about the kind of savings there will be by reducing programs for Indian and Inuit people, the kinds of savings there will be from a reduction in overseas development. There are specifics about the kinds of savings we will see from veterans. It is all very specific in the budget.
The budget also talks about the ending of grants to business. The government presents this as dealing with fairness and justice. It is going to end grants to business, but which businesses? Is it small businesses that create most of the jobs in this country and will feel the worst effects of the goods and services tax because of the administrative burden, and fewer purchases? This government does not say.
Is it the over 80,000 profitable corporations that do not pay any taxes? This government does not say. And how much will we save by this budgetary measure that is supposed to assure those less well-off people that the corporations will pay their fair share? Well, there is no figure.
I find that very curious because when this finance minister decides that he is going to cut services to veterans, cut social housing, cut social assistance, cut child care, he knows exactly how much. But when it comes to his friends in the corporate world we see no figures, no projections, no definition of what business he is talking about.
This is the kind of flim-flam and sham that the Minister of Finance is trying to sell to Canadians as his answer to the 1990s. Well, this is the minister's sixth budget and it is absolutely essential that we look at this budget in that context. This Minister of Finance has had six years of economic mismanagement. He has had six years to bring inflation under control. He has had six years to get interest rates down. He has had six years to plan for post-secondary education and research. But what has happened? Now we are told it just did not work.


Lorne Edmund Nystrom: We should deep six him.


Audrey Marlene McLaughlin: My colleague says we should deep six the minister. I think that may be a good piece of advice for the government.
The Budget
On the one hand the government is purposely pursuing a high interest rate to bring inflation down, while on the other hand it is proposing a goods and services tax which by its own admission will increase inflation. It is pretty hard for average Canadians and maybe for average members of Parliament to follow this logic and this kind of economic management.
On one hand you have a policy to bring inflation down and another one to bring it up. That is some balancing act. I would suggest to you, Madam Speaker, that just like those statements about sacred trust of social programs, just like the statements about the goods and services tax not being hidden and that it would develop our economy, this budget simply is not describing the situation as it is. By pursuing conflicting policies, this government has led us to a debt that has doubled since it came into power. This is economic management?
In fact, the government predicts higher unemployment rates in its own budget. This should be a shame to the government, not a so-called economic indicator. History would show that this government bases its budgets on some fairly inaccurate projections. In last year's budget the minister said our interest rate this year was going to be about 10 per cent, and all of the calculations were based on that figure. Canadians who are now looking at interest rates of 14 per cent and more know how much they can trust the projections of this Minister of Finance.
They also know that the high interest rate has added billions of dollars to the deficit the minister says he wants to bring down. For each increase in the interest rate we immediately add $1.7 billion to the deficit. Again this year's budget is based on low interest rate forecasts. Given the course followed by this government, I think we can assume that it is very unlikely to happen so that we will have inaccurate projections of deficit reductions and the deficit will remain high.
In conclusion, this is truly a budget of despair and disparity. For women, for aboriginal people, for the unemployed and for the poor it holds no hope for a brighter future. It means even a larger gap between those who live in the richer provinces and those who live in the poorer provinces. It is tough times for those who live in the Atlantic, on the prairies, in the north. It is a budget totally without vision, without new ideas, a budget that fails to deal with the challenges of tomorrow.

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The Budget
What this country needs is an end to food banks, to homelessness, to soup kitchens. We need a fair taxation system where upper-income Canadians and profitable corporations pay their fair share.


Some hon. members:: Hear, hear!


Audrey Marlene McLaughlin: What this country needs is a government that moves toward social fairness. There should be investment in our people through higher education, job training, employment flexibility and child care. A substantial and immediate cut in interest rates would take billions off the deficit, would assist our farmers, assist small business and get this economy moving.
We need a budget that has a plan to develop and sustain our regional communities. We need to see a budget that has a strong, concrete, specific commitment to the environment.


Some hon. members:: Hear, hear!


Audrey Marlene McLaughlin: We need a budget that will ensure that no matter where you live in this country, from coast to coast to coast, you will have the opportunity to have a job, to have dignity, to stay in that community to build a strong country.

We have to get rid of the Conservative program. Cupidity is not a virtue, compassion is not a vice. We have spent too much time and a lot of effort building a just and humane society, we simply cannot let the Conservatives destroy it now.
I am saying to members opposite that Canadians from coast to coast cannot stomach the Conservative government's lack of vision. They reject free trade, they reject the GST, they reject this budget. They are tired of broken promises. They can no longer stand being losers all the time.

The voices of Canadians are going to be heard. There is a movement growing in this country. The so-called little people are standing up and they are increasingly speaking with one united voice, which is thundering across this country, where people from every background, every social group, every community, every
region are getting together to oppose this government's policies. It is a united voice that is saying: "Enough is enough, we are going to take Canada back".


An hon. member:: Hear, hear!


Audrey Marlene McLaughlin: We in the New Democratic Party say it is time the voices of Canadians were heard. It is time this government listened to Canadian concerns and heeded their advice. The people of Canada can show the way. They have a vision for the future.
To the Minister of Finance, to the Minister of the Environment, to the Prime Minister, I say: Listen to the people of Canada before it is too late.

The Canadian people can show the way. They have faith in the future. There is one thing I want to say to the Minister of Finance to the Minister of the Environment, to the Prime Minister: Listen to the people of Canada before it is too late!

This budget is yesterday's budget. This budget presents not one new idea, not one vision for the future. Therefore, I move:
That the amendment be amended by adding the following words:
(4)	for failing to protect the environment;
(5)	for failing to provide support for Canada's farm communities;
(6)	for failing to share the burden of taxation by closing tax loopholes which permit profitable companies to escape paying taxes;
(7)	for failing to provide aid to Atlantic Canada; and
(8)	for failing to provide a national program of child care.


Some hon. members:: Hear, hear!


Hon. Gilles Loiselle (Minister of State (Finances)):: Thank you, Madam Speaker, for giving me this opportunity to participate in this important debate.

The motion before us today to approve, in general, the budgetary policy of the Minister of Finance deserves the full and wholehearted support of all members of this House. Approval of the motion will mean acceptance of the goals set out in the budget; deficit reduction and putting the economy back on the road to sustainable growth.
February 21, 1990

The message of the budget is clear. It calls on Canadians to persevere in the battle to control spending, reduce the deficit and to fight inflation.
Moreover, it holds out the promise that its measures will put us back on the deficit track set out in the 1989 budget, which will lead to a dramatic cut in the federal deficit to $14 billion by 1993-94 and to $10 billion in 1994-95. That track will allow the burden of national debt to begin to be reduced as it shrinks relative to our national income.

The policies announced in the budget, Madam Speaker, will move our national finances ahead, so that spending on debt interest will shrink from 35 cents of every revenue dollar today to 26 cents and falling in 1994-95.
My confidence in the policies set out in the budget is well placed. It stems from the fact that they are the same policies this government set out in 1984 and has been following since, with positive effects for the economy. In that November 1984 Economic Statement the Minister of Finance set out a plan with two main thrusts: to put the government's financial house in order, and to foster a dynamic, innovative and competitive private sector.
Our actions since then have challenged Canadians and encouraged them to improve their ways of doing things, but the real source of pressure for change is not the government, Madam Speaker, it is the rapidly evolving and increasingly competitive world in which we must earn our way.
Our policies have really recognized this. They promote the development of a dynamic, flexible economy that responds quickly and effectively to new challenges and opportunities; a more open and market-oriented economy that brings out the best of our competitive abilities.
Let me remind you, Madam Speaker, of the major initiatives taken by the government to strengthen the structure of the economy and encourage the development of growth and job creation.
The Canada-U.S. Free Trade Agreement has opened up new opportunities in the large American market. This will help build a stronger, more competitive economy. It
The Budget
will lead to an ongoing 3.5 per cent increase in our economic output, in all regions of the country.
Deregulation of the energy and transportation sectors, through scrapping the National Energy Program and other initiatives, has reduced government interference in these key parts of the economy, and encouraged greater competition and efficiency.

Reform of the income tax system has lowered tax rates and eliminated tax breaks and loopholes. The system is now fairer, and provides greater incentives to work, save and invest, with a resulting increase in economic output.
Our Labour Market Development Strategy seeks to improve the flexibility of the labour force. Better training means better jobs. A better trained and more flexible labour force can adapt more quickly to new technology and change.
Privatization of Crown corporations and sale of investments where government ownership is no longer needed to meet public policy objectives has led to greater economic efficiency and deficit reduction. Since 1984, holdings in 18 corporations have been sold or reduced, and eight other corporations have been dissolved. As well, the financial health of many Crown corporations has substantially improved.
Reform of the sales tax system is a necessary further element in our economic plan. The existing manufacturers' sales tax impairs our economic competitiveness, is unfair, and does not provide a secure source of income to help control the deficit. It destroys jobs and costs Canada $9 billion in lost annual output. The GST will unlock our potential for new growth and job creation. It will be a fairer tax, because of the refundable tax credit, and it will provide a secure source of revenue to the government.
Taken together, all these reforms will significantly increase the capacity of the economy to produce goods and services. They raise potential growth from an average of 2.75 per cent a year to over 3.25 per cent. That means more jobs and a higher standard of living for Canadians.

I said earlier, Madam Speaker, that this approach has been successful. The proof lies in the record which shows that Canadians have responded well. About 1.6 million

February 21, 1990
The Budget
more Canadians have jobs today than in 1984. Average family and individual incomes have steadily increased, both in total dollars and in real, after-tax income. There are now 750,000 fewer Canadians living below the poverty line.


Some hon. members:: Hear, hear!


Gilles Loiselle: Despite these successes, more remains to be done. This brings me to the second element of our policy-gaining control of our national finances.
Let me remind you that in 1984 the government was living far beyond its means. It was spending more on programs ans services than it was taking in through taxes and other direct revenue. Because of this, it had to borrow $16 billion to cover the difference between revenues and program spending. In addition, on a separate track, the $200 billion debt was generating over $22 billion in annual interest charges.
We recognized that the first task was to tackle the deficit on program spending, and launched a broad and sustained effort to reduce expenditure. Our first priority was cutting the cost of government operations, that is, the day to day costs of running departments, including salaries, travel, equipment and maintenance.
In the five years since 1984 these have been cut from $17.4 billion to $16.8 billion. Government is functioning with less money despite a larger workload.
Thus, in December 1989, the President of the Treasury Board announced further steps to eliminate waste and improve efficiency. We are continuing with the job of lowering government's overhead costs.
We then tackled government program review. We undertook a major effort to reform and improve them. Some outdated programs were eliminated, and others were restructured or restrained.
With tight discipline and good management, program spending has been reduced from 19.5 per cent of the economy in 1984 to 16 per cent this year. That is equivalent to a $22 billion reduction in spending.


Some hon. members:: Hear, hear!


Gilles Loiselle: Obviously, our financial problem was not caused just by too much spending. We were also very much aware that revenues had declined as a share of national income. Special tax breaks and flaws in the sales tax system were contributing to this decline. By eliminating tax breaks and loopholes, and reforming the tax system, we have increased revenues. As a proportion of national income, revenues have now returned to their average level for the 1970s.

In 1987-88 we passed a major milestone on the road toward financial soundness, when the operating deficit on programs was turned into a slight surplus. That operating surplus now stands at $9 billion. It results from a fundamental structural change in the balance of spending and revenues. And 70 per cent of the progress is the result of expenditure restraint, not revenue increases.
Having a surplus on program spending means we are working our way toward also dealing with the second component of the deficit problem. Despite the fact that the annual growth of the debt has fallen from 24 per cent a year in 1984 to less than 10 per cent, it is still growing faster than the economy-faster than our ability to pay.
The deficit of $200 billion we inherited in 1984 has grown by $150 billion. Over 80 per cent of the increase has been due to the compounding interest on the original debt. This demonstrates clearly how urgent, and how difficult, it is to break the debt cycle. It also helps to explain why our annual deficit is still at $30 billion, despite the reduction in spending and increased revenues.

Yes, Madam Speaker, the $200-billion debt cost us $22 billion a year in interest for which we did not have the money because we had been left with a deficit that did not even allow us to pay for current expenses- We changed this negative situation-$16 billion-into a positive one, with a $9-billion surplus this year.

So 80 per cent of the increase has been due to the compounding interest on the original debt. How can you pay a debt without paying the interest on the debt and where do you take the money when you have a deficit? The growth in the public debt will ultimately consume the opportunities we seek for our children if it is not brought under control. We have a responsibility toward all future Canadians to protect their future. The most effective way to deal with this problem is to deal with high inflation. Only in that way will interest rates decline
February 21, 1990

and the economy be put back on a sustainable path of expansion.
Inflationary pressures are strong after seven years of strong economic growth. The demand for goods and services has outpaced the economy's productive capacity. To lower inflation, costs have to be kept under control, not just in the federal government but in all areas. But there are no shortcuts or easy ways to bring down inflation. Least of all can this be achieved by arbitrary reductions in interest rates.
Experience makes clear that to run away from the problem is futile. Experience shows that the monetary policies now being followed are the ones that will work.
Let us be clear about the problem. The Liberal government demonstrated that it did not understand the problem. High interest rates are only a symptom, not the problem itself. Underlying inflationary pressures are the cause.
The key to a successful economic policy is to deal with the underlying problem. Our measures work together with the restrictive monetary policy of the Bank of Canada to ease demand and reduce inflationary pressures. They will reinforce each other and pave the way to strong sustained growth and job creation.
There is no question that the budget's measures are tough. There is no disguising that fact. This reflects the reality that there are no easy ways to cut spending after several years of restraint. There is no truth in the belief that spending can be substantially reduced without having a real impact outside the government.
Together with measures already announced by the President of the Treasury Board, the budget's measures will produce savings of $3 billion in 1990-91 and almost $4 billion in 1991-92. Over $19 billion will be saved over the next five years.

To achieve these savings, Madam Speaker, we examined all areas of spending. We had to make some difficult decisions. In making them, however, have been
The Budget
sensitive to their effect on the finances of individual Canadians.
Therefore, major transfers to persons, such as benefits to seniors, family allowances and unemployment insurance benefits will not be affected. Nor will equalization or Canada Assistance Plan transfers to the poorer provinces.
We have capped the growth of a number of programs at five per cent a year for the next two years. Such programs include: CAP payments to Ontario, British Columbia and Alberta, which are fiscally stronger than the others; and spending on defence, foreign aid (ODA), native programs and science and technology.
A number of other programs have been frozen at current levels for two years. Per capita cash and tax transfers to the provinces under Established Programs Financing will be held constant, so that total transfers will grow as provincial populations grow.
Some programs will be cancelled or reduced. We will not proceed with assistance to the OSLO oil sands project, or with the Polar 8 icebreaker project. The Canadian Exploration Incentive Program has been cancelled.
We will be taking a more businesslike approach, to our help for business. Grants will be eliminated, beginning in 1990-91, with certain exceptions. Financial assistance will be repaid on more rigorous terms. This approach places the emphasis on investment in economic development, rather than on subsidizing the private sector.
As a result of this move, ongoing financial contributions to business will essentially be limited to programs for agriculture, science and technology, native economic development, social housing, regional transportation in Atlantic Canada and regional development incentives focused on small and medium-sized business.
Further measures will be undertaken to increase efficiency and reduce the cost of government operations. More Crown corporations will be privatized, and more holdings will be sold. Dividends from Crown corporations will be increased. And the two per cent annual limit on the growth of government operations and maintenance budgets will be extended to 1994-95.

February 21, 1990
The Budget
These measures, Madam Speaker, mean that program spending will grow by just under three per cent next year, which is well below the rate of inflation. The measures in the budget bring us back on to the deficit track set out in the 1989 budget, and cut the anticipated deficit for 1990-91 to $28.5 billion.

By 1994-95, we expect the deficit to decline further to $10 billion. The operational surplus will reach $31 billion with program spending falling to 14.2 per cent of national income. The burden of debt will be reduced as the national debt shrinks relative to the national income, and we will begin to pay down our bonds and treasury bills.
In short, we will be regaining the flexibility we need to make real choices about the country we want to pass on to the future. We will be able to do this in a climate of lower inflation, lower interest rates, sound economic growth and more jobs and opportunities in every part of Canada.
The measures in our budget show that we are willing to work hard to reach our goals. If we maintain our resolve we will win through to lower inflation and a stronger economy. I invite all members of this House to join with the government in fighting this battle for the future-not just our future but the future of all Canadians to come.


Mr. Samson:: Madam Speaker, I listened very closely to the delivery of that unbelievable speech from the hon. member opposite. I sometimes wonder if we are talking about the same topic.
The government said that there are no new tax increases in this budget and there was a rousing round of applause for the minister when he made that statement. I would like to point out to the members opposite, in case they missed it, that the veterans in this country who are going to be paying $6 more per day for health care services are getting a tax increase. I do not care what you call it. If it is a price increase for health care it is a tax increase, it is an increase in something that they have to pay. You can cover it up and cloud it over any way you like. The veterans who defended this country do not deserve this slap in the face and the government ought to be ashamed of itself for even suggesting it.
I would like to ask the member for an explanation. Government members talk about not having any tax increases. Yet, in the same breath, they are telling us that in this year $1 billion in transfer payments to the provinces will be eliminated. Next year there is going to be a $1.5 billion reduction in those transfer payments. Last night we heard the Minister of Finance tell us that the provinces should have no problem whatsoever in recouping this money without raising taxes.
The finance minister has all the answers. Surely he must have a plan, surely he must have an answer. Can he tell us how the provinces are going to raise $1 billion and $1.5 billion without raising taxes to anyone? I would like the member opposite who just spoke to explain to us how this is going to happen. I would be interested in hearing the response.


Gilles Loiselle: Madam Speaker, I would like to remind the hon. member that, whether he likes it or not, there were no tax increases in the budget. There were expenditure reductions, and we do not apologize for them. They are needed, because our capacity to help the veterans and the other people we care for would be considerably hampered if we were not to deal with this very real problem.
This is what our friends across the floor failed to do. They left this country with a very hard inheritance. They laugh at the debt problem. They laughed at it when they were in power and that is why we are in this mess today. We have worked at it and we are gaining over it.
As for the other question raised by the hon. member about the $1 billion diminution in transfer payments to the provinces, the government has been very careful over the last five years to keep expenditures as low as possible, in fact to reduce them. We have very often been accused of doing that too much. We have kept, on average, increases in our expenditure at about 3.5 per cent.


Cyril (Cid) Samson: How come the deficit went up?


Gilles Loiselle: The deficit went up because we had to pay interest on the debt and we did not have the money to pay it. They will never understand this. A debt of $200 billion accumulates interest of $22 billion a year, and that is not touching the debt. We did not have the money. We had a deficit in our current operation of $16 billion. We do not print money. We have to get it. We achieved a $25
February 21, 1990

billion turnaround in our last five years. This is a great achievement.
We have cut our spending, keeping it at the rate of growth of 3.5 per cent. Meanwhile, our transfers to the provinces year after year were increasing by 6.5 per cent. Looking at the over-all situation, at the need to get this in order and to continue in our effort, we felt that we could not leave aside such a massive program. Next year in transfers to the provinces we will be spending $35 billion. This is a large amount of money. You cannot cut what you do not spend so we had to look at it and we had to do it in a very fair way.
We had been asked by many ministers of finance of the various provinces, including my own province, to be attentive to the fact that there are provinces where the inflation pressures were higher, such as in Ontario, Alberta and B.C.
We have been very attentive to make sure that we spread these necessary cuts around. In total, these reductions, not in the transfer themselves but in the growth of transfers from 6 per cent to an average of 3 per cent-a little over 3 per cent in Quebec, a little over 4 per cent in the Atlantic provinces, and about 2 per cent in Ontario-were for the very purpose of sharing together in this national problem of reducing our expenditure. They represent less than 1 per cent of the total income of the provinces.
So it is a problem that can be dealt with if the provinces agree to share in this effort. They have to, because if we do not put this problem to rest once and for all over the next few years, we will not be able to transfer anything to anybody. This is what we are doing because our capacity to maintain the programs would disappear.


Mr. Pickard:: Madam Speaker, I appreciate being able to address the Minister of State for Finance with a question.
I found it very interesting that he would stand in response to my colleague's question and suggest that six years ago the Liberals had a difficult situation with a budget deficit of $22 billion. I have noticed that your budget deficit last year was $39 billion, about double.
I found it interesting that the national debt was $168 billion in 1984. It is now $350 billion. Taxes have been
The Budget
increased 31 times by your government and those 31 increases have brought $50 billion more revenue into your coffers, bringing the total coffers to $70 billion, which national taxes were in 1984. Today, it is $120 billion.
And you stand and brag about improving the economy in this country. There has been tax grab after tax grab after tax grab. You have changed direction now, but you have not changed in one area. You still seem to blame the Liberal party. After five years of mismanagement, five new budgets and a sixth one now, how on earth do you have the nerve to stand and blame the Liberal government for your folly for five years when you have increased the taxes 100 percent and you have doubled the debt, doubled the deficit-


Some hon. members:: Order.


Mr. Fretz:: Point of order.


Jerry Pickard: I can ask a question with regard to-


The Acting Speaker (Mrs. Champagne):: On a point of order, the hon. member for Erie.


Claude Girvin (Girve) Fretz: On a point of order, Madam Speaker. The hon. member keeps addressing the hon. minister. I realize he may be a new member here but surely he knows that his comments have to go through the Chair.


The Acting Speaker (Mrs. Champagne):: It would be appreciated by the Chair if he would put his question to the minister through the Chair.


Jerry Pickard: I stand corrected, Madam Speaker. I am sorry they did not go through the Chair. I was misdirecting my comment. I was trying to deal through the Chair to the hon. minister. I was really baffled about how he directed his comments to the Liberal party. I guess sometimes things are misdirected.
I would guess, from what I have heard from the hon. minister, that there has been a tremendous misdirection about the economic woes of Canada in 1990. That misdirection has come from the Minister of Finance and the Minister of State for Finance. In all honesty, I would like to hear a justification of how he can support blaming Liberal governments when six budgets have come in, when there have been so many tax increases, and still we have an economy in a terrible state.

February 21, 1990
The Budget


Gilles Loiselle: Madam Speaker, the hon gentleman said I do not understand. That is your problem. You have never understood this problem and you still do not understand it. To repay not a $100 billion debt but a $200 billion debt would mean $40 billion of repayment a year. The interest on the debt was $22 billion. In that current account there was a $16 billion deficit. You should revisit your numbers. This is the problem. To pay it back we would need to have $40 billion on top of our expenditures. This is the legacy you have left to this country and you should be ashamed of it.


The Acting Speaker (Mrs. Champagne):: The period for questions and comments has now expired. I think the
day should be coming close to an end when everything is going across the floor without coming through the Chair. I understand there is an agreement between the parties that the Chair should call it 6.26 p.m. Is there unanimous consent for that?


Some hon. members:: Agreed.


The Acting Speaker (Mrs. Champagne):: It being 6.26 p.m., the House will now adjourn until eleven o'clock tomorrow morning. Accordingly, this House stands adjourned until tomorrow at 11 a.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6.19 p.m.