1991-02-27

STATEMENTS PURSUANT TO S. O. 31


Mrs. Marlene Catterall (Ottawa West):: Mr. Speaker, yesterday the Minister of Finance and the government launched a vicious attack on workers across Canada by imposing a 3 per cent cap on Public Service wage increases. They have told every employer in Canada that it is okay to throw away the right to bargain, it is okay to threaten workers with job losses and contracting out. If all that does not work, the government is prepared to interfere with conciliation and arbitration and force workers back to the job.
Workers in every community across Canada will suffer from this cynical severe attack on the hard won rights of workers. When 1.3 million Canadians are out of work, taking purchasing power away from consumers only guarantees that suffering will be even deeper and more prolonged.
The Minister of Finance has told working people they are going to have to swallow the devastating affects of his high interest rate policy, his high dollar policy and his high unemployment policy. They are going to pay twice for the GST) once at the cash register and next in their pay cheques.
Workers in Canada are not going to savage each other to survive, they are going to savage this government.


GULF WAR
Mr. Svend J. Robinson (Burnaby-Kingsway):: Mr. Speaker, yesterday, as Iraqi troops withdrew from Kuwait, pursuant to UN resolution 660, coalition aircraft, including huge American B-52 bombers, dropped cluster bombs and 1,000-pound bombs on the fleeing troops. U.S. airmen said: "We hit the jackpot. It looks like the Iraqis are moving out and we are hitting them hard. It is not going to take too many days before there is nothing left of them."
The Prime Minister, exercising what former UN ambassador Stephen Lewis has described as poodle diplomacy, has refused to state what role Canadian CF-18s are playing in this carnage.
Today, Foreign Minister Tariq Aziz stated that Iraq accepts all relevant UN resolutions. It is now clearer than ever that the U.S. is determined to press on far beyond any UN resolution to achieve their agenda of the total destruction of Iraq's military, political and economic structure.
When will our Prime Minister finally show some independence and tell George Bush that enough is enough, this mad war must stop and that Canada will no longer be part of the killing machine.


THE BUDGET
Mr. Peter L. McCreath (South Shore):: Mr. Speaker, the Minister of Finance is to be congratulated for setting a clear course for recession recovery and the restoration of economic growth and renewed prosperity.
I, for one, was brought up to believe you have to pay your bills and I am sure most Canadians believe their government should do the same thing. The government can serve Canadians best by bringing inflation and interest rates under control. A strong economy is the best road to full employment and prosperity for Canadians. I commend the Minister of Finance for leading the way by freezing his own salary, and I am sure all members will join me in agreeing to the cap on our salaries. It is only reasonable that we should be joined in this restraint by our fellow employees in the Public Service.

February 27, 1991
The continued cap in growth of EPF payments sends a strong message to the provinces that they too are part of the problem, thus must be part of the solution. The Minister of Finance has set a solid course. Let us all get behind him with our full support.



Hon. Warren Allmand (Notre-Dame-de-Grace):: Mr. Speaker, yesterday's Tory Budget completely forgot Montreal. In Montreal, the unemployment rate is now 13.4 per cent. The government has made cuts in unemployment insurance, the job development program, social housing, medicare and payments to the provinces.

In a report dated February 4, Statistics Canada said that Montreal had more poverty than any other city in Canada. Twenty two per cent of the residents of greater Montreal live below the poverty level compared to 13 per cent in Toronto. And what is the Conservative government's answer? "Too bad, boys, get help somewhere else. We can find $1 billion for a war in Iraq but we cannot find money for housing, hospitals and jobs at home." God bless Canada.
This government was so intimidated by the headlinegrabbing protests over last spring's budget proposals to eliminate women's centres funding that it now hides behind the thin veil of ministerial consultation. Canadians are not fooled. They demand to know who is being targeted and why.



Mr. Guy Saint-Julien (Abitibi):: Mr. Speaker, I was glad to see that in the 1991 Budget, program expenditures will increase by $7.5 billion in 1991-92, and also that the 6.9 per cent increase over the previous fiscal year will go to where needs are most pressing, i.e. $3 billion for assistance to the unemployed, $1.6 billion for the elderly, $1.3 billion for farmers in difficulty, $600 million to support our troops in the gulf and $1 billion for all other programs.
Mr. Speaker, for the sale of equity, the disability tax credit will be increased by $125 from 575 to $700 as of the 1991 taxation year. This means that federal assistance to disabled Canadians will increase by $35 million per year.



Ms. Dawn Black (New Westminster-Burnaby):: Mr. Speaker, I rise today on behalf of all Canadians to demand honesty from this government.
Yesterday, the finance minister announced his plan to slash $75 million this year, and $125 million every year thereafter, from groups working for equality and social justice. But his government has refused to tell Canadians from where those amounts are being taken. Nor will it tell us in the estimates, the traditional forum for revealing the victims of this kind of budget slashing.
What should Canadians make of their government's spineless secretiveness? There is only one conclusion, Mr. Speaker. This government plans to knock off equality-seeking groups one at a time in order to escape organized opposition.


GOODS AND SERVICES TAX
Mr. Girve Fretz (Erie):: Mr. Speaker, a headline to a newspaper article reads:
"U.S. firms warned Canada's GST to hurt them".
American companies should wake up and smell the GST, says a U.S. tax expert.
"I think American companies are going to be the big losers under the goods and services tax", said Cliff Massa, a Washington lawyer who specializes in value-added taxes.
Now largely ignored by U.S. firms, the seven-per-cent GST will make Canadian competitors more efficient.
"I do not know why companies here seem so disinterested."
Massa, who has been sounding the GST alarm in the United States for the past year, said Canada's old federal sales tax was a boon to U.S. companies.
"I think everybody understands (the federal sales tax) discriminated against the Canadian manufacturer."

February 27, 1991

"It has both amazed and frustrated me, in that I don't think
Americans have been paying any attention to the GST," said Massa.


THE BUDGET
Mr. Rey Pagtakhan (Winnipeg North):: Mr. Speaker, the budget stands as the last will and testament of medicare. It is impossible to conceive the government can surrender its bargaining power of transfer payments and still keep provinces from bolting from the national health care system.
Provinces are being forced to close hospital beds. Deaths occur while waiting for surgery.
This budget will create a two-tier system of health care. Where you live and what you earn will determine your status in the system.
And who will suffer the most? The struggling middle class, the seniors and the poor.
Health care is a fundamental right of Canadian citizenship and now the government is destroying this right. For six years this government has failed to enforce the Canada Health Act. Now we are asked to believe national health standards will be upheld with new legislation.
We do not need new legislation to save us from user fees and extra billing. What we need is a new government.


AGRICULTURE
Mr. Greg Thompson (Carleton-Charlotte):: Mr. Speaker, recently the United States imposed a restriction on Canadian seed potatoes because there were reported cases of potatoes being contaminated with the plant killing virus PVY-N.
The Department of Agriculture has indicated that the infected areas have been clearly identified and the spread of the virus has been confined, ensuring the successful eradication of the disease.
New Brunswick seed potatoes received a virtual clean bill of health as a result of the various tests.
As a result, the Americans amended their restrictions and are now allowing New Brunswick potatoes to cross
the border. However, the Americans continue to have stringent controls on P.E.I. potatoes. The lesson for Canada is simply this, that we must ensure top quality products only are exported out of our country into neighbouring countries to ensure quality.


THE BUDGET
Mr. Bob Speller (Haldimand-Norfolk):: Mr. Speaker, my constituents in Haldimand-Norfolk were shocked and dismayed at the callous attack the Minister of Finance took on the tobacco farmers and communities of my area.
Did the minister have any idea of the economic hardship that the people of Haldimand-Norfolk have been going through because of his economic mismanagement?
Did he have any idea that the implementation of this tobacco tax would push many of my constituents over the edge into bankruptcy?
Even though the minister collects over $5 billion a year with this tobacco tax, less than $10 million of that is returned to the farmers whose livelihoods depend on it.
Did the minister not know what the impact of his budget would have on the communities and the small entrepreneurs surrounding the tobacco belt?
Did the minister not know that there is anger and frustration and that people are desolate and, in some cases, without hope, and that they are taking this frustration out on themselves and, in some cases, on one another.
Tbbacco farmers have subsidized the minister's programs long enough. It is time the minister put his money where his mouth is and either buy tobacco farmers out of give them the long-term certainty that they need to survive.



Mr. Doug Fee (Red Deer):: Mr. Speaker, following a budget there is always an outcry from those free spenders who feel the government has unlimited resources. We are hearing this chorus again today, but we are not hearing it from the average Canadian, the taxpayer, the person who pays the bills.

February 27, 1991
Our taxpayers have had it with government spending and this budget gives them hope.
The Minister of Finance has listened to those who demand that government operate in a more fiscally responsible manner. Business cannot survive if it overspends and neither can our country.
Committing all GST revenue to the debt servicing and reduction fund is a positive step. Canadians do not like taxes and appreciate the legislated assurance that GST revenues will go toward debt reduction and not new spending.
For the first time, we will put a ceiling on how much politicians can spend. My Private Members' Motion No. 684 asks for this and I am pleased to see it included in the budget.
The country faces difficult times and the minister has chosen to make tough decisions and thinking Canadians are going to support him.



Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, the champagne bottles were popping all night in the boardrooms of The Business Council on National Issues and the Prime Minister's friends.
Unscathed in their tax shelters, big business has been toasting their beloved Minister of Finance. He has relentlessly unleashed devastating fiscal bombs on the working poor and middle class Canadians.
Budget damage assessment will show that he has inflicted severe hardships on just about everybody except his cronies, the 150 members of the BCNI-and the deficit.
The Minister of Finance said last night and I quote:
I have heard the anguish of people who have lost their jobs or
their businesses.
Yet, while the unemployed line up at the food banks, I can only hear Tom d'Aquino and his gang clinking the glasses of their tax-deductible cocktails.



Mr. Stan Wilbee (Delta):: Mr. Speaker, I rise today to commend the finance minister on the new tax measures he has introduced to assist disabled persons.
Last June, the Standing Committee on Human Rights and Status of Disabled Persons chaired by our colleague, the hon. member for Oxford, tabled a report calling on the government to make the economic integration of disabled persons a national priority.
The important new steps taken in yesterday's budget constitute one element of this strategy to promote equal opportunities for Canadians with disabilities.
They build on an impressive series of initiatives to improve the quality of life of Canadians with disabilities and remove barriers to their full participation in our society.
By assisting both employers and employees, these new tax measures will help ensure that disabled Canadians have equal opportunity to participate in the workforce.


FILM INDUSTRY
Ms. Mary Clancy (Halifax):: With the Tories' cut of $28 million to Telefilm Canada, Canadian film makers will be singing the Bye, Bye Blues.
Since this government entered into close trade relations with the Americans, Canada's film industry has suffered from the divided loyalties. The government first cut the tax incentive program for film and video production which was $200 million yearly.
Then it failed to produce distribution legislation to increase the number of Canadian films on our screens to 3 per cent against its own task force recommendations and promises but close to the heart of the finance minister's American cousin, Jack Valenti.
Not only could the Telefilm freeze impact on the feature film industry, but it also could become une histoire inventee for the CBC as it receives about $31 million yearly from the broadcast fund.
It is clear to this side of the House that this government is editing its film policy and determined to leave the Canadian film industry on the cutting room floor.



ORAL QUESTION PERIOD


Ms. Sheila Copps (Hamilton East):: Mr. Speaker, let's get one thing clear.


Some hon. members:: Oh, oh.


Sheila Maureen Copps: Canadian consumers did not cause this recession. World stock markets did not cause this recession. The Persian Gulf crisis did not cause the recession.
If the Minister of Finance wants to know who caused the recession, he should buy a mirror, pay the GST and look in it because he made this recession.
I ask the Prime Minister why, in this time of recession, he allowed the Minister of Finance to cut social and job programs at a time of devastating unemployment. Why did he allow the Minister of Finance to cut housing programs at a time when emergency shelters are bursting at the seams?
Why did the Prime Minister approve a budget which attacked the victims of the very recession he and his government created?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, I might remind the hon. member of something that she said about a year or so ago.
She said: "We face the danger point with the deficit." She went on to say: "I think it is important for any leadership candidate to go to the countiy and to preach fiscal sanity."


Some hon. members:: More, more.


Michael Holcombe Wilson: I would also draw to her attention comments that were made yesterday by representatives of the provincial government that is the greatest amount in debt and the one that is facing the same type of problem that we are in the federal government.
Mr. Hubert Kitchen, the Minister of Finance of the province of Newfoundland, said: "Mr. Wilson's budget is quite a responsible one given the times in which we live and given the essential importance of all governments in Canada of living within their means. I think he has made
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a sincere attempt at that. I think we should give him credit for attempting to do better."


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: This is the essential choice that Canadians face. We either live within our means, or we move to the approach that the hon. member is suggesting that we take of saying: "Let's forget about fiscal sanity," to use the words that she used last March.
We must realize that we had been running, until 1984, government spending far too quickly, averaging 13.8 per cent per annum. It is important that Canadians and the hon. member for Hamilton East understand the significance of this budget in getting us back to fiscal sanity.


Sheila Maureen Copps: Mr. Speaker, his interest rate policies have failed. His employment policies have failed. His tax policies have failed. This is a minister who is not in a position to talk about fiscal sanity.
Could the Prime Minister explain why he is allowing the Minister of Finance to destroy our country's system of universal medicare? How can the Prime Minister pretend, on the one hand, to support universal medicare and then destroy funding for it? How can the Prime Minister tear the heart out of our health care system at a time when the very nature of the country depends upon the hallmark of decency and caring that is reflected in our health care system?


Hon. Perrin Beatty (Minister of National Health and Welfare):: Mr. Speaker, how soon former Liberal leadership candidates forget what they once said.
According to the Manitoba Dauphin Herald, when the hon. member opposite was running for the leadership of the Liberal Party, she said this: "Copps said if she is Liberal leader and Prime Minister, she will reform the income tax system and cut government spending instead of imposing a tax".
How soon they forget.
What threatens the social programs that are important to Canadians is the fact that out of every dollar that goes to Ottawa in tax revenues, the first 35 cents goes just to pay the interest on the national debt. That means that each Canadian, every man, woman and child in this countiy, has a debt in Ottawa of over $15,000.

February 27, 1991
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How much higher is the hon. member prepared to see that go, or will she be honest with Canadians and say that it is time that this generation started to pay its own way?


Sheila Maureen Copps: Mr. Speaker, my question is directed to the Prime Minister, who was supposed to be responsible for Canadian unity. He knows this Budget is not only anti-Quebec but anti-Canadian as well. The federal government is forcing the provinces to introduce user fees. It is forcing them to cut health care by cutting its health insurance program. The federal government cuts payments and still asks the provinces to provide the same services. Could the Prime Minister inform the House, at this difficult time in Canada's history, why he is attacking health insurance, the only program that unites Canadians in Quebec, Ontario, western Canada and the Maritimes? The only program in which all Canadians really believe? Is the Prime Minister going to tell us he is willing to sacrifice the health insurance program to the national debt?


Henry Perrin Beatty: Mr. Speaker, this is not the first time that members opposite have taken the approach of trying to frighten the elderly, the sick and the poor. It is a tactic that is reprehensible. It was a tactic that was followed by them in the last election and was rejected by Canadians then. It will be rejected by Canadians now.
The federal government is not asking the provinces to do anything that the federal government is not prepared to do itself. Transfer payments to the provinces will go up by some 3.7 per cent, while spending on federal programs will be going up by 3.4 per cent. Mr. Speaker, if you look at the cost to the provinces, this amounts to less than one-half of 1 per cent of provincial revenues. And to suggest that this is the death-knell of medicare is simply Liberal scaremongering once again.


Some hon. members:: Hear, hear.


Mr. John Manley (Ottawa South):: My question is for the Minister of Finance, who seems to enjoy quotations.
Back in 1982 when he wanted the job of presenting budgets, he said this: "The government must begin to realize that it is individual people who are being hurt. We cannot stay here in an ivory tower in Ottawa; we must deal with individual Canadians who are losing their jobs and their businesses."
Can the minister explain how a $100 million cutback to the Canadian Jobs Strategy and interest rates which he projects to be in excess of 10 per cent will help individual Canadians keep their jobs and businesses?


Michael Holcombe Wilson: Mr. Speaker, I think my hon. friend should search a little longer for quotes, because I think he will find that consistently through all my time in government I have been cautioning about the growth of deficits and debt.
When we faced the preparation of this budget, we were looking at a budget deficit of $35 billion, which we have been able to bring down to a deficit of $30.5 billion.
What I am hearing from hon. members opposite is that they would want to increase that deficit from $35 billion to $36, $37, $38 billion. That is completely unacceptable. That would result in an increase in interest rates, and the people he is referring to in that quote he took of mine would be the first ones who would be hurt.
We have designed this budget to bring interest rates down. We are doing that through legislated controls on government spending, through getting the deficit down from where it would have been and getting it down even further next year, and by bringing in inflation controls, inflation targets, which are designed to bring interest rates down. That is the fundamental difference between the government on this side of the House and the Liberal Party on the other side of the House. We are going to bring down interest rates to ignite the economy. The Liberals on the other side would just spend their way into oblivion.


Some hon. members:: Hear, hear.


John Paul Manley: Mr. Speaker, the minister's problem is that he thinks deficits are about numbers. Deficits are also about people.


Some hon. members:: Hear, hear.
February 27, 1991


John Paul Manley: According to yesterday's Budget, even if economic recovery begins in the second half of this year, we will still have a million and a half unemployed in this country.
Mr. Speaker, I have another quote. The Minister of Finance also said, and I quote:

"When people are struggling for survival, when people fear that they will lose their jobs, there is not much trust".

In light of what he said, could the minister explain how his Budget could give a million and a half unemployed Canadians and their families any reason to trust the government?


Michael Holcombe Wilson: Mr. Speaker, in the 15 years leading up to 1984, what we saw-


Some hon. members:: Oh, oh.


Michael Holcombe Wilson: Mr. Speaker, I am going to show hon. members how this is veiy relevant to today.


An hon. member:: You haven't been right on a prediction yet.


Michael Holcombe Wilson: Mr. Speaker, in the 15 years up to 1984 government spending increased at 13.8 per cent per annum, year in and year out. According to Jeff Simpson this morning, he said: "Ottawa became a fiscal cripple in the years 1975 to 1984 when the federal government accumulated nearly $200 billion worth of debt".
The message here, which is totally lost on the Liberals on the other side of the House, is that choices they and we might want to make today have been taken away from us by the runaway spending during that time as the debt built up.
If hon. members do not understand that lesson of the past, they are living in another world.


Hon. Audrey McLaughlin (Yukon):: Mr. Speaker, my question is for the Minister of Finance. The Minister of Finance talks about choices. He talks about making these
Oral Questions
choices but not having any room to move. There are over 1.5 million Canadians who have no choice because they have no job.
I want to say to the Minister of Finance that certainly the Liberal government during the last recession also, I might add, capped old age pensions and family allowances, cut wages, put over a million Canadians out of work. At that time this Minister of Finance said to the then Liberal government: "Why is it that the Liberal government continues to take Canadians to the edge of a cliff and push some of them off?" That is what Canadians are asking this finance minister and this Conservative government.
My question to the finance minister is simply this: Why in this budget is there not any programs to get Canadians back working? That is the choice this minister should be giving Canadians, the choice of a job.


Michael Holcombe Wilson: Mr. Speaker, unfortunately I have to say that my friend opposite totally misunderstands this budget. The essential objective of this budget is to get those Canadians that she is talking about back to work by bringing about lower interest rates. By bringing about lower interest rates we can give the greatest amount of stimulus to the economy that we can.
What I am hearing from my hon. friend is that she would take that $35 billion deficit we are starting with this year, sprinkle around money through all parts of the economy, build it up to about $37 billion or $38 billion. The result of that would be higher interest rates, which would totally overwhelm the limited benefits of that additional spending.
That is the direction we are going with this budget. It is designed through the spending caps, through the reduction in the deficit and the inflation targets to get interest rates down and to keep down in the broadest possible way.


Audrey Marlene McLaughlin: I have a supplementary question, Mr. Speaker, for the Prime Minister.
The Minister of Finance says that creating 1.5 million unemployed is creating prosperity. When the interest rates were even higher, he told us we needed the high interest rates because that was going to be better for the economy. Now he tells us he is going to lower the interest rates with which we agree, but he still says we

Oral Questions
have to have over 1.5 million unemployed. This is totally unacceptable.
I want to ask the Prime Minister who, just two weeks ago, told Canadians in a major speech in Toronto that a major part of national unity was to continue the Canadian tradition of national standards and singled out health care and the environment in particular.
How can the Prime Minister seriously talk of national unity when this budget helps to destroy medicare, does not do anything for the environment and does not have any job creation at all? How can he speak of national unity when he cannot even provide jobs for Canadians?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, my hon. friend says that the Minister of Finance indicated that we must have 1.5 million people unemployed. That is a complete distortion. He never said any such thing, and I know that my hon. friend-


An hon. member:: Oh, oh.


Martin Brian Mulroney: He never said any such thing and I know that my hon. friend at an appropriate time will want to rise and correct the impression that she has given because it is completely inaccurate.
In point of fact the figure of 1.5 million is, however, applicable because it is just about the number of new jobs created by this government since it was sworn in, in 1984. That job creating record was the best of all the OECD countries and led the G-7 with the exception of Japan.
We are now in a recession, which we have acknowledged. We are going to work our way out of it in the real world not by promises of some better day to come by spending borrowed money, but by getting interest rates down, re-energizing the private sector, attracting international investment, and creating durable jobs.


Audrey Marlene McLaughlin: I have a supplementary question, Mr. Speaker, for the Minister of Finance.
There are many ways that the Minister of Finance can justify his budget, but it is the Minister of Finance who said that he projects 10 per cent unemployment. That means about 1.5 million Canadians unemployed. I am
not suggesting he likes it, but that is his projection and so he has projected a budget based on a high unemployment rate.
I want to ask the Minister of Finance another question.

In 1982, the current Secretary of State for External Affairs told the Liberal government that it was asking low and middle-income Canadians to shoulder more than their fair share of the burden. Yesterday, the Tory government made the same mistake. The disadvantaged and the middle class are still footing the bill.
My question is directed to the Minister of Finance. Why didn't the government decide to get rid of corporate tax loopholes in this Budget?


Michael Holcombe Wilson: Mr. Speaker, I do not know how many times I have to say it to the hon. member. The essential purpose of corporate income tax reform was to close a number of the loopholes that she talked about and was quite correct back two or three years ago, but we have seen many of those loopholes closed. We have the banks, which at that time were paying no tax, paying about $1 billion worth of taxes this year.
We brought in the large corporations tax. That is covering all corporations that have capital over $10 million. We have seen in this last year where corporate profits have fallen by about 40 or 50 per cent, but corporate income tax revenues have only dropped about 5 per cent. Why? It is because they do not have the same loopholes that they had before. They have been closed by this government.
If she has any other loopholes she wants us to close, she should bring them to my attention. I would be very delighted to listen to them and respond if it is appropriate.


Some hon. members:: Hear, hear.


Mr. Brian Tobin (Humber-St. Barbe-Baie Verte):: Mr. Speaker, my question is for the Minister of Finance.
February 27, 1991

The Minister of Finance in the province of Newfoundland may be impressed with this budget, but the people of Newfoundland and Labrador know that this is the mother of all budgets.


Some hon. members:: Hear, hear.


Brian Vincent Tobin: What we see is the Minister of Finance and his budget in full retreat in the face of the recession. This minister has forecast a 10 per cent unemployment rate, a 10 per cent unemployment rate at the same time that job strategy has been cut by $100 million.
My question is the following: Why is this government preparing to abandon 1.5 million unemployed Canadians on the battlefield of his made-in-Canada recession, made by this Minister of Finance?


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: Mr. Speaker, I want to remind my hon. friend the last person who used the expression "the mother of all wars" just got wiped out.


Some hon. members:: Hear, hear.


Michael Holcombe Wilson: Possibly my friend will wear his beret into the House tomorrow. He has the moustache.


Some hon. members:: Hear, hear.


Brian Vincent Tobin: Yes, Mr. Speaker, the Minister of Finance is very fast. Saddam promised the mother of all battles. He delivered the mother of all budgets. And they are both in full retreat.


Some hon. members:: Hear, hear.


Brian Vincent Tobin: Mr. Speaker, the simple fact of the matter is that this minister-


Some hon. members:: Oh, oh.


Mr. Speaker:: The hon. member.


Brian Vincent Tobin: Mr. Speaker, the simple fact of the matter is that the government that promised jobs, jobs, jobs is now preparing to leave 1.5 million Canadians unemployed, without shelter, without hope.
Why has the government cut $100 million from job development? Why has this government increased UI premiums by 24 per cent at a time when Canadians are
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being told they are to expect no hope, they are on their own in the face of this recession?


Michael Holcombe Wilson: Mr. Speaker, the hon. member is wrong again.


Michael Holcombe Wilson: We are
reducing the budget of the Canadian Jobs Strategy, that is correct. However, at the same time, we are adding moneys to the amounts that we are putting into training because of the amounts that we are spending in the unemployment insurance fund. We do not like to reduce that amount of funding in the Canadian Jobs Strategy because it is a good program.


Brian Vincent Tobin: Why are you doing it, Michael?


Michael Holcombe Wilson: Well, I will tell you why we are doing it. The fact that we are doing this demonstrates the serious nature of the deficit and debt problem.
My hon. friends opposite are being presented with a choice; they can have a healthy economy through lower interest rates or they can have an economy that is going to drag along with high interest rates. The approach of the Liberals and the New Democratic Party as well is to spend, spend, spend, hoping that we are going to get ourselves out of a problem. All it is going to lead to is higher interest rates and a continuation of that problem.


Mr. Robert D. Nault (Kenora-Rainy River):: Mr. Speaker, my question is for the Minister of Finance. This budget is a direct attack on the labour movement in this country. The government has effectively declared war on its own employees.
In 1989, more than 68,000 Public Service employees earned less than $30,000 and, interestingly enough, two-thirds of those employees were women.
In light of this, would the Minister of Finance now admit to this House that these measures are aimed solely at the total destruction of the union movement and their rights to bargain in good faith?


Hon. Gilles Loiselle (President of the Treasury Board and Minister of State (Finance)):: Obviously, Mr. Speaker, the government will admit to no such thing. If you have read the budget this year and if you have read the budgets of last year and the year before, you will realize that we are facing a difficult fiscal situation, largely due

Oral Questions
to the very large debt, whether you like it or not, that was left to us by your regime.
To illustrate the dimensions of our problem, in order to service that debt next year we will have to pay in excess of $43 billion. This is a very difficult situation at a time when Canadians are being laid off and losing their jobs, when some are reopening agreements in order to help their companies along. We have had to take difficult measures.
We are not attacking our Public Service, far from it. We are asking them to help us in solving this problem for all Canadians.


Robert Daniel Nault: Mr. Speaker, my supplementary is for the same minister.
The government's own Labour Canada statistics confirm that the federal employees' wage settlements have fallen far behind both the private sector and the public sector. Based on these figures and those in my previous statement, will the Minister of Finance now agree to abandon these ridiculous plans to control the federal Public Service wages before its own employees take them to task?


Gilles Loiselle: Mr. Speaker, we have not decided on a wage freeze. We have said there would be a cap on the wage budget.
That being said, I will agree with the hon. member that we have negotiated with the Public Service unions very good agreements. I am proud to say that we have negotiated them below inflation rates. We have managed better than the private sector. We have managed better than other governments and other administrations.
That being said, we are still faced with a fiscal situation. Everybody must bring its share to the solution of that problem. We are taking our cuts and we are bringing in our share. We expect all the employees to participate. I met with all the union leaders this morning except one and we had a very frank exchange. I am very confident that together we can manage this situation.


Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, Canadians needed a budget of hope to get people back to work. What they, got was the same mean ideas which had shut plants, lost jobs and destroyed hope for people right across this country.
My question is directed to the Minister of Finance. In the budget and in Mr. Crow's news conference today, the government committed itself to inflation targets. Will the minister show that he cares about jobs and commit himself to reduce unemployment by setting unemployment reduction targets for this country?


Michael Holcombe Wilson: Mr. Speaker, there is a booklet with the budget called Canada's Economic and Fiscal Performance and Prospects. I refer him to page 37 where there is a chart which shows the inflation record of this country in the 1950 to 1973 period and the impact that that had on the economy. Inflation was 2.8 per cent. The deficit, by the way, was at zero.
Federal programs spending was at a low level relative to the size of the economy. Labour productivity was nearly three times what it was in the 1974 to 1984 period, and the growth in the national income was 5.2 per cent in real terms as opposed to 3.3 per cent in real terms in the 1974-1984 period. During that same period the unemployment rate was a good deal lower than it was during the 1974 to 1984 period. That, demonstrates as clearly and as succinctly as I can the benefits of low inflation.


Steven W. Langdon: In fact, Mr. Speaker, in the minister's own budget, he projects a 10 per cent unemployment figure and what is worse a 9.8 per cent unemployment figure for next year. Is it not possible for this minister to recognize that there are people hurting across this country, that the anguish that he talked about in his speech is real? Therefore for this minister, it should be just as important to put inflation targets into effect, yes, but just as important to put unemployment targets into effect. Will this minister in fact do that? Will he stand up in the House and commit himself to such targets?


Michael Holcombe Wilson: Mr. Speaker, I do recognize that Canadians are hurting. I have heard very directly of the anguish of people losing their jobs and losing their businesses. It is precisely that which drives me to bring in the type of budget we brought in yesterday. It is because this budget is going to bring down interest rates. It is going to bring down inflation. It will result in the employment growth that my hon. friend would like to have.
February 27, 1991

Now, he shakes his head because he does not understand the approach that we are taking. What his-


Some hon. members:: Oh, oh.


Mr. Paul Martin (LaSalle-Emard):: Mr. Speaker, yesterday in his Budget speech the minister justified cuts in spending on the environment as follows: "Since the Green Plan was announced, the economic situation has deteriorated." Mr. Speaker, the Green Plan was announced only two months ago. What does the minister know today that he didn't know two months ago? And what should the minister have known in December that he knows now?


Hon. Robert de Cotret (Minister of the Environment):: Mr. Speaker, the hon. member for LaSalle-Emard is aware that these are difficult times for the economy, and the Budget reflects the measures the government must take to deal with a difficult situation. As far as the environment is concerned, we should recall that yesterday's Budget reconfirmed the federal government's commitment to injecting $3 billion into the Green Plan over a period of six years instead of five. We should also remember that all initiatives described in the December Green Plan will be maintained by the government, and we intend to act on every one of these initiatives.


Paul Edgar Philippe Martin: Mr. Speaker, I cannot believe that an intellectually bankrupt Minister of the Environment stands up to defend an intellectually bankrupt Minister of Finance.
In December, the Minister of the Environment told us, and I quote: "All the moneys for the Green Plan have been committed for the next five years". Now the Green Plan has been trashed. Why? Because Finance has told us that the fiscal deficit is more important than the environmental deficit.
Well, since the minister wants to answer, will he tell me this. Does the minister agree that the fiscal deficit is more important than the environmental deficit? Does he agree that there are no economic opportunities in
Oral Questions
environmental technologies? Does he agree that there are no economic costs in the environmental deficit? Is this minister happy being the lapdog of his colleagues?

Is the minister glad to be Environment's Marcel Masse? [English]


Robert René de Cotret: Mr. Speaker, in the fiscal year just ending, the Government of Canada will spend $1.3 billion on the environment. Given the fiscal plan that was put forward by my colleague, the Minister of Finance yesterday, that will be increased in the next fiscal year by $250 million.
I will spell out exactly what that means for my hon. colleague opposite. That is an increase of 20 per cent. And yes, I believe this government is firmly committed to the environment. Look at the numbers and watch us go-


Mr. Ronald J. Duhamel (Saint-Boniface):: Mr. Speaker, my question is directed to the Minister of Finance.

A little more than a year ago the Prime Minister stated and I quote:
In our second mandate, we are going to focus more and more of our attention and resources on the fundamental building blocks of a competitive society-(on) long-term investment in people, skills training, education, research and development.
Yesterday's continued freeze on transfer payments for education, as well as a $100 million cut in training completely contradicts the Prime Minister's statement. Why? Why this flagrant contradiction?


Michael Holcombe Wilson: Mr. Speaker, first of all, what my colleague has said is simply wrong. The transfer payments to the provinces will increase by 3.7 per cent over the next four years.


Martin Brian Mulroney: They are not frozen.


Michael Holcombe Wilson: They are not frozen. They will be going up.
My colleague from Winnipeg says that is less than the inflation rate. No, that is greater than the inflation rate.

February 27, 1991
Oral Questions
I appreciate that my hon. friend has not read all of the aspects of the budget. But if he would read this, he would see that one of the principal components to improving the competitive position of an economy is to get the macro-economic elements right, that is, low inflation, low deficits, low interest rates. These are all key elements to improving the competitive position. They have to be done in conjunction also with improvements in education, science and technology and things like that. However, we must get the macro-economic elements right and that is what this budget is designed to do.


Ron J. Duhamel: How the
Minister of Finance can know that the transfer payments are going to be more than next year's inflation rate is beyond me and, I suspect, beyond most Canadians.

I have a supplementary. According to the Association of Universities and Colleges of Canada and the Canadian Federation of Students, there will be a massive increase in tuition fees and student debt as a result of the freeze announced by the government. The total increase per student will be at least $1,000 by 1995. Will the minister confirm that from now on, the rich will have better access to education while the middle class and low-income Canadians, especially in poor provinces like Manitoba, will end up being left out altogether?


Michael Holcombe Wilson: Mr. Speaker, let me remind my hon. friend again that the major transfers to the provinces will be going up by 3.7 per cent.


An hon. member:: Not frozen.


Michael Holcombe Wilson: The hon. member raises certain aspects of the impact of this. Those are the responsibility of the provinces. The provinces have to decide how they are going to manage their own fiscal position. I would say to my hon. friend that it is important that the provinces also restrain their spending because their spending has been increasing at almost double the rate of the federal government's spending.


Mr. Bill Blaikie (Winnipeg Transcona):: Mr. Speaker, my question is for the Minister of Finance. The minister said in response to my leader, and he was careful in what he said, that he had closed some of the loopholes in the
tax system that were put there by the Liberal Party over 15 years. But he has not closed all of them. The minister either never reads anything or he has deliberately ignored the many recommendations that have been made to him over the course of the last few years about other loopholes that could have been closed if the minister was serious in his rhetoric about distributing the burden of deficit reduction.
Why did the minister not eliminate the business and entertainment tax deduction, the dividend tax credit, the manufacturing and processing tax credit and the tax breaks that exist for real estate developers in this country, many of whom have become millionaires at taxpayers' expense? Why did he not eliminate those tax breaks if he is serious about everybody contributing to deficit reduction?


Michael Holcombe Wilson: Mr. Speaker, the hon. member has raised four different, what he calls, loopholes. If he wants to raise these in committee, I would be glad to give him a specific response.


Some hon. members:: Oh, oh.


Michael Holcombe Wilson: I do not think the Speaker would allow me to give a full response, but I will start anyway. Let us start with the manufacturing and processing deduction. This is designed to put our manufacturing industry on a competitive tax basis with the manufacturing industry in the United States. If this was removed, the tax rates of the manufacturing sector would increase significantly. That would result in job losses here in Canada. It would result in the creation of jobs in the United States.


Some hon. members:: Oh, oh.


Mr. Speaker:: The hon. member will put his question please.


William Alexander (Bill) Blaikie: Mr. Speaker, the Minister of Finance knows full well that that tax credit was put there partly in response to the manufacturing sales tax, which has been eliminated. Therefore, the need for that tax credit has also been eliminated.
How does the minister have the nerve to come before this House today and yesterday and talk about burden sharing and deficit reduction and not ask of the business community, his friends over at the BCNI, one single sacrifice? How does he have the nerve to talk about

February 27, 1991

deficit reduction and not ask them for one single sacrifice?


Michael Holcombe Wilson: Mr. Speaker, the hon. member says that the manufacturing and processing tax was brought in to offset the manufacturers' sales tax. That is wrong. The manufacturers' sales tax was brought in in 1926. In the late 1970s the government brought in this manufacturing and processing tax to offset a new export enhancement tax that the United States had brought in. It was designed to put the American and Canadian tax position for manufacturing companies on the same basis so we did not lose jobs to the United States.
If my hon. friend wants to lose jobs to the United States by jacking up the taxes in this country, let him have it, but please do not do it to this country and government.


Hon. Lucien Bouchard (Lac-Saint-Jean):: Mr. Speaker, the federal-provincial implications of this budget reek with arrogance-


Some hon. members:: Oh, oh!


Lucien Bouchard: If I may, Mr. Speaker, the budget's federal-provincial implications reflect an incoherence which borders on arrogance. On one hand the government reduces its contribution to provincial health insurance programs, on the other it seeks additional powers to dictate to the provinces their expenditure level and program contents. How can the government justify its intention to pay less and control more at the same time?


Mrs. Marie Gibeau (Bourassa):: Lucien, ask for the CNTU's proper interpretation of that!


Henry Perrin Beatty: Mr. Speaker, the hon. member should be aware of the fact that the federal government continues to increase transfer payments to the provinces.
Privilege
The federal government will be holding federal program spending to a 3.4 per cent year over year increase. It will be increasing transfer payments to the provinces by 3.7 per cent.
In the case of EPF, we will be transferring some $20 billion, $14 billion of which is for health care. I believe the taxpayers of Canada have a right, when $14 billion of their money is being spent, to set minimum national standards to be met for all Canadians.


Lucien Bouchard: Mr. Speaker, I assume that this is the renewed federalism the government has been dangling in front of Canada and the provinces: The provinces pay the bills and Ottawa makes the decisions.


Michael Holcombe Wilson: Mr. Speaker, I am somewhat embarrassed to even point this out to my hon friend, but it says in La Presse today: "A budget, honest, which looks far into the future. Wilson gives an example."
What we are trying to do here is demonstrate to Canadians the essential direction that this country has to take to strengthen national unity and our ability to work with the provinces in support of the traditions and the principles that are important to this country.
My hon. friend says he wants more flexibility for the Canada Health Act. Is he saying he is in favour of user fees and extra billing?


PRIVILEGE
Ms. Lynn Hunter (Saanich-Gulf Islands):: Mr. Speaker, I am rising on a point of personal privilege.
I found the exchanges that occurred this afternoon during Question Period and the language that was used to be personally offensive.
There was talk about the "mother of all budgets", the "mother of all battles". Not only did it bring a tone of levity into this House that is absolutely inappropriate both to the war and to this budget, it denigrated motherhood.

February 27, 1991
Routine Proceedings



ROUTINE PROCEEDINGS


Henry Perrin Beatty: Mr. Speaker, pursuant to the provisions of Standing Order 32(2), I wish to table, in both official languages, the report of the Canada Pension Plan Advisory Board, entitled The Level of Pension Awareness in Canada.


PETITIONS
Mr. Albert Cooper (Parliamentary Secretary to Leader of the Government in the House of Commons):: Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table in both official languages the government's response to nine petitions.
[Editor's Note: See today's Votes and Proceedings.]


The Acting Speaker (Mr. Paproski):: Statements by ministers.


Mr. Waddell:: On a point of order, Mr. Speaker. I ask that the minister of energy give a statement to the House on ministerial statements explaining why Petro-Canada sold land adjacent to Fantasy Gardens in British Columbia without tender to Tan Yu on November 20.



INTERPARLIAMENTARY DELEGATION


The Acting Speaker (Mr. Paproski):: Pursuant to Standing Order 34, I have the honour to present to the House a report on the meeting of the Standing Committee on the Conference of Speakers and Presiding Officers of Commonwealth Parliaments held in Port Moresby, Papua New Guinea on January 7 and 8, 1991, in both official languages.



ENERGY, MINES AND RESOURCES PRESENTATION OF SECOND REPORT OF STANDING COMMITTEE

Mr. Charles A. Langlois (Manicouagan):: Mr. Speaker, I have the honour to present the second report of the Standing Committee on Energy, Mines and Resources on tar sands. The report is in both official languages.
[Editor's Note: See today's Votes and Proceedings.]



BORROWING AUTHORITY ACT, 1991-92 MEASURE TO ENACT

[Stage Direction]
Hon. John McDermid (for the Minister of Finance)
seconded by Mr. Blais, moved for leave to introduce Bill C-97, an act to provide borrowing authority.
Motion agreed to, bill read the first time and ordered to be printed.


Mr. Peter Milliken (Kingston and the Islands):: Mr. Speaker, I rise to ask unanimous consent of the House for leave to withdraw Bill C-272, standing in my name on the list of private member's bills. I gather the appropriate words are that the order be discharged and the motion be withdrawn.
I ask for unanimous consent for that to take place.


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


Some hon. members:: Agreed.


The Acting Speaker (Mr. Paproski):: So ordered. Order discharged and bill withdrawn.


BUSINESS OF THE HOUSE
Albert Glen Cooper: Mr. Speaker, I have two housekeeping motions. The first one applies to next Monday and relates to the normal time for Private Members' Business. Because of the budget
February 27, 1991

debate, that time will not be used for Private Members' Business. This motion simply allows us to continue with government orders and thus give more members time to participate in the budget debate.
Therefore, I move:
That, notwithstanding any standing order of practice of this House, the House meet at one o'clock p.m., Monday, March 4, 1991 to resume debate on Government Order, Ways and Means proceeding No. 18, in the name of the Minister of Finance.


The Acting Speaker (Mr. Paproski):: The House has heard the terms of the motion. Does the hon. member have leave to move the motion?


Some hon. members:: Agreed.


Some hon. members:: No.


The Acting Speaker (Mr. Paproski):: There is not consent.
Mr. Cooper. Mr. Speaker, I assume there will be unanimous consent for this motion. It arises out of the fact that the names of the standing committees have been changed and as a result a document referred to one committee did not go to the others, which it had to be.
Therefore, I move:
That, notwithstanding any order or practice of this House, the annual report of the Department of Indian Affairs and Northern Development for the fiscal year ending March 31, 1990, which was deemed referred to the Standing Committee on Aboriginal Affairs on February 26, 1991, be deemed referred as well to the Standing Committee on Industry, Science, and Technology, Regional and Northern Development.


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


Some hon. members:: Agreed.


[Stage Direction]
Motion agreed to.

Mr. John Brewin (Victoria):: Mr. Speaker, I have the honour to present a petition under Standing Order 36.1 have a number of petitions here from citizens in Victoria and in the area. The petition is with respect to the Gulf War and was written before we heard the reports today
Routine Proceedings
in which generals were proclaiming the enthusiasm of shooting at retreating soldiers.
It calls on the governments of the United States, Great Britain and other countries with forces in Saudi Arabia not to use offensive action against Iraq because of the catastrophic consequences of war. The generals were saying today that thousands upon thousands of soldiers were killed, clearly in unnecessary action.
If I may add, Mr. Speaker, there was one name that was not accepted on the petition. A 90-year-old citizen of Victoria named Percy Gray expressed his strong objection to the war, and I would like to place that in the record of the House.


Mrs. Barbara Sparrow (Calgary Southwest):: Mr. Speaker, I have the honour today to present a petition signed by many residents of the province of British Columbia pursuant to Standing Order 36 concerning the National Parole Board and its releasing of convicted murderers without due consideration for the safety of the public.
These petitioners humbly pray and call upon Parliament to revise the laws of Canada relating to parole to make a life sentence mean life in lieu of the current 12 to 15 years the first degree convicted murderers are currently serving prior to being released by the National Parole Board.


Mr. Dan Heap (TVinity-Spadina):: Mr. Speaker, it is my honour and duty to present several petitions which have been approved by the Clerk pursuant to Standing Order 36. One of them is from residents of a number of municipalities in Ontario and Quebec. It refers to the practise of low-level flight training in Labrador. It states that they wish Parliament to have the government join with the First Nations, the Innu of Labrador and the aboriginal peoples of northern Canada in opposing this use of their lands for NATO and NORAD attack training, and to redirect Canada's NATO-NORAD funding toward enabling Canada's aboriginal peoples to regain control of their lands and their livelihood and promoting sustainable development for all Canadians.

February 27, 1991
Routine Proceedings GOODS AND SERVICES TAX


Daniel James Macdonnell Heap: Mr. Speaker, I have a further petition from a number of residents of Toronto, Weston, Downsview and Mississauga opposing the goods and services tax, asking the government to reject it and to reduce the need for such a sales tax by reducing the bank interest rate so as to help small business and increase employment.


Daniel James Macdonnell Heap: Mr. Speaker, I have a further petition from several hundred residents of Toronto who petition the House of Commons that it call upon the government to declare its absolute commitment to a peaceful resolution of the mid-East conflict, to oppose any offensive military action against Iraq, to withdraw all Canadian Armed Forces from the region until we can be assured that they are not deployed in an offensive capacity but solely as is necessary to make sanctions effective, and to use our tax dollars for useful social programs such as child care, pensions, health care and education, and not for military adventures in the Middle East.
I have a further petition from residents of Toronto on the same subject, asking that the Government of Canada use all means available to encourage UN members to give sanctions a chance to work, to refrain from offensive military action against Iraq and not to commit the Canadian Armed Forces to offensive military action against Iraq.


Guy St-Julien: Mr. Speaker, pursuant to Standing Order 36, I present a petition from citizens of Lebel-sur-Quevillon in Quebec who request that the Government of Canada shelve the project described as the Parliament Hill sector which, at the estimated cost of $68 million, provides for a parking garage and a shopping mall under Canada's Parliament Hill. They urge the government to acknowledge the need to preserve the environment and the historical character of the buildings and the site of Parliament Hill in Ottawa.
An. hon. member: We agree!


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Albert Glen Cooper: Mr. Speaker, question no. 407 will be answered today.

SUBSIDIES/TAX EXEMPTIONS


Mr. Saint-Julien: For the years (a) 1984 (b) 1985 (c) 1986 (d) 1987 (e) 1988 (f) 1989 (g) 1990, did the government grant subsidies under federal programs or tax exemptions to the Canadian National Railways and the Ontario Northland Railways for any rail subdivisions within the federal ridings of Abitibi and Temiscamingue and, if so, what is the breakdown of subsidies and tax exemptions granted under these programs (i) by year (ii) by subdivision?


Albert Glen Cooper: I am
informed by the Departments of Finance and Transport as follows:
u The following comments respond to the tax exemption issues raised in the above question.
Ontario Northland Railways is a branch of the Ontario Northland Transportation Commission, which is a provincial Crown Corporation. As such, it is exempt from federal income tax under paragraph 149 (l)(d) of the Canadian Income Tax Act, which is a general provision applicable to all provincial Crown Corporations.
No Remission Orders granting specific tax relief to the Canadian National Railways (C.N.R.) were passed between 1984 and 1990. As such, the treatment of income and deductions for this taxpayer over this period would have been in accordance with the general provisions contained in the Canadian Income Thx Act. In general, these provisions do not provide for partial exemptions for some of a corporation's business activities based on their nature or location.
However, certain investment tax credits in respect of qualified capital expenditures are provided for on a regional basis and are available in the region in question.
February 27, 1991

Although the confidentiality provision of the Income Tax Act prohibits the release of tax information about specific taxpayers, C.N.R. itself has made available through Transport Canada an account of their investment tax credit refunds resulting from capital expenditures in the federal ridings of Abitibi and Temiscamingue for the years 1984 through 1990:
ITC Refund by Year ($ thousands)
1984	1985	1986	1987	1988	1989	1990	Total10.3	72.0	11.0	10.5	0	0	0	103.8
Routine Proceedings
The Ontario Northland Railway does not receive federal subsidies in respect of the portion of its Kirkland Lake Subdivision falling in the riding of Temiscamingue.


The Acting Speaker (Mr. Paproski):: 
[Stage Direction]
(ii)
CN - Taschereau Sub (Temiscamingue segment)
Albert Glen Cooper: Mr. Speaker, if question no. 432 could be made an order for return, this return would be tabled immediately.


The Acting Speaker (Mr. Paproski):: Is it the pleasure of the House that Question No. 432 be deemed to have been made an order for return?


Some hon. members:: Agreed.


Mr. Berger: Since January 1, 1989, what is the number of refugee claimants who have been refused refugee status by the Immigration and Refugee Board, and, of these, how many were accepted on humanitarian and compassionate grounds by (a) country or origin (b) province in which they applied for refugee status?
Return tabled.


Albert Glen Cooper: Mr. Speaker, I ask that all remaining questions be allowed to stand.


The Acting Speaker (Mr. Paproski):: Shall the remaining questions be allowed to stand?


Some hon. members:: Agreed.

The Budget



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Tbesday, February 26, consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the government.
Hon. Herb Gray (Windsor West):: Mr. Speaker, on Monday I asked the Minister of Finance about bankruptcies. As we know all too well, Canadians are being hit by bankruptcies in increasing numbers, up by 69 per cent this past January alone.
In the budget speech he gave yesterday we saw a different kind of bankruptcy. It is the political bankruptcy of the Prime Minister and the Minister of Finance.
When it comes to integrity, this Conservative government is bankrupt. When it comes to fairness, this Conservative government is bankrupt; and when it comes to constructive ideas and compassion, this Conservative government is bankrupt. It is bankrupt when it comes to concern for the needs of ordinary Canadians, workers, fishermen, farmers, small business people, Canadians who live and work along the main streets of this country.

Every Spring for the past seven years, the Minister of Finance has tabled his budget in the House of Commons. Right wing ideologists, who cling to outdated theories, always look forward with impatience to this annual event. Budget number seven will not disappoint them. It contains a great many goodies for them.

For most Canadians there is nothing; nothing positive in this budget. For the majority of Canadians this minister's seven years of budgets have brought only seven years of bad luck.


Some hon. members:: Hear, hear.


Herbert Eser (Herb) Gray: His most recent effort does not change Canada's losing streak under this Conservative government. For most Canadians, it is little more
than what has already been called "A Nightmare on Wellington Street, Part VII".
Examples of this nightmare are not hard to find in this budget tabled by the Minister of Finance here in this House yesterday.
In his last budget, the minister put medicare, one of Canada's proudest achievements, on life support; and from this budget the result will likely be that the minister will end up pulling the plug. A full $2.3 billion has been cut from transfers to the provinces for medicare, risking the end of a health care system that has been the envy of the world.
In this budget, the minister has told Canadians that in just a few more years the federal government will be out of the business of supporting medicare. If there is no direct financial involvement in medicare by our federal government, how can we possibly continue to have a national health care system with the same standards from coast to coast to coast.
These cuts in yesterday's budget will also assist in the destruction of post-secondary education. Yesterday, the minister, in effect, told low-income students that their days of education in our post-secondary institutions were numbered.
More than anything else this budget confirms that this Conservative government has placed us all on a path that will lead to the disintegration of Canada. The minister is killing off some of the very programs which have held us together; the programs which have made us proud to be Canadians.
The nightmare does not end there. For the thousands upon thousands of unemployed Canadians this budget offers no hope, but only despair.
Not only does the minister accept that this very high unemployment is here to stay, he is making that high unemployment an integral part of his economic plan. He is telling us without even blinking that this year 10 per cent of Canadians will be unemployed and next year he says it will be more of the same. That is simply obscene, simply obscene.
For the next two years the minister has told us that nearly 1,500,000 Canadians will remain out of work,
1,500,000	people, Mr. Speaker. Instead of doing something about this problem, he simply makes it worse. He
February 27, 1991

gives the unemployed a kick in the teeth not once, but twice. First he slashes $100 million from federal job creation programs. Then he raises unemployment insurance premiums by 25 per cent.
This Minister of Finance, this Prime Minister, this cabinet, and their caucus are pushing hundreds of thousands of Canadians on to the unemployment lines and, even worse, on to the welfare lines.
This budget shows how this government is ducking the blame for its mismanagement, its own mismanagement of the Canadian economy, for when confronted with the grave recession that is causing so much suffering this government blames the economic problems of the United States. It blames the turmoil caused by the war in the Persian Gulf, and when confronted with unemployment the government blames and hurts the unemployed.
When confronted with regional disparity this government blames and hurts our regions. When confronted with thousands of Canadians losing their jobs and thousands of Canadians in desperate need of decent housing, what does the Minister of Finance do? He not only increases unemployment insurance premiums; he actually slashes $411 million from housing programs aimed at helping lower income Canadians.
The facts are clear. The blame lies at the government's own doorstep, and nowhere else. This recession now battering Canadians from coast to coast to coast started well before the Persian Gulf war. It started well before any recession in the United States. It started some 11 months ago, last April in fact. It was initiated by this minister's February 1990 budget and his earlier budgets. If the minister does not want to believe me, he can ask the non-partisan Conference Board of Canada. It told him that last fall his own mismanagement has given us our "first made-in-Canada recession".
The minister should know that already. After all, the recession is the natural result of seven years of narrowminded Conservative policies, particularly their high interest rate policy and their high dollar policy.
And what did the Prime Minister say about all this last October? He confessed, and these are his exact words:
The Budget
We have induced a slowdown. Mr. Wilson said as much in his (last)
budget. Look at the budget-it's as clear as spring water. Mr. Wilson
spelled it out".
That is exactly what the Prime Minister said. If there is one thing that is as clear as spring water, it is that Canadians are mired in a tough unrelenting recession. It is also clear that this government induced the recession. The Prime Minister has said as much.
Something else that is as clear as spring water is that yesterday's budget is going to do nothing, nothing to get us out of that recession. As the economist Michael McCracken of Informetrica said after hearing the budget, and these are his words: "This is a recession making budget". This is what Michael McCracken of Informetrica said and I repeat. He decided this is "a recession making budget".

Mr. Speaker, this government had the gall to decide on our country's economic future on a roll of the dice. All Canadians men and women are the losers. The Minister claimed today, as he did yesterday, that interest rates are coming down. Yet, this reduction is again too little too late. It will take months before this drop in interest rates has any impact.

This is because it will be many, many months before businesses and consumers once again have any kind of real confidence in the economy. But, in the meantime, thousands more Canadians will lose their jobs and thousands more small businesses will go bankrupt.
So what does this budget offer those Canadians and those small businesses? Well, nothing positive, Mr. Speaker, nothing positive at all.
While economic flames rage destroying the lives of Canadians, the minister does nothing constructive, nothing positive and nothing useful. Instead, he fiddles like some modem day Nero and with this budget he is simply stopping his fiddling only to throw more gas on the fire he himself has started.
Economists tell us the recession created by this government could last for many more months, and that is far too long. We Liberals say that what is needed now is more than a new budget. Canadians do not merely want to wait out the recession. They want a new and a better economic plan to lead us out of this recession as soon as possible, and there is no such plan in this budget.

February 27, 1991
The Budget
The Liberals have been calling for a new economic plan since early last summer, one built on much lower interest rates and a much lower dollar. As part of this, Liberals have been calling for adjustment programs to help the firms and the workers hurt, and hurt badly, by the U.S.-Canada free trade deal and by this recession. Liberals have been calling for policies which will help us to restructure, to modernize our work place and retrain our workers. Above all, Liberals have been calling for policies based on fairness. We want to see fair policies which create more jobs, fair policies which bring back strong economic growth, fair policies which end this Conservative government's destruction of our industrial base.


Some hon. members:: Hear, hear.


Mr, Gray (Windsor West):: The Prime Minister once promised jobs, jobs and more jobs. Instead, his government has handed Canadians only cuts, cuts and more cuts. It has handed Canadians a good and services tax, a GST that has pushed inflation up to record breaking levels. It has handed them a recession, the Prime Minister has admitted, his government has induced. It has given us high levels of inflation. It has given us an announcement it is seeking free trade with Mexico, without first having any public debate, without first setting out any goals and objectives, and with no effort to undo the damage caused by the Conservative trade deal with the United States.
Yesterday, as the Minister of Finance has done so many times before, he talked about what he plans to do to reduce the deficit, but he does not admit at all that the national debt has doubled, yes doubled, since his government came into power in 1984.
Canadians should not bother to listen to what this Minister of Finance has to say about the deficit and the public debt, because he has no credibility left on this issue or on any other issue.
The minister and the government have their priorities all wrong. The minister is refusing to focus on what is needed, which is to make getting us out of this crippling recession his priority. By failing to do this he is making the deficit problem worse. The minister admits as much on page 70 in his own budget document when he writes:
-the economic situation has deteriorated with a consequent impact on the deficit.
Exactly. What has brought about this deterioration? The Conservative government's own policies, including its support for high interest rates. This has simply made the situation worse. This high interest rate policy has added billions of dollars to the costs of this government's borrowing, and this adds billions to the deficit and to the national debt.
By the way, each time interest rates drop a single percentage point, it saves the government almost $2 billion. If the minister would bother to read his own budget papers, I think he would agree with me, finally. Giving priority to solving Canada's economic crisis will obviously, greatly help the government to deal with its own financial management problems.
The minister's proposed deficit reduction fund, using the proceeds of the GST, is an economic shell game, plain and simple. It adds nothing to government revenues that will not already be there. Meanwhile, the GST itself remains in place to continue to hammer lower and middle income Canadians and create an administrative nightmare for small business.

Mr. Speaker, I urge the Minister of Finance to pause for a moment today to think things over. I urge him to forget the embraces of his Cabinet and caucus friends. I urge him to pause and listen to the voices which can be heard more and more every day outside these walls. I urge the minister and his Cabinet colleagues to listen to the shouts of anger bursting forth everywhere in this country. Canadian men and women have just had enough of this government's callous policies.
More and more Canadians are telling the government that they are fed up with the GST and they will no longer stand any budgetary restraints in the areas of health care and higher education.

Canadians are fed up with the cutbacks to research and development. They are fed up with the way our fishery, agricultural and forestry sectors, the north of our country, and our auto industry have been systematically undermined. They are fed up with the gutting of medicare. They are fed up with cuts to post-secondary education and, as I have already said, they are fed up

with the deterioration of our industrial base, all since this Conservative government came into office.


Some hon. members:: Hear, hear.


Herbert Eser (Herb) Gray: Mr. Speaker, Canadians have watched as this government has gutted VIA Rail and shut down post offices all across this country.


An hon. member:: Shame.


Herbert Eser (Herb) Gray: They watched as this government slashed services and scrapped local television programming by the CBC all across this country.


An hon. member:: Shame.


Herbert Eser (Herb) Gray: Canadians have watched as this government dismantled the institutions which have helped make this country what it is. They are angry. They want it to stop, but this government does not want to listen to them.
In January and February of this year, while the government was listening to its big business friends on Bay Street, members of the Liberal caucus were crisscrossing the country listening to the real people on Main Street: 35 hearings were conducted by the Liberal caucus, more than 300 submissions were made. We have heard from business associations, labour groups, social action groups, municipalities, provincial government representatives, cultural organizations, and average individual Canadians. The Liberals listened to what Canadians had to say, and what they had to say is this: This Conservative government, this Minister of Finance, this Prime Minister have lost the trust and the confidence of the Canadian people.
The economic policies of this government and this Prime Minister, Canadians have told us, are hurting single mothers, children and small businesses, working men and women and the sick and the elderly. The facts speak for themselves. Economic growth is at the lowest level in 10 years. We have a made-in-Canada Conservative government produced recession, and the most heart-wrenching fact of all: 186,000 Canadian children have been forced to stand in line at food banks across the country; one in six children goes to bed hungry every night.
This budget will not help those hungry children. It will not help working people or small business or farmers or fishermen or anyone else, except maybe the handful of
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people who still support this government's right wing agenda. But this minister is simply not listening to the overwhelming majority of Canadians.
The words our task force heard were not the words of some narrow corporate elite. They are the words of average Canadians, like the people of my community: auto workers who have seen their jobs disappear forever to the United States and Mexico due to the insensitive policies of this Conservative government. They are the words of Canadians battered by the GST, the free trade agreement and the Conservative government's other insensitive and narrow-minded economic policies.
But does this Minister of Finance, this Prime Minister and this government want to listen? This budget proves they do not. This budget proves that this government is bankrupt when it comes to integrity and constructive ideas. The budget the Minister of Finance has tabled in this House is the last straw. It shows the true face of this government and this cabinet.
They may go around, as the Prime Minister has been doing lately, talking about re-Confederation. But this budget shows us the unvarnished truth, since this budget is simply a blueprint for de-Confederation. The institutions and programs which hold Canada together are being unravelled by this government. Just look at what it has done to VIA Rail, to Canada Post, to the CBC.

And let's take a look at what they are doing to health care and postsecondaiy education. By cutting transfers to the provinces, Mr. Speaker, by the year 2009-which is not that far off-there will be no more federal transfers to the provinces for health care. And if that prediction is correct, the federal government will not be in a position to enforce the standards for health care provided under the Canada Health Act.

There are other examples, but the bottom line is the same. This government is dismantling the institutions and the programs which make Canada great. This government is dismantling the institutions and the programs which define Canada, the institutions which have made us so admired in the eyes of the world. As they move Canada ever closer to the brink of economic and constitutional ruin the minister, the Prime Minister and

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The Budget
their cabinet colleagues are not listening to what average Canadians have to say any more.
This budget is a Scud missile attack on Canadians. It is an attack on medicare. It is an attack on the jobless. It is an attack on the very institutions and programs that help make up the very fabric that is Canada.
In his budget the minister pays lip service to the notion of a strong and a united Canada.
He cries tears, hopefully not crocodile tears, for Canadian unity. Then, he presents a budget document that is-I repeat-simply a blueprint for de-Confederation.
Yesterday, the minister gave Canadians a blunt lesson in the politics of cruelty. He said to Canadians that they are on their own.
Yesterday, in the midst of a harsh recession the minister told low and middle income Canadians: "You're on your own."
Yesterday, the minister told homeless Canadians that they will just have to make do to get through the winter. He told them that they are on their own.
Yesterday, the minister told sick and elderly Canadians that it does not matter if his policies force provinces to shut down hospitals and lay off doctors and nurses. The minister told sick and elderly Canadians: "You're on your own."
Yesterday, the minister gave us a blueprint for deConfederation and after seeing it, Canadians are saying: "Enough is enough." They are saying: "It is time to stop this Conservative government before it rips this country apart."


Some hon. members:: Hear, hear.


Herbert Eser (Herb) Gray: Therefore, I move, seconded by the hon. member for Ottawa South:
That the motion be amended by deleting all of the words after the
word "that" and by substituting the following therefore:
this House condemns the government for presenting a budget that offers no relief to Canadians from the made-in-Canada recession created in 1990, undermines the social and economic foundations of Canadian federalism, increases the already unfair and disproportionate financial burden on lower income and middle income Canadians and provides no program that will, in fact, bring about the recovery of the Canadian economy.


Some hon. members:: Hear, hear.


The Acting Speaker (Mr. Paproski):: I find the motion in order.


Steven W. Langdon: Mr. Speaker, it is difficult in responding to a budget not to fall into the trap of choosing rhetoric, phrases and over-statements which make people think that you are not seriously trying to grapple with the way of thinking of the government and the Official Opposition, as opposed to the approaches which we would take in the New Democratic Party, faced with the economic conditions of today.
I want to try to avoid rhetorical flourish. I also want to convey to the House and to the country our sense of profound disappointment in this budget which Mr. Wilson has presented to Canada.
As we listen to people across this country and as our New Democratic economic recovery tour visited different parts of this great country of ours, we heard people say to us just how tough things were, how hard life had become as this recession had begun to bite, how serious and deep the human problems were that they were facing. We heard, for instance, from people such as one of the farmers who talked to us, who talked about what was happening in his community, and I quote directly: "The lay-offs, plant closures, bankruptcies, work sharing, these are only numbers in the paper and at Statistics Canada. But in our community they are real and they hurt". It is a tragic story of broken pride, food bank line-ups, needing welfare assistance, family tensions.
He went on to say that workers between 45 and 64 years of age, many of whom have spent their entire working lives with a single employer, find themselves out in the cold, their jobs eliminated by free trade.
As the director of the Unemployment Help Centre in London said to us: "The social safety net in this country strains under the demands of people hurt by this recession".
As the St. Thomas District Labour Council said to us: "The consequence of a succession of Conservative budgets over the past six years have been devastation for most Canadians". Unemployment is soaring, plant closures and mass lay-offs are everywhere, workers' real average earnings are falling, poverty and hunger are spreading, farm bankruptcies are increasing at a record level and the many victims of these Conservative budgets

are being denied the help they need because of cuts in unemployment insurance and welfare.
Or, as the Waterloo Regional Council said to us: "Seventy per cent of all applicants for welfare in that community are now applying for the first time". Seventy per cent, Mr. Speaker. The total number of recipients of general welfare reached a record high level, higher than they have ever seen before, of over 6,000 in the month of December. In 1989 the Waterloo regional food bank distributed 400,000 pounds of food to people in need. This year they forecast distribution of a million pounds from their food banks to people in need.
As the Community Opportunities Development Association in Cambridge said to us, and they put it very bluntly, if very simply: "The downturn in the economy has put fear into the souls of many members of our community".
That is the reality, Mr. Speaker, which this government seems incapable of recognizing. That is the reality which is devastating lives right across this country, which is destroying families, which is giving people a sense of despair, a sense of pessimism, a sense of fear about the future.
And so I have to say, Mr. Speaker, that I stand up here with a sense of growing fury at this government and its inability to listen to the real voices of people across this country. I say to this government that it is time they recognize the anger, the frustration, the bitterness, the sense of complete and utter failure of hope that hundreds of thousands of Canadians across this country are feeling.
For the sake of this country's future, for the sake of the hundreds of thousands of people being hurt across this country, for the sake of the future of the children of our country, I ask this government to start listening, start to pay attention, start to show you care about those hundreds of thousands of people who are being hurt.


Some hon. members:: Hear, hear.


Steven W. Langdon: People wanted a budget of hope and what did they get? They got the same mean message which they have had for the last six and a half years, the
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same shameful message of cutbacks, of taxes that hit the ordinary person while the large corporations go scot-free; the same fixation on inflation as the concern, the same fixation on the deficit, when it is people across this country who have lost their jobs or have seen their plants shut.
As one person said to me in one of our meetings across the country, "in the 1981-82 recession of the Liberal government, things were bad. We were hurt, but at least we saw the plants were still there. We hoped the jobs would come back and eventually, not because of anything the Liberals did, but because of an upturn in the rest of the world, the jobs did come back and the plants were there for people to go back and work in. The farms were there to give people a sense of prosperity for the future. The small businesses were there."
But this person said to me, "in this recession it is different. In this recession the plants are shutting and they are leaving." They are going to the United States, thanks to free trade. They are going to Mexico and thanks to this government's further foolishness, there will be more of them going to Mexico. More of them will move south. More of them shut and more people hurt across this country as a consequence.
We need a change in direction that says: "Not just targets for inflation, but above all, targets for jobs, for reducing unemployment and for dealing with this recession; targets to get people back to work," so that this country once more starts to work.
It is a very hypocritical budget. It is a budget which talks about the need for national unity. Then in its details cuts back the CBC, destroys national institutions like VIA Rail, and breaks its promises to the provinces.

I am a member from Ontario, but if I were a member from Quebec, if I were a citizen of the province of the Quebec and I were looking at this Budget, I would notice a lot of terms referring to national unity. But what is the real situation? We have a government that has broken its promises to the provinces, that decided that all its promises to the province of Quebec, for instance, were worth nothing, that they could be conveniently ignored or changed or broken!

February 27, 1991
The Budget
The results, for Quebecers and all Canadians, are more unemployment, fewer services, and perhaps the dismantling of our national health care system. We cannot accept that in this country!


Some hon. members:: Hear, hear!


Steven W. Langdon: We must fight, and I must say that as a party we want to fight this regressive approach. It is not one we can accept, and it would destroy our country.


Mr. Edmonston:: It's against the interests of Quebec.


Mr. Samson:: It is unacceptable.


Steven W. Langdon: That is one piece of hypocrisy: the discussion of national unity and the lack of any reflection of things that would help to build national unity.
There is also talk of co-operation and how we all must work together. All of us must share the burden. Yet, the reality in the budget is what? It is an attack on workers, on the 6,000 public servants who will lose their jobs.
It is an attack on the possibility of workers being able to keep up with the rate of inflation in the salaries and wages which they receive.
It is an attack on small business.
It is not widely recognized but an increase in unemployment insurance premiums hurts workers. It is true. But, in fact, it hits small business even more than it hits those workers. Small business people across this country will find themselves devastated by the increased burden of these unemployment insurance premiums.
When it comes to workers there are burdens. When it comes to small business there are burdens. When it comes to women there are burdens, as some of the women's groups are cut back as is the support which they have received in the past.
But what about those large companies? What about the big corporations? Is there a single thing in this budget that attacks those corporations? Is there a single thing that asks those corporations to start to pay a fair share? A single thing? Not a single solitary point, not a single change in the tax loopholes that exist, not a single thing to even respond to the willingness which was expressed on the part of some big business groups to
share the burden. Yet, not a single thing was done to make such corporations contribute to the burdens that are falling on workers and on small business people across this country.
There is also discussion in this budget of competitiveness. We all must seek competitiveness.

Competition is important for the future.

We agree. But what is the reality of the budget? The reality is an attack; an attack on education, an attack on science research, an attack on job training, an attack on environmental support. All of those are the basis of future competitiveness in this budget.


Some hon. members:: Hear, hear.


Steven W. Langdon: Yet what does this government do? It cuts. It cuts not for the sake of eliminating waste, because we stood up here in this House and pointed out again and again cases of waste which this government has refused to do anything about.
We had to talk for over two years about grants which were being given to questionable companies in Cape Breton before the government finally recognized that in fact the grants being given were part of a scam and therefore should not be continued.
It took us two years. The member for Nickel Belt and myself fought here in the House, fought in committee. We finally forced the government to recognize the waste which was involved in that particular case. It is so hard to get the government to do something about that sort of waste. It will instead do a few symbolic things like say that it is freezing the salaries of cabinet ministers when, in fact, all that it is freezing is the extra amount which those ministers get as members of the government. They still get their increases as members of Parliament.
We have here an incredible case of hypocrisy within this budget. We have a Minister of Finance who has stood up in the House and said that he heard the anguish of people across this country who had lost jobs and lost their small businesses. He heard that anguish and then he did nothing about it. He did not do a single thing to help people who were being hurt.
February 27, 1991

I would like to move, on behalf of our party, a subamendment to the amendment which has been moved by the Official Opposition. I move:
That the amendment be amended by adding the following words:
"fails to respond to the anguish of people who have lost their jobs or their businesses; undermines the principles of universal medicare; and fails to introduce a program of fair taxation, including a minimum corporate tax."
There was a choice. The government did not take that choice. It kept to the same old path. If it had taken the choice that we put before the country, the many hundreds of thousands hurting across this countiy would be in much better shape.


Some hon. members:: Hear, hear.


The Acting Speaker (Mr. Paproski):: I will take the subamendment under advisement. I will go to questions and comments. The hon. member for Ottawa-Vanier.


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, I listened carefully to the speech by the hon. member for Essex-Windsor, and I must say I was disappointed when he failed to mention the impact of this Budget on federal public servants. If we look at yesterday's Budget speech, on page 10, it says:
The wage budgets of departments will not be adjusted in 1991-92
for any increases in costs arising out of new collective agreements.
Departments will have to absorb any such higher costs from within
existing budgets.
Each increse of 1 per cent in average wage settlements across the
public service could lead to a loss of about 2,000 jobs.

It is quite evident to those of us who care about the Public Service of Canada that the government has declared war on its own public servants. By stating that each per cent increase in wage settlements could lead to
2,000	job losses from the Public Service of Canada, the government is endorsing and promoting the kind of prejudice that some people in this country have against public servants.
This country happens to have one of the best public services in the world. I feel that to not have addressed this question today, which spreads the seed for labour unrest, not only in the Public Service of Canada in the years to come, but in other departments. For the NDP,
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who are the socialists of this countiy, what I like to call the arm-chair socialists, not to have alluded in one sentence in the speech to the labour unrest we are going to be suffering because of this government's lack of sensitivity is beyond my understanding.
I want to ask the member from Essex-Windsor, why is it that his party and his opening speech on this most important budget speech did not once mention the impact of this budget on labour in general? Specifically, why did he not address the impact on the Public Service of Canada, the public servants of this country who are doing a damned good job for Canada?


Steven W. Langdon: Mr. Speaker, every time a spokesperson from the Liberal Party gets up to defend workers, I have to say that I am especially amused. I am especially amused when they get up to defend public servants, because this member and his party, if the hon. member would remember back a few years, was the very party that brought into effect controls on public servants-the six and five program which was opposed bitterly by the Public Service across this country and across the community of Ottawa. Let me tell you that the impact on morale in the Public Service, which is certainly going to be very negative over what the Conservatives have done in this budget, was also extremely negative over what the Liberals did during the 1981-1982 recession when they did precisely the same thing. They tried to make workers into the cause of that recession instead of recognizing that in fact working people are very much those who are hurt by recession.
If the member had listened to my speech he would also have noticed that I did in fact talk precisely about the
6,000	jobs that this Conservative approach to the Public Service will likely lead to being lost. Those 6,000 jobs will be lost if public servants take their full 3 per cent increase, which itself is well below the rate of inflation. That will force an elimination of jobs within the Public Service.
Now if the member did not recognize that I was talking about the sections of the budget which deal with the Public Service in noting those 6,000 potential job losses then it shows that despite his past work he really does not understand very well the way in which these particular measures from the Conservative Party are going to

February 27, 1991
The Budget
negatively impact public servants here in Ottawa and across the country.


Some hon. members:: Hear, hear!


Mr. Jack Whittaker (Okanagan-Similkameen-Merritt):: Mr. Speaker, the member for Windsor-Essex mentioned the small business community and how it was going to be hurt. I would like to describe, in my introductory remarks here, how the unemployment insurance filters down and, as employers, how this is going to affect the small business community. Not only directly, but in the municipalities. These increases in unemployment insurance, the increases in Established Programs Financing or the cuts to Established Programs Financing and the cap on the Canada Assistance Plans all filter through to the provinces and through to the municipalities.
The biggest employers in most small communities across Canada are municipalities, hospitals and school districts. These people and these groups are going to be hurt directly by UI and by the cuts in these various programs. Those people are going to have to pick the money up somewhere and pass it down to the taxpayers through property taxes and through provincial taxes. In this way it also hurts.
My question to the member is this. Would he agree that, although the government has told us there will not be tax increases, in fact, once again, the low and middle income earners are being hit by tax increases by underhanded methods of this government?


Steven W. Langdon: Mr. Speaker, the member has made a veiy important point. I want to just indicate to the House some of the comments which we received from small business people during our economic recovery tour in different parts of the country.
For instance, as somebody said to me in my own community in the hearings that we held there: "The GST, the high dollar and the recession are killing us". This person is the head of the Downtown Business Persons Association in my community. We have to recognize what this government is doing this year. It is, first, putting a very serious burden on small business with the introduction of the GST. The level of administrative cost that small business will have to absorb is extremely heavy. Many small business people across the country have talked to me about the damage that is going to be
done to their prospects for the future as a result of that administrative cost.
In addition to that GST impact, the government has now decided as well to increase unemployment insurance premiums. And, as I indicated in my speech, that is going to impact most on small businesses across this country because, of course, small businesses pay $1.4 for every $1 that a worker pays into the unemployment insurance fund. That is just one example of the way in which the unfairness that this government has put into effect in past budgets continues in this budget, and it is one of the reasons why we oppose this budget so strongly.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated.
Before I recognize the hon. minister, I have looked at the amendment to the amendment, and I accept the amendment to the amendment.


Hon. Pierre Blais (Minister of Consumer and Corporate Affairs and Minister of State (Agriculture)):: Mr. Speaker, I welcome this opportunity to lead off the debate on the Budget on behalf of the government side in this House. After listening to my NDP colleagues who are up there in the clouds, I think we should get down to earth, for a change.
I must say I was puzzled when the hon. member for Windsor West said we had to create jobs for Canadians but certainly not open our markets to the United States and even less to Mexico. Far too dangerous! Let's create jobs here to produce goods. And where would we sell them? That, of course, is a minor problem. It is a minor problem for NDP members who don't have a clue about government finances and financial administration, about being competitive and being able to manufacture goods and sell them at competitive prices. It doesn't fit their vision and concept of society.
However, after the Minister of Finance brought down his Budget yesterday, others did react, Mr. Speaker. Frederic Wagniere, in this morning's La Presse, qualified this Budget as honest and far-sighted. He said it had been a long time since we had a budget that reconciled both the government's financial requirements and the economic interests of Canadians. He went on to say that the government had understood the gravity of Canada's economic and financial situation and had decided to do something about it. Mr. Speaker, Mr. Wagniere also said

that the Budget was straight forward in that it meets problems head on, without compromising our economic future in the long term.
Mr. Speaker, clearly these people are far more objective than the hon. member for Essex-Windsor, as far as I could gather from his comments. I believe that the plan for economic recovery set forth in the Budget brought down yesterday puts Canada and Canadians on the path to renewed and sustained prosperity. The key to dynamic economic recovery and the nation's future growth and prosperity is obvious.
Interest rates must go down and remain at low levels for some time. To achieve this, we will have to meet a very basic requirement, equally obvious, which is to bring about a continuing and sustained reduction in inflation and the inflationary expectations of Canadians. Incidentally, Mr. Speaker, I heard another member from the Windsor area say that an unemployment rate of 10 per cent was obscene. I find such comments hard to accept, coming from the Liberals, since at the time they inflicted unemployment rates on Canadians that in some parts of the country were as high as 20 per cent, and interest rates that for a while were as high as 24 per cent, with 12 per cent inflation- there was for instance- Perhaps the hon. member for Ottawa-Vanier-


The Acting Speaker (Mr. Paproski):: There will be opportunity for questions and comments a little later.


Pierre Blais: Mr. Speaker, I can assure you that Canadians who had to fork over these huge amounts and pay the astronomical cost of that recession are not about to forget it. Indeed this is why they saw fit at the time to get rid of those great administrators, those glorified public clerks, and replace them by a government which proved to be responsible during its first mandate from 1984 to 1988 and which will continue to steer the country towards prosperity with the measures unveiled yesterday.
Mr. Speaker, of course there is a direct link between inflation and interest rates, as evidenced by our past economic performance. During the 1950s and 1960s when inflation was low-averaging less than 3 per cent a
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year-interest rates were low as well. When inflation rose in the 1970s, so did interest rates.
Comparisons with other countries confirm the existence of that link. Between 1980 and 1989 the major industrialized countries of the Group of Seven where inflation was lowest on average-Japan and Germany- were also those where average interest rates were lowest too. Then there were countries where inflation was left running rampant. For example, France and Italy generally recorded the highest interest rates, and that was unfortunate for those people. Mr. Speaker, we are working to bring about such conditions as will enable the economy to get back on an even keel by the middle of this year, not in five years, this year. And we are making progress because interest rates have already declined by more than four points since last May's peak. Canadian consumers throughout the country will see for themselves when they renew their mortgages or personal loans in the coming weeks that indeed they have more money in their wallets to cope with present conditions precisely because their interest rates will have gone down by 2, 3 and 4 per cent.
Still if we hope for a sustainable economic growth we cannot be satisfied with getting a handle on inflation. Our national objective must be to check inflation and then reduce it considerably and keep it down. Price stability spells enormous economic and social benefits, and lower interest rates are just one of a good many others.

Price stability is vital for Canadian companies and workers to compete and succeed in today's global marketplace.
With inflation, Canadian products can end up costing more than comparable goods sold by other countries. This means companies lose sales and workers lose jobs.
Price stability also supports increased investment by business.
Research indicates that lower inflation is one reason the cost of investment capital is lower in Japan and Germany than in Canada and the United States. Economic fairness is another crucial reason why Canadians should work toward lower inflation. Keeping price increases down is simply the best way to protect those with the least ability to protect themselves against inflation:

February 27, 1991
The Budget
the poor, the elderly, and people on fixed incomes. These are compelling reasons why our plan for economic recovery takes direct aim at reducing inflation further.
The budget announced realistic achievable inflation targets. They are based on the Consumer Price Index, the most commonly used measure of inflation. The official targets are: by the end of 1992, an inflation rate of 3 per cent; by mid-year 1994, inflation down to 2.5 per cent; and the year after, by the end of 1995, an inflation rate of 2 per cent. I think that this is achievable.
Clearly, in the words of Terence Corcoran in The Globe and Mail this morning:
- Mr. Wilson has defied many forecasters with a deficitcontrolling, opposition-rattling Recovery Budget.
[Translation\
After 1995, as I explained, Mr. Speaker, the government will continue its efforts to achieve price stability. The goals and methods then adopted will be based on the experience gained over the next few years and on the continuing consultations of Canadians. The inflation targets described in the government's Plan for Economic Recovery make sense and, in my opinion, are necessary. Canada had much lower inflation rates in the past and is able to equal this performance. It is only since the 1970's that Canada's performance has deteriorated compared to those of such countries as Germany and Japan.
There is no reason why Canada could not repeat its performance of those years, provided we work together to reach this goal.
The benefits of a lower inflation rate are evident and concrete. Interest rates would be coming down, as they are currently doing, Mr. Speaker. Our economic productivity and competitiveness would be strenghtened. Already second in the world, our standard of living would improve, and so would our social equality. Consequently, Canada would be a stronger and more prosperous country which could rank among the economic leaders, Mr. Speaker.
With this budget, we are putting government finances firmly on the course to a balanced budget. We are taking steps to eliminate the build-up of the public debt as a source of inflationary concern. For this purpose, we are extending by nearly three years until 1994-95 the Expenditure Control Plan developed in the 1990 budget. Of course, this decision does not please our NDP friends whose only policy is to spend more and more, because they think that throwing away borrowed money can help a country prosper. Clearly their position does not have the support of any economists, except their own, and as everybody knows, Mr. Speaker, has no credibility among Canadians.
We are legislating mandatory program spending limits and we are setting up a Debt Servicing and Reduction Fund solely dedicated to offsetting the costs of the public debt. By law, all revenues from the Goods and Services Tax and from privatization will flow into this fund. This way, Mr. Speaker, we expect to achieve our goal in time-it will not be easy and will require time, energy and determination-but I am convinced that we can do it.
Also, the government and its civil servants will do their share. We will severely restrain the operations of the government. Operating budgets will be frozen at current levels and the wages and salaries of Cabinet Ministers will be tightly restrained. Severe restrictions will be placed on the salaries paid to members of Parliament and senators as well as all federal civil servants and any person designated by an Order in Council from this government. That is why it was said, Mr. Speaker, and I am again quoting from this morning's edition of Le Soleil: "Wilson sets the example."
I think that it would be extremely difficult for the government to ask the Canadian people to make sacrifices, while allowing its own expenditures to keep growing by 8,10 or 12 percent. Of course, we could very easily go on spending. There is nothing easier, Mr. Speaker. We could borrow and establish programs, as our predecessors did for years. That is how they created a structural deficit which had reached $200 billion when we came to power. It is so easy. Any government can borrow money, establish programs and spend irresponsibly.


Mr. Ricard:: And foot the bill later!


Pierre Blais: Mr. Speaker, if we want our children and grandchildren to enjoy prosperity in this country, we have no choice but to make government accountable. We appreciate that these measures are very hard on the

government. They are hard on our employees. They are indeed, but we have no choice.
In a family faced with a shrinking income for one reason or another, the father and mother sit around the kitchen table and decide on ways to reduce overall expenditures so that money will be assigned to specific purposes and earmarked for the neediest. That is how we came to earmark more than $7 billion in spite of the difficult economic context. We managed to identify an amount totalling over $7 billion which is earmarked for the unemployed who are the neediest this year. We understand what they are going through. There is also $1.6 billion for the elderly and another $1.3 billion for farm producers who are struggling for reasons beyond our control and having to do with the global environment.
I think it is wise to consider and respond to the needs of particular groups, Mr. Speaker.
The programs I mentioned earlier account for over 90 percent of the financial support given by the federal government to the provinces in order to help them finance a wide range of important services across Canada. That is essential. No wonder that the Budget that was tabled yesterday has some major effects on the federal-provincial fiscal arrangements, particularly on some components of the transfer payments system to the provinces, that is, the Equalization program, the Established Programs Financing and the Canada Assistance Plan.

For decades, the federal government has provided large and growing financial support to the provinces. Next year alone, total federal transfers, including both cash and tax transfers, will reach almost $37 billion.
The cash portion alone of the transfers accounts for one-fifth of all federal program spending. These transfers are simply too large to exempt from our expenditure restraint program.
The deficit is a national problem and it demands a national solution. Major transfers to the provinces, both cash and tax, will grow by an average of 3.7 per cent per year from 1991-92 to 1995-96. All other federal program spending will grow by just 3.4 per cent. It should be noted that the 1991 budget has no effect on transfers in the current fiscal year or the next.
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For 1990-1991 and 1991-1992 transfers will be made on the basis of the February 1990 budget, which provinces have already factored into their planning. The new measures in this year's budget will cause 1992-1993 transfer growth to be reduced by roughly $700 million or about one-half of one per cent of provincial revenues.
In addition, the measures are tailored so as to have a smaller impact on the low income provinces.

I think, Mr. Speaker, that we have taken the necessary measures to insure that our initiatives with regard to the provinces are just and fair. I think that ultimately, as the Minister of Finance of Newfoundland said last night, the Minister of Finance's approach is just and fair and, despite certain difficulties that we appreciate, we will be able to cope with the situation.
The cap on the growth of transfer payments for Established Programs Financing raises concerns about the ability of the federal government to continue enforcing national medicare principles under the Canada Health Act.
Legislation will be introduced to ensure that the federal government continues to have the means to enforce these principles. As we said yesterday, and as we are saying again today, the principles of the Canadian Health Act will not be compromised.
The measures in this budget bring the growth of transfer payments to the provinces into line with current fiscal realities. But it is also time to ask ourselves whether the system of tranfers and tax arrangements can be reformed to better meet the energing challenges, priorities and needs of the 90s and beyond.
The federal government will consider reforms to the major transfer programs within the fiscal framework set out in this budget. In this regard, we will keep in mind that one of the best things we can do to strengthen national unity is improving our economy and our financial position. We want to ensure that, in the future, the system of transfers provides for the sharing of opportunities and benefits of Confederation, supports a more efficient and competitive Canada, and maintains the principles and standards that are the basis of Canadian citizenship while respecting provincial flexibility.

February 27, 1991
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It is false to claim, as I heard the hon. member for Essex-Windsor say a moment ago, that by cutting-


The Acting Speaker (Mr. Paproski):: The hon. member has terminated his debate. We will now turn to questions and comments.
The hon. member for Ottawa-Vanier, on the first question or comment.


Jean-Robert Gauthier: Mr. Speaker, like the minister, I can quote headlines from newspapers of Quebec, his province: "Wilson's Budget, A lack of courage", in La Presse, from Montreal; "Business and Labor are disappointed with Michael Wilson's new Budget", by Serge Truffault in Le Devoir, "Wilson squeezes civil servants and provinces first", by Chantal Hebert, in Le Devoir. And I can quote several others.
Mr. Speaker, the minister who just spoke to us would have us, Canadiens, believe that his government cares about the economic problems of our country. We do not trust this government, Mr. Speaker. It is clear. We cannot entrust the future of our country to a group of people who did not keep their word.
I would like to ask the minister how he will explain to his colleagues and to the Quebec taxpayers an article published in today's Le Devoir under the headline: "Gerard-D. Levesque: A Budget that will cost $732 millions to Quebec". Gerard-D Levesque is a somebody. Is he not one of your chums? He regrets the rise of the UI contributions. He says it will hurt Quebec to the tune of $136 millions. He also says that the $10,000 cap on capital tax deductions for businesses planned by Ottawa is bad news for Quebec. And it goes on and on like that in the article.
I am sure the minister read today the comments of well informed people, of responsible people, in the newspapers from both Quebec and Canada. So I ask him: how can he tell us here, in this House, that he is in favour of national unity, while he is a minister under a government which pulls out gradually of national programs' of established programs financing in the health, social or education areas? This government says to
Canadians: "Don't worry. We withdraw from established programs, from social programs, from health programs, but we will introduce legislation to make sure that those programs are continued by those who are responsible for them. However, we will not pay for them anymore. I ask the question, Mr. Speaker. How is it possible to make Canadians believe that?


Pierre Blais: Mr. Speaker, I may remind the hon. member for Ottawa- Vanier that the same Mr. Levesque, the Quebec Minister of Finance, supported our government's decision to introduce a goods and services tax and agreed to harmonize the provincial tax with the federal tax. Mr. Levesque's government supported our government on free trade with the United States and on a tripartite free trade agreement with Mexico, and it supported the Meech Lake Accord. I think if we are going to quote Mr. Levesque, we should quote him across the board.


Jean-Robert Gauthier: I am talking about the Budget.


Pierre Blais: The hon. member has a selective memory, Mr. Speaker. In any case, transfer payments to the provinces, in the case of the province of Quebec, rose from $9.8 billion last year to more than $10 billion-I believe $10.2 billion-this year, and next year it will be $10.6 billion, Mr. Speaker, which represents about 30 per cent of the budget of that province. Unless my arithmetic is completely off base, this is an increase, not a reduction. Granted, we had to keep increases down as much as possible, but I am convinced the provinces will spend this money wisely and that they will harmonize their budgets with the federal Budget, reflecting the kind of responsible attitude expected of all Canadians, including municipal and provincial governments and Canadians in general, who will realize that this budget is a way to achieve expenditure control. And I am convinced that provincial ministers will accept the Budget as did Mr. Levesque and Mr. Kitchen.


The Acting Speaker (Mr. Paproski):: I have four people who would like to ask the minister a question. I will go to the hon. member for Windsor-St. Clair and then I will go to the hon. member for Scarborough and then I will go to the hon. member for Laval-Est.
February 27, 1991


Mr. Howard McCurdy (Windsor-St. Clair):: Mr. Speaker, I will not get into a discussion about how wrong Mr. Levesque and this government have been about the GST and all the other economic policies of this government which at root of the cause of the disassembly of this country.
I want to try to understand how this minister claims to understand economics. Peter C. Newman in Maclean's today points out that the Liberals and this government have been responsible for deindustrialization of this country and are making a Third World nation out of Canada because they do not understand what the deficit is really all about. That deficit will continue to rise so long as this country is not capable of creating the wealth that it needs in order to cut down expenditures for make-work programs, unemployment and everything else.
I wonder if this minister understands the severe damage that has been done, even from the point of view of the announced expectations for economic growth, by this government and its Prime Minister: when it continues to cut on research and development, continues to cut on post-secondary education and continues to cut on training. Everybody who has spoken to the issue-including the National Advisory Board on Science and Technology, when every single industrial and high technology consortium-has told you, and told this government, that if it does not change its pattern of expenditures and emphasis on training, education, and research and development, this country will go down the tube and its deficit will increase.


Pierre Blais: Mr. Speaker, only a New Democrat could say that an increase of 3 per cent in the funds reserved for science and technology is in fact a decrease. Only a New Democrat can see it that way and only a New Democrat can see Canada, can reduce Canada -I let my honorable friend make his point and I wish he would give me the opportunity to finish. Only a New Democrat can see Canada as a Third World country, which is not a polite thing to say to Canadians who, for the most, enjoy the second highest standard of living in the world. Canada's economic performance was not bad during these last years. In fact, it ranked first among the 24 OECD
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countries on numerous occasions. I do not think we can take that kind of comment seriously and I believe that our government has endeavoured to maintain the 3 per cent increase in research and development funds. With the tight budget we must deal with, I believe, that my colleague should applaud and commend the government for the action it has taken.


Mr. Tom Wappel (Scarborough West):: Mr. Speaker, I have some comments and then a question for the minister.
I would remind the minister that history does not stop at 1984. This government has been around since 1984 and has done, I might say, a lamentable job with respect to the economy, the budget of this country, the physical aspects of this country, and the deficit of this country.
The minister knows perfectly well that the over-all debt of this country has doubled during the six short years that we have been held ransom by the Conservative Party in government. So, let's have a little bit of truth.
The minister was talking in his speech about a nice picture that I accept, that being a family struggling to meet their financial obligations. They sit down in the kitchen-and I accept that-and they talk to each other about those problems. But they do not try and pull the wool over each other's eyes and they do not try and pretend that things are not the way they are.
I am going to ask the minister a specific question relating to pulling the wool over people's eyes. I am referring specifically-and the minister will know this because his colleague delivered the speech yesterday-on page 2 of the finance minister's speech, talking about the aspects of recovery, growth and prosperity, there is a very simple sentence:
By law, all revenues from the Goods and Services Thx-will flow
into this fund.
I repeat, all revenues. On page 13 of the same speech, he says:
-we will ensure that all GST revenues are allocated solely to the effort to bring the public debt under control.
That is what his colleague, the Minister of Finance, said.
If, however, you turn to page 78 of the budget document, you will see that:

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The Prime Minister has given a commitment that any above-projected revenues from the GST will make a contribution to deficit reduction -
And lo and behold, something that was not in the minister's speech:
Tb implement this commitment, the government will introduce legislation to establish a specified purpose account, to which will be credited net GST revenues-
A family does not do that. A family does not play with words, in a speech in Parliament, saying "all" GST revenues and then in the explanation saying "net" revenues.
The question is simple: What does "net" revenues mean? If your colleague said "all" GST revenues, why does he then say "net" GST revenues?


Pierre Blais: Mr. Speaker, fortunately, life did not stop in 1984 because we were left with a debt of $200 billion.


An hon. member:: Now, it is $400 billion.


Pierre Blais: Yes. But the compound interest on that $200 billion is more than $120 billion.
So, $87 billion of that actual debt is a result of the debt that was there when we came into office in 1984. That is the truth, that is the reality. That is the truth and that is the reality. It was an annual deficit of $38 billion and an increase in expenditures of 13 per cent to 14 per cent, that is the reality.
About the net GST revenue, Mr. Speaker. [Translation]
It is veiy obvious the government will have to take into account the fact that out of the revenues from the GST we should not forget-and I am a little surprised my colleague did-we give back several millions of dollars to Canadians through credits to allow low income families who earn less than $ 30,000 to receive their GST refund in advance. This gives me once again the opportunity to emphasize the value of this measure, which allows us to refund millions and millions of dollars to Canadians before they can go to the stores and do their purchases. This measure, precisely has been provided within the GST framework. I believe this answers my colleague's question.


The Acting Speaker (Mr. Paproski):: A very short question or a comment.


Mr. Vincent Della Noce (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, before I start my comment, I would like to ask my hon. colleague a question. He quoted an article in Le Devoir-which is very dangerous to quote when you do not read the paper-concerning $732 million of Mr. Gerard-D. Levesque's budget. I am asking him because I read the article this morning in Quebec. It is in my area and I know what is written in the paper. I hope he did not do that on purpose, but I hate to see things like this here and $732 million-

-M. Speaker, I hope he is watching us on television- this amount of 732 million will be spent over a three year period which means it is only $244 million a year. I know it does not have the same impact to talk about $244 million; it is much more impressive to talk about $732 million, but things have to be clarified. I have Le Devoir here: We are talking about $732 million over three years, which comes to $244 million a year.
First of all, M. Speaker, since I am not a member of the Opposition, I would like to mention some positive things. I would like to ask my colleague a question, if you would give me at least a few minutes to prepare it, since only negative things were mentioned. There must be some positive elements in this budget, even if it contains a tax on tobacco.


The Acting Speaker (Mr. Paproski):: A point of order, the hon. member.


Mr. Parent:: Is it your understanding, Sir, that we are able to question the questioners in these question periods or are we talking to the minister? What is it?


The Acting Speaker (Mr. Paproski):: another speaker. The one who just spoke is the one you ask the question of.


Vincent Della Noce: I do understand, Mr. Speaker, and I thank you. Just the same, I should like to make a correction while this is still fresh in my memory.
My honourable friend did not quote the right amount of money. He was wrong when he said $732 million; since this amount will be spent over a three year period, it is only $244 million a year. I wanted this correction to be part of the official record. My honourable friend has read the same article as I have, I am sure.
Now, here is the question I wanted to direct to my honourable friend. In fact I might have risen on a question of privilege, but there are still in the budgets some positive measures, even if there is a tax increase on cigarettes. I still sympathize with the people involved in this industry who have been in a very difficult situation for several years. On the other hand, nobody mentioned for instance that there has been no tax increase on gas, something which affects a great many businesses.
My question to the hon. member is very simple: Today, during the Oral Question Period, I realized that many members still do not understand transfer payments to the provinces work. Personally, I understand perfectly but I was quite suprised today-my hon. friend will correct me if I am wrong-to hear that many Opposition members did not or pretended not to.
We have made no cuts to the transfer payments to the provinces-I think he mentioned this in his remarks- but we limited the increase to 3.7 per cent. Therefore, I should like my Hon. friend to tell me if I understood him correctly or whether the opposition feigned not to understand. I feel the opposition should read again the document which the Minister of Finance tabled yesterday.


Pierre Blais: I am
sorry, Mr. Speaker. Obviously, as my hon. colleague just said, transfer payments will increase in each of the provinces. Only the amount of such equalization payments to the wealthier provinces will in some cases be limited.
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But the fact is that despite harsh economic conditions and with very little room to manoeuvre, we were able to considerably increase transfer payments to the provinces in many areas. What we have indicated is that, in tough times, we have to better identify our priorities. That is what we have done, as well as increase transfer payments to the provinces by 3 per cent, and transfers for research by 3 per cent. Also, we were able to come up with $7 billion, including $3 billion for the unemployed.


The Acting Speaker (Mr. Paproski):: I regret that questions and comments are now terminated. Debate.


Mr. Dennis Mills (Broadview-Greenwood):: Mr. Speaker, last night as I listened to the Minister of Finance deliver his seventh budget, I asked myself: "Where are the ideas that could animate and inspire a whole generation?" Ideas, visions and principles move a nation, and for ideas to have meaning they must be returned to their centre. That centre is the human being; the human being suffering, working, striving and hoping. This is where I think the Minister of Finance and his advisers have failed. They have failed to relate to the human being. Our distinct Canadian society is centred in the person.
This minister talked about a national exercise to bring together the ideas and efforts of all Canadians. But for an effective and meaningful national exercise, trust must be the first rung on the ladder. For a minister of finance to earn trust, people will look at his track record, past and present. Does the past track record of the Minister of Finance build the trust factor or diminish it?
I would suggest over seven budgets of cuts, cuts, cuts-and I do not talk about cuts to eliminate waste, I talk of cuts because of lack of creativity. There have been multiple tax increases on the personal side, GST, sell-offs, giveaways of Terminal Three; a litany of forecasts never achieved. The trust factor on being sincere about reducing the deficit from 1984 to 1988 when we had one of the best economic performances in this country, where was the effort to reduce or hold the deficit and the debt then? He supervised. He was the Minister of Finance when the deficit went from $180 billion to $370 billion and blamed all of that on Liberals who were not in

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power. The trust factor for this minister is on precarious ground.
Let us talk about the present, last night's budget. Once again, the cornerstone of this government's plan, its Speech from the Throne, was the environment. And right off the bat we see in last night's budget cuts again. The Canada Assistance Plan which will affect our municipalities; Telefilm Canada cuts; Science and Technology, which affects our research and development, which affects our training, something we need so badly to meet the competitive levels that the Minister of Finance talks about.
Elousing. We have the worst state in our history for affordable shelter in this country, and what does the Minister of Finance do instead of trying to alleviate this problem? He pulls back over five years $411 million.
I am going to mention the Toronto Ballet Opera House. I am going to mention it because on the face of it, it would seem that the minister does not realize that a ballet house is not just for those who go to the ballet. The ballet is a cultural contribution and this is one of the greatest industries that we have in this country. It is also for tourism which is the biggest job creator in this country. But, once again, he has misread it and it is cut.
The same with cultural centres in other parts of the country.
Wage controls for the Public Service. The Minister of Finance does not realize that now with the problems we are having during a recession, with the unemployment rates going so high, with the problems we are having in immigration because of refugee backlog, with the problems we are having at Canada Mortgage and Housing, that at this time more than ever we need our Public Service to really give the kind of service that supports all of us as parliamentarians. So, when you sort of come along and spit in their faces, as we have done with this budget, that affects morale, that affects productivity and that affects the mood of this entire country.
When it comes to the present and we look at this budget, once again I see that the Minister of Finance's trust factor is again diminished.
The minister used the words "national exercise", "national unity", "faith", "Canadian value system". We have the world's second highest standard of living.
I am absolutely amazed when I hear this group of Conservatives rediscovering the word "national".
I am amazed because for the last six years they have been decentralizing and denationalizing and retreating from national programs and national standards as if they were in some form of a dismantling race.
When I hear the Minister of Finance use the word "national", I feel it is like some kind of a deathbed conversion.
I want to repeat that the human being is where we must begin.
I suggest that human beings want to be treated fairly. When fairness is a part of the national mood, then productivity will increase. Then, and only then, will the objectives of lower interest rates, lower inflation, lower cost of goods, full employment happen. Only when a human being feels like he is being treated fairly can the trust factor take hold.
I believe that the instrument the Minister of Finance has to begin that national mobilization that he talks about, to begin that galvanization, the instrument that he has at his disposal is the tax system. It is the one instrument that touches everyone coast to coast and the Minister of Finance ignored that instrument. He ignored it last night. He had one page in this budget devoted to the tax system and said: "Over the next few months we will listen to people. We will listen to their ideas and then we will go from there".
How can trust be present unless we begin with the human being and that is where the Minister has failed. He is looking at a set of numbers in a macro sense, but he is not going back to basics.
The way we galvanize the will of this nation is by treating people fairly. We know that the current tax system in this government, run by this government right now, and I will say that previous governments which we were a part of, is in sad shape and needs a major overhaul. The Minister of Finance failed to have the courage to address it in last night's budget.
I want to mention Mr. Yves Seguin, who was Minister of Revenue for Quebec until six months ago when he resigned over the GST. He said last night on Radio-Ca-

nada, the French CBC network, Le Point: "Canadian unity is in danger if the tax system is not profoundly reformed. It is favouring the rich more than ever".
How can trust be present with a minister who has failed to address the human being? What we have here as a result of that is a policy document with no moral substance. Therefore, I say, that with every good intention of this minister, this document is going to end up like the previous six where very little of it will come to reality.


Guy Ricard: Mr. Speaker, I listen to the speeches of members of the opposition and I am having some difficulty with examples they give.
I will first make a comment then ask a question, Mr Speaker. We know the budget is divided roughly into three parts: one third for the servicing of the debt, about one third for transfers to the provinces and the other third for programs. When we came into office in 1984, debt servicing cost about $200 billion and we had to borrow approximately $30 billion a year just to pay interests on that debt.
If my arithmetic is right, $30 billion multiplied by seven years amount to $210 billion, plus the $200 billion we inherited in 1984, $410 billion all told. This is about what figures now reveal.
I listen carefully when the members of the opposition tell us that we do not cut down on the right expenses. Well, it is impossible to reduce the service of the debt that calls for the third of the budget. As for the transfers to the provinces, the minister said earlier that he did not reduce them in the budget. So, that leaves the federal programs to be examined.
I would like to ask a question to the Hon. Member who has just made such an eloquent speech. If we examine the federal programs-as the minister himself suggested it-how could we rearrange the system so to recover adequate amounts of money first to pay the debt and second to improve the lot of Canadians?


Dennis Joseph Mills: Mr. Speaker, I would like to respond to the hon. member by saying that first of all when his party took power, the debt was approximately $180 billion and the interest payments during that first year were closer to $18 billion because of the current rate of tax and other
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accesses his party had to foreign capital. So when he uses numbers like $30 billion and $200 billion I do not mind a small increase, but when he is almost doubling, I get a little disturbed.
The point of the matter is, his party took power when we had one of the best economic performances ever. The Minister of Finance last night talked about setting up this reserve fund, this debt reduction fund, which I think is an interesting idea. My point would be that he mentioned when he was the finance critic in opposition in 1982 and 1983 that he was going to come in and attack this deficit, this debt problem. Why did he not implement some of those ideas at that time when he had an economy that was working in his favour? That was the time to begin acting on his words.
When we have a severe recession on our hands, it is not the time to ignore those 1.5 million people who are unemployed.
If these 1.5 million people are put to work, it will generate revenue and that will pay down the debt and the deficit a heck of a lot faster than an almost programmed unemployment. With 1.5 million people unemployed the entire social safety net becomes stressed to the point where we are locked into these deficit and debt numbers. That is where we take exception.
We hear about job creation programs being gutted and tourism programs being gutted and the small business of this nation, which employs 80 per cent of the labour, being threatened by an almost 150 per cent increase in UI premiums. That is not how to get an economy working again. That further demoralizes it.


Gilbert Parent: Mr. Speaker, I have listened to the very reasoned and reasonable critique of this budget by my colleague. In his remarks he mentioned the cuts in the transfer payments. I feel that the young people of our province and of our nation are going to be attacked by this budget because it is going to put tuition fees and the price of books, on which they are charged the GST, out of their reach.
I would like to address a very specific question to my colleague. I would like to know how he feels this budget is going to be of any benefit to the people who are in our post-graduate institutions here in Canada. Would he have any suggestions they might be able to use in order

February 27, 1991
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to enable them to get through the problem of this budget.


Dennis Joseph Mills: Mr. Speaker, I thank my colleague for his question.
He has asked me a very tough question. When I go through the litany of cuts and see the attitude in terms of cuts in science and technology and programs related to training and cultural industries, I do not see any real hope there. Because I do not see any hope, I think this budget is on the wrong track. I want to repeat, I do not think the minister is dealing with the human being who has individual aspirations. He does not realize that in order to get people to achieve at the level my colleague is talking about, or even at shop floor level, he has to put some fairness into our system. I do not think this budget addresses fairness in any way, shape, or form.


The Acting Speaker (Mr. Paproski):: I will entertain a supplementary, but first I will recognize the hon. member for Winnipeg St. James.


Mr. John Harvard (Winnipeg St. James):: Mr. Speaker, I congratulate my colleague from Broadview-Greenwood for an excellent presentation.
When he talks about putting people at the centre of things that we do, I think he is on the right track.
I want to remind my colleague from Toronto about a debate we had two and a half years ago about the free trade agreement. Our concern at that time was something that we called harmonization, in particular harmonization with certain social programs in the United States. Our concern was that this Conservative government would drag down our social programs to the level of the Americans, in other words, reducing our social programs to the lowest common denominator.
And what have we seen? I will give two examples. In the budget of yesterday there was an increase of 24 per cent in UIC premiums. UIC has been disavowed in this country. The government has backed off from unemployment insurance, a la the American style.
What about medicare? The same dismal story. The government is backing away from medicare. More than $2 billion was taken out of transfer payments in this budget alone.
In my opinion what we have is harmonization; harmonization that is rampant. I would like to know from my colleague from Toronto whether he sees exactly the same thing.


Dennis Joseph Mills: Mr. Speaker, in my riding of Broadview- Greenwood there are 20,000 senior citizens. If there is one comfort they feel in our community, in our country, it is our medicare system.
Canadians are aware of the fact that there are close to 40 million Americans without medicare, close to 40 million. When they see or feel us shifting to a standard that is similar to the United States, and they are at a period in their lives where they are basically helpless to do anything about that shift, they become very nervous. I hope this government will not last long enough to get to that point of harmonization, but I have absolutely no doubt in my mind that because of its fear of being lacking in competitiveness it will choose cuts, cuts, cuts rather than creating a bigger pot.


Guy Ricard: Mr. Speaker, I wonder if I correctly understood the answer of the member who just spoke a few minutes ago. I think I heard that he was suggesting to the government that the deficit be increased by some billions of dollars instead of cutting or reorganizing some programs.
I wonder if he is aware that the people cannot afford an increase in the deficit. Am I correct in understanding that?


Dennis Joseph Mills: Mr. Speaker, what I tried to say in my speech was the following: if a nation, a people, feels it is being treated fairly, then productivity grows immediately. Increased productivity creates more products at a better price, which creates more revenue for the Government of Canada, which creates more jobs, which means that there are fewer people on UI, fewer people on the welfare rolls, and more exports. That is where I am coming from.
It is only when the government introduces the GST and cuts, and demoralizes a community that there is a disincentive to productivity, and that disincentive to productivity comes right back in its deficit face.
February 27, 1991


Mr. Murray W. Dorin (Edmonton Northwest):: Mr. Speaker, I am pleased to have an opportunity today to speak in support of the budget that was presented by the Minister of Finance last night.
This budget is consistent and can be taken in the context of the long list of economic reforms and restructuring that we have been pursuing over the past six years. At that time we set out on economic and non-economic fronts to deal with, what were in some cases, long outstanding problems that were the country and restricting us from reaching our true potential.
During that time we reformed the energy sector through abolition of the National Energy Program and deregulation. We reformed the transportation sector through deregulation. We reformed the investment sector through abolition of the Foreign Investment Review Agency to allow for increased foreign investment, especially needed in resource areas of the country like Alberta and western Canada.
We have been privatizing Crown corporations. We are trying to expand trade opportunities through such measures as the Free Trade Agreement with the United States and are now examining the possibility of a trilateral trade agreement between Canada, the United States, and Mexico.
We made major reforms to the unemployment insurance program. The list goes on and on.
All of these have been an attempt to make the Canadian economy more market oriented, more able to compete in international markets. I believe each of these steps has been positive in itself. Frankly, on most of them we have no choice.
The world economy has undergone and is continuing to undergo radical change. If we think back to 20 or 30 years ago, there were a few industrialized countries like our own producing most of the industrial products and services for the rest of the world. We think of countries like Japan back in the fifties and sixties. They were thought of as producing low quality products that nobody really wanted. We do not think of Japan in that way any more. The same can be said for countries such as Taiwan, Korea, now Thailand, and others, which have gradually moved to value added high technology products that now compete with the best that we can produce here in Canada.
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We are currently seeing a virtual revolution going on in eastern Europe. Those countries have recognized that they must move forward and they must become more market oriented if they are going to share in the same kind of economic benefits as has the rest of the world.
What this means is that we no longer have a monopoly on technology and industrial production that we used to share with a few other countries. Today, our former customers are now our competitors. But we have always been and continue to be a trading nation, the second most dependent nation in the world on trade.
Now trade, investment and capital flows are more international than ever before. It is competition that we have not known in the past or at least not known to this degree, and it is probably going to be much more severe in the future. This means that we have to prepare ourselves for what is coming.
I believe that these structural reforms, along with the signals that have been given in yesterday's budget, put us in a position to do that. On page 51 of the budget document reference is made to this:
The government's structural reforms, implemented since 1984, have helped raise the economy's potential growth rate from about 2 3/4 per cent during the 1980s expansion to a projected 3 1/4 per cent over the medium term.
That increased capacity of approximately three-quarters of a percentage point of real growth per year is where we can find the resources, among other things, to deal with the deficit and debt problem we are concerned about, but also on an ongoing basis free up money and capacity to do the kinds of things that most of would like to get on with.
The potential growth rate is determined by the growth of labour, capital and total productivity. As noted on page 51:
The Free Hade Agreement with the United States, deregulation of industries, and the effect of the GST will stimulate capital spending. The capital stock is expected to grow 4.4 per cent a year over the medium term, up from 3.5 per cent-The structural reforms will also raise total factor productivity growth which should average 0.5 per cent a year compared with virtually no growth during (the last) expansion.
While aggregate output growth is expected to be similar over the 1993-96 period to that recorded between 1984-87, there will be many differences in the over-all performance of the economy. Much more of the growth will come from business fixed investment and a net trade balance than in the previous expansion which was led by

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growth and consumption, both by households and governments.
Productivity performance should also be better. These differences in the composition of growth, more supply and less consumption will contribute to fundamentally lowering inflation pressures and an improved competitive position internationally. The economy will therefore be in a much better position in 1996 than it was toward the end of the 1980s.
By 1996, Canadians, under this scenario can achieve an economy with no government sector debt, no current account deficit, no net reliance on foreign savings, and low inflation. This represents a return of the more balanced economic type of environment that we had been 1950 and the mid-1970s.
In short, we will have set for sustained growth and prosperity rather than the wrenching cycles that we have been going through between the 1970 and 1980 period.
How do we achieve this? I guess what is important in the message from the Minister of Finance's budget last night is the fact that fundamentally we must continue to keep the growth in the deficit and debt under control. The only way to manage and keep sustained growth in the economy is to keep interest rates low on a permanent basis. High public sector deficits do not allow for that.
Many people do not understand the relationship between government debt and interest rates. Essentially, there is only so much money available in an economy from the savings that people have put into retirement plans and other savings instruments. If the government consumes all those savings or a substantial part of them, it crowds out demand from other sources such as business which wants to borrow for investment. Essentially the price then goes up or interest rates go higher, meaning our companies and Canadian business cannot compete in the capital markets against other countries where capital is available at a lower rate. We have seen this, for example, in Germany and Japan.
There is no other way of doing this. Other countries have tried. They have tried, for example, printing money, which is about the only other choice. That just simply does not work.
Sometimes in this House we tend to talk as if the government and the Bank of Canada can set interest rates simply where they wish, with no other consequences. The fact of the matter is their ability to do that is limited. Essentially, international capital markets are going to have a much more greater influence in the things we do in Canada.
That is why, in order to establish the environment for lower interest rates, we must give the signal that both public sector debt as well as inflation are going to be maintained under control. That is why in his budget last night the Minister of Finance dwelt essentially on those two items, because both are related.
If we keep inflation under control or reduce it to the 2 per cent level that he is seeking, this sets the environment for lower interest rates on an ongoing, sustained and permanent basis. This naturally reduces the cost of borrowing for everyone, including the government, which means that the debt we carry will be easier to pay the interest on. As well, we will be able to start to reduce that debt because after about the middle of this decade, about 1995, we will hopefully be in a position where we will not be issuing any more new government bonds.
Of course all of these are predicated on some assumptions, but I believe that the Minister of Finance in his budget last night has made realistic assumptions, as realistic as anyone can make given the nature and times that we are living in. None of us, for example, a year ago in the budget debate would have expected to have gone through a war between then and now. We will likely face other challenges between now and next year's budget.
I think what the Minister of Finance has shown last night is that he is prepared to make the adjustments necessary to stay on track. He set the track several years ago. He has consistently addressed this every year. Adjustments are required and he made them. We have made some adjustments again in terms of the public sector and what we plan to do as a government. We have done that, to send a signal to the private sector so that it can have the confidence that the economic climate, inflation and interest rates will be maintained and that levels of inflation and interest rates will be reduced.

Hopefully this will bring the kind of investment stimulus that we are all looking for and the kind of job creation that we would all like to see.
I would like to say one thing, because I see there is a member of the Liberal Party seeking to ask me a question.
I enjoyed his speech, by the way. He talked about tax reform, which is a favourite topic of his recently. I wonder if he could comment, while he is asking his question, on when he is prepared to come to the finance committee and explain his proposal, because we had to postpone the meeting which was scheduled before Christmas.


Dennis Joseph Mills: Mr. Speaker, first of all, I will address the question regarding the single tax, which is a fairer and simpler system than the one we have on the table now. It needs refinement and modifications, which I am doing in conjunction with my leader's tax task force.
Our single tax team would be happy to appear before the finance committee in the not too distant future. We hope that we will provide some creativity for him.
My question has to do with the dollar. I notice that the Minister of Finance last night never talked about the dollar, and none of the speakers today on the government side talked about the dollar. We all want to increase our competitiveness, we all want to get full employment going again, and we are all concerned about exports.
I would like to know the member's thoughts on bandying the dollar around 78 and 82 cents. He never mentioned his thoughts on the dollar during his speech. I wonder if he would elaborate on what he thinks that might do to stimulate exports, which would take people off the unemployment rolls. That in itself would not have a great effect on inflation or interest rates in my opinion, but at the same time would probably take less drag on the deficit.
What are his thoughts on that?


Murray Dorin: Mr. Speaker, first I would like to say that when he gets his caucus to agree to his tax proposal, I can assure him that I will have no problem in getting mine to support it.
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Dennis Joseph Mills: Did you hear that?


Thomas (Tom) William Wappel: Absolutely.


Murray Dorin: As far as the question about the dollar, there is often debate as to whether or not the dollar is too high relative to the productivity in the country. But when he suggests that somehow we can bring this dollar down, one has to ask: how does this happen?
There is a suggestion that the Bank of Canada has been doing something to keep the dollar high. In fact, the numbers do not bear that out. Foreign reserves are at an all-time high, something in excess of $20 billion. What that means is that the Bank of Canada has been intervening in financial markets, essentially to try and keep the dollar from going even higher.
Beyond intervening in those markets and accumulating even higher degrees of foreign reserves, there really is not any direct way of dealing with it unless we are prepared to impose some kind of currency controls.
We used to have a fixed dollar; we used to have it fixed to the United States. But that was abandoned because, essentially, it did not work. The government could not make it stick. There was simply too much pressure on the dollar. There were too many dollars available for sale that the government then had to buy up, and that policy was abandoned. Most countries in the world that have had those kinds of policies have also abandoned them.
There is really no industrial country in the world at the moment, that I can think of, that has this kind of policy. The Europeans are trying to bring about a more common currency. The Deutschmark does dominate the economy there-and they do intervene-but in part that is because they have the Bundesbank in Germany essentially supporting that. For us to peg the dollar to the United States dollar would, for the most part, require us to get the Americans to agree to assist us. I am not sure that they would, in the first place, and probably we would not want them to do that.


Thomas (Tom) William Wappel: Mr. Speaker, I listened carefully to the member's address. If I understood it correctly, the member has great faith in the prognostications and tea-leaf reading ability of the Minister of Finance. I of course do not have that same faith.
I would like to ask three specific questions to the member, addressed to some of the prognostications that

February 27, 1991
The Budget
were made by the finance minister last year as compared to what he in fact said last night in his budget speech.
He said last night, and I quote, "We will hold the deficit to $30.5 billion this year and next"-I repeat, $30.5 billion this year and next-"despite the pressures of recession". Then he predicts that the deficit will fall next year below $25 billion for the first time in a decade. I ask the hon. member, does he believe that, in view of the fact that last year the Minister of Finance did not say that he was going to hold the deficit, but rather predicted that it was going to be below $30 billion? He did not predict a recession, which he himself made.
Later in his speech he said, and I quote: "The economic recovery will begin in the second half of this year and accelerate next year". So the question is: Does the member believe that statement, in view of the fact that last year the finance minister in no way in his speech predicted that this year there would be a recession? On the contrary, he predicted the exact opposite and was wrong.
Finally, he predicted in his speech yesterday-he was talking about interest rates-that the interest rates will be well below the 1990 average of 13 per cent. Indeed, the 1990 average was 13 per cent, but I am sure the member will remember that the finance minister predicted that they would not be anywhere near 13 per cent when he delivered his budget in 1990.
I ask the member: Does he believe in the prognostications of the Minister of Finance on those three points, three points on which he was 100 per cent dead wrong one year ago? If he does, why has the minister's future seeing ability, clairvoyance, suddenly got better?


Murray Dorin: Mr. Speaker, I will try to respond to that as briefly as I can because I think we are nearly out of time.
First of all, yes, I do believe that the minister will meet his targets. I think that anyone involved in predicting economics, or for that matter in budgeting in a business, would recognize that in terms of the order of magnitude we are talking about a difference in the deficit between what was predicted and what it is now coming in at of about $1 billion to $2 billion.
In government we use billions, but in business we deal with either thousands or millions. In order of magnitude
with a $150 billion approximate expenditure budget, we are talking about something between a 1 and 2 per cent variance here. I think that with any business plan that comes in with a 1 or 2 per cent variance, most businessmen would think they had been pretty close.
In terms of the economic recovery, the member has asked why do I believe that that will start in mid-year. I think that is probably a good case because last year it was expected that the economic slowdown would come sooner than it did. In fact, it came somewhat later in the year, which probably means that the recovery now projected is going to begin somewhat sooner than we might have thought last year.
As far as interest rates, the fact that the economy remains stronger than predicted for a period of time is one of the reasons interest rates also remain higher. What we are seeing now is the response. Interest rates have fallen; the demand for borrowing and credit has been reduced. In all likelihood, I think if anything the Minister of Finance's projections are probably conservative.


Hon. Roy MacLaren (Etobicoke North):: Mr. Speaker, a number of my colleagues have already or will shortly speak on specific aspects of the budget and how they affect Canadians in various regions of our country and in various sectors of our economy, the adverse impact that the budget will have on the expectations of Canadians during this period of recession.
I want to spend a few moments in this budget debate on the question of where the government has come from and pick up a point that my colleague from Scarborough just touched upon, and that is the credibility of the government and of the Minister of Finance in offering Canadians their budget forecast for the time ahead.
The Minister of Finance and the government enjoy nothing more than to attempt to blame the current recession on the Liberal government in the period prior to 1984. This seems like a footling waste of time of the House of Commons and indeed of the people of Canada to engage in such surrealistic thinking. The fact remains that, in statistical terms, what the government says when it attempts to blame a previous government for its present dilemmas is nonsense.

I shall offer the House one example and then proceed to a consideration of the background of the budget itself.
The Minister of Finance enjoys, it seems, pointing to the 1980-81 recession when interest rates were over 20 per cent. But what he does not add is that at that same time inflation was 12.5 per cent. Not only in Canada, but globally inflation was high. In Canada it was 12.5 per cent, so that the real interest rates were 7.5 per cent.
What happened in May 1990 when this government and this Minister of Finance were in office? Interest rates were at 14.1 per cent, inflation was 4.4 per cent. So the real interest rates in May 1990 were 9.7 per cent and in 1981, as I say, they were only 7.5 per cent, so who is fooling whom? The fact is that this government has made its own recession. It has created its own recession. At a time when interest rates could have been much lower, the government pursued its wrong-minded interest rate policies and contributed to the recession that all Canadians have been affected by during the last year or so.
I shall return to that point shortly, but I also want to say that, prior to this budget, Canada has been a country in quite severe recession. That is in part the result of the failure of this government to take the five and six years of unprecedented prosperity in the 1980s as an occasion to rein in government spending, to make those years a real occasion of reducing the debt and reducing the deficit in accordance with all orthodox economic thinking.
After all, in past years, thanks in part to the measures of the Liberal government prior to 1984 introduced, we have had strong employment, strong economic output, strong income. Then there was a case for a more conservative fiscal policy. When the economy is buoyant that is the occasion to take measures to curtail in government spending and to permit the private sector to expand and develop as it can do in the circumstances which I have described.
But what we have seen is a reversal of Keynesian economics. We have had a reversal of orthodox economic thinking from this government. It did not act in a time of prosperity. It did not act during its first years in office to counter excessive spending in the economy. It did not rein in government spending. When the time came that it realized that the economy needed regulation and control, it sought only the monetary route to do so. It
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imposed ever higher interest rates on Canadians. It imposed interest rates as virtually its sole method of attempting to fight what it perceived as growing inflation in Canada. In doing so, it not only discouraged investment, discouraged small business, discouraged farmers from making further commitments to growth in our economy. But the government also increased, and I have to think intentionally, the spread between Canadian and U.S. interest rates to unprecedented levels. Now what does that mean for the average Canadian? It means a loss of jobs. It means a loss of exports. That is what the continuing wide gap between U.S. and Canadian interest rates means. Yet, this government went right ahead and persevered in its wrong-headed policy of ever-increasing interest rates.
The government knew that by doing so, that each point of increase in interest rates meant a yet higher deficit service charges for Canadians. Our deficit service charges increased until the point has been reached where the government has had to acknowledge in this budget that it has made no progress in reducing its deficits. Our deficit today is far higher than the Minister of Finance predicted only a year ago. It is back to what it was when he came into office following a major recession.
The result of this high interest rate policy and of the differences in interest rates between Canada and the United States has been to drive up the Canadian dollar. It has driven the Canadian dollar up to unrealistic levels, levels which do not match our productive capacity. The result of that unrealistic exchange rate is that we are suffering from the inability of Canadians to export not only to the United States, but abroad, because the value of the Canadian dollar is grossly inflated.
We have seen the results in Canada of the effect of the high interest rate policy the government has pursued with a wrong-headed obstinacy. If anyone does not believe what I am saying is reliable, let me refer to the Economic Council of Canada, a respected economic think tank financed by the government.
In reviewing economic policy of the past two years, the Council said that it does not believe that the current rate of unemployment is acceptable and unavoidable. The council concluded: "One painful lesson learned about fighting inflation with monetary restraint-that is, high interest rates-is that the remedy only works when it brings on a recession. This in turn reduces employment, investment and export sales". That is exactly what this government has done. It has brought on a made-in-Ca-

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nada recession. It has driven up unemployment. It has discouraged investment and our exports have sagged.
That is part of the background to the budget that the Minister of Finance introduced last night.
I want to turn for a moment to a more specific review of the minister's credibility. Last year in his budget, the Minister of Finance projected that interest rates would fall from 12 per cent in 1989 to 11 per cent in 1990. Instead, they averaged 13 per cent, further fueling the pressure on the deficit that I have already touched upon. As interest rates go up, so goes the deficit. The government has in response now cut and slashed programs in the name of reducing the deficit. Yet it created many of the circumstances, through high interest rates, that have lead to the major deficit that confronts every Canadian.
The Minister of Finance, in his last budget, predicted an inflation rate which would decline from 5 per cent in 1989 to 4.7 per cent in 1990 and would reach 4.5 per cent by the end of last year.
Yet, what is it today? Canada's inflation rate stands at 6.8 per cent although our economy has been enduring the made-in-Canada recession for over six months.
I want to cite another example of the inability of this Minister of Finance to offer the Canadian people accurate forecasts, accurate predictions, of what is going to happen in the economy in the time ahead.
The Minister of Finance's deficit prediction was $28.5 billion for 1990, and for 1991, $26.8 billion. Now we know that the deficit this past year has amounted to $30.5 billion and indeed the minister himself acknowledges that it would have been $35 billion if he had not acted in some way to reduce the growth in the deficit.
One can go on. There are many examples of how inaccurate this minister has been in his forecasting and in offering the Canadian people any certain guide to what lies ahead.
In his last budget, the minister predicted that Canada would experience a 1.2 per cent growth rate in 1990, but he added: "Growth is expected to rebound in the latter half of 1990 and in 1991, led by an improvement in net exports".
In fact, the economy shrank in the second quarter of 1990 by almost 2 percentage points to be followed by further contractions in both the third and fourth quarters of last year. Moreover, in the first quarter of 1990 I regret to say that Canada marked a record current account deficit in its trade of $20 billion. This was not the improvement in net exports which the Minister of Finance not a year ago promised the Canadian people.
What is the situation if we turn to the budget today? What is the situation with regard to the government's credibility and the Minister of Finance's forecasts?
This budget which is full of rhetoric but short of facts offers the assurance that short-term interest rates are expected to fall to 9.5 per cent this year from the current level of slightly over 10 per cent, and average 7 per cent over the medium term.
This is an interesting statement on the part of the Minister of Finance because until very recently he was as staunch a monetarist as the governor of the Bank of Canada. He was saying: "We must above all things pursue high interest rates as a method of restraining inflation". But suddenly the Minister of Finance seems to be a born-again fiscalist. He has given up his monetary obsessions and has now decided that the principal obstacle to increased affluence in Canada and increased prosperity is high interest rates. Above all things, we must now bring down interest rates.
Yet it was he himself who raised interest rates steadily every month, every month over the past year and a half. It is he who has now decided that his principal task is to bring down interest rates. But they are not to come down very much. They are just to come down from the current 10 per cent to a 9.5 per cent average over the next 12 months.
That is not much of a reduction. It certainly will do nothing to close the gap between Canadian and U.S. interest rates. It certainly will not be enough to bring about the resurgence of investment, the resurgence of economic commitment that all Canadians seek.
In believing that he can bring down interest rates even to that limited level, the Minister of Finance suggests that inflation will fall to 2.9 per cent by the end of 1992 and 2 per cent by 1995. Mr. Speaker, 2.9 per cent inflation by the end of 1992 from the 6 per cent and 5 per cent inflation that Canadians have been experiencing is a
February 27, 1991

major reduction. We are to see inflation cut in half in two years.
The Minister of Finance does not tell us how he is going to do this.
This is quite wonderful. This is quite marvellous. There is nothing that any of us would prefer to see than inflation brought down at such a rapid rate. But as the Toronto Globe and Mail said today, these numbers are amazing. They are not backed up by any information, any projections, any details about how Canada is to achieve this quite remarkable reduction in inflation while at the same time interest rates are only supposed to fall a very little bit.
The minister further claims in this budget that in 1992-93, instead of the present $30 billion-plus represented by the deficit, we shall have a deficit of $24 billion, $16 billion the following year, and $10 billion in 1994-95. These are amazing numbers, as the newspapers have said. But the Minister of Finance does not tell us how he is going to get there.
I would suggest that we take a very careful look at the assumptions made in this budget. The Canadian people will ask themselves where, for example, the 3.5 per cent growth is to come from next year. Canada, deep in a recession today and with some quarters exhibiting no growth and some quarters negative growth, suddenly next year is to achieve growth of 3.5 per cent and 4 per cent in the following year. The Minister of Finance, in offering these bald numbers unsubstantiated by any analysis, stretches the credulity of the Canadian people. Who can have confidence in these numbers on the basis of the minister's past performance or in the past performance of this government? These are numbers one might hope will be achieved, but on the present evidence
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and on past performance, the Canadian people can have no confidence that this government is capable of bringing about the radical change that is set forth in this budget. And yet, at what a price? At what price has the government set itself these goals?
The government talks about radically restructuring the economy, making Canada more competitive. What is most striking about the government's failure to act over the past seven years is that on the debt, on the underlying structural weaknesses in the economy, this government has not acted. It has not acted for seven years. It is now attempting to act in an inappropriate way. This is what comes from an economic philosophy that believes that the government has no role in the economy, in a political agenda which has resulted in the fragmentation of our country along regional, linguistic or social lines.
What the Canadian people are looking for are not these pie-in-the-sky, excessively optimistic, unsubstantiated budget measures which do not really address the principal issues confronting Canada today.


An hon. member:: Hear, hear.


Roy MacLaren: I am very pleased to hear the member opposite supporting the views that I have just set forth. I am sure their views-


The Acting Speaker (Mr. Paproski):: Well, on that basis my clock here shows six o'clock. The hon. member will have ten minutes remaining in his questions and comments when he begins tomorrow.
It being six o'clock this House stands adjourned until tomorrow at eleven o'clock a.m., pursuant to Standing Order 24(1).


[Stage Direction]
The House adjourned at 6 p.m.
[Stage Direction]
Thursday, February 28,1991