May 6, 1974


1973-74 Preliminary Actual*1' 1974-75 Forecast1**> (Millions of dollars) Budgetary Transactions- Revenues Expenditures Surplus (+) or Deficit (-) 19,000 -20,000 - 1,000 23,950 -24,400 - 450Net Non-Budgetary Transactions- Excluding Foreign Exchange Transactions - 675 - 1,550Total Financial Requirements- Excluding Foreign Exchange Transactions - 1,675 - 2,000Foreign Exchange Transactions(3) 297 - 368Total Financial Requirements- Including Foreign Exchange Transactions. - 1,378 - 2,368 "'Numbers in this column are subject to revision pending closing the accounts for the fiscal year. However, the numbers for total financial requirements whether including or excluding foreign exchange transactions are subject to only minor adjustments. *-!Number- in this column should be interpreted as mid-points of ranges of estimates. <s)The amount which is shown for financial requirements arising from foreign exchange transactions in fiscal year 1974-75 reflects the transactions which occurred in April. The Budget-Hon. John N. Turner


GOVERNMENT OF CANADA BUDGETARY REVENUES


1973-74 1974-75 Preliminary Actual*1' Forecast*7' (Millions of dollars) Personal Income Tax 7,915 9,500Corporation Income Tax 3,185 4,610Non-Resident Tax 325 340Estate Tax 15 -Customs Duties 1,375 1,520Sales Tax 2,625 2,640Oil Export Tax 300 1,740Other Duties and Taxes 1,080 1,250Total Tax Revenues 16,820 21,600Non-Tax Revenues 2,180 2,350Total Budgetary Revenues 19,000 23,950 O'Numbers in this column are subject to revisions pending closing the accounts for the fiscal year. (2>Numbers in this column should be interpreted as mid-points of ranges of estimates.


GOVERNMENT OF CANADA REVENUES AND EXPENDITURES ON A NATIONAL ACCOUNTS BASIS


1973-74 1974-75 Forecast*1' Forecast*1' (Millions of dollars) Revenues- Direct Taxes, Persons 10,950 13,405Direct Taxes, Corporations 3,520 4,860Direct Taxes, Non-Residents 325 350Indirect Taxes 6,475 8,095Other Current Transfers from Persons... 5 5Investment Income 1,850 2,095Capital Consumption Allowances 300 330Total Revenues 23,425 29,140 Expenditures- Current Goods and Services 6,250 7,025(Non-Defence) (3,950) (4,575)(Defence) (2,300) (2,450)Transfer Payments to Persons 7,540 9,215Subsidies 1,025 2,335Capital Assistance 235 210Current Transfers to Non-Residents 305 410Interest on the Public Debt 2,600 2,960Transfers to Provinces 5,080 6,150Transfers to Local Governments 110 120Gross Capital Formation 780 875Total Expenditures 23,925 29,300Surplus (+) or Deficit (-) -500 - 160 '"Numbers in these columns should be interpreted as mid-points of ranges of estimates.



May 6, 1974 The Budget-Hon. John N. Turner


GOVERNMENT OF CANADA REVENUES PUBLIC ACCOUNTS AND NATIONAL ACCOUNTS RECONCILIATION


1973-74 1974-75 Forecast*11 Forecast*11 (Millions of dollars) Budgetary Revenues 19,000 23,950 Deduct Post Office Revenues and Deficit -590 -690Deficit of Government Business Enterprises*21 -120 -120 Excess of Accruals (4-) over Collections (-) Corporate Income Tax 115 -35Oil Export Tax 225 -60 Add Government Pensions and Social Security Receipts*31 4,850 5,880Capital Consumption Allowance 300 330Miscellaneous Adjustments*11 -355 -115Total Revenues, National Accounts Basis, ,.. 23,425 29,140 (11 Numbers in these columns should be interpreted as mid-points of ranges of estimates. *2)In the Public Accounts, deficits of government business enterprises are a charge to budgetary expenditures whereas in the National Accounts, these deficits are deducted from remitted profits of other government business enterprises. *3>In the Public Accounts, the government pensions and social security receipts and benefits are treated as non-budgetary transactions whereas in the National Accounts, these transactions are reflected in the determination of government revenue and expenditure. (,1These miscellaneous adjustments arise as a result of conceptual differences between the two forms of presentation. These items represent, for example, the proceeds from the sales of existing capital assets; budgetary revenue items offset against budgetary expenditures; imputed items; and, an adjustment for the treatment pf revenue in the supplementary period.


GOVERNMENT OF CANADA EXPENDITURES PUBLIC ACCOUNTS AND NATIONAL ACCOUNTS RECONCILIATION


1973-74 1974-75 Forecast*11 Forecast*11 (Millions of dollars) Budgetary Expenditures 20,000 24,400 Deduct Transfers to Funds and Agencies*21 -1,860 -1,880Post Office Expenditures - 590 - 690Deficit of Government Business Enterprises*31 - 120 - 120 Add Expenditures of Funds and Agencies*21... 785 1,030 Government Pensions and Social Security Benefits*11 5,545 6,375Capital Consumption Allowance 300 3301973-74 1974-75Forecast^ Forecast(l)(Millions of dollars) Miscellaneous Adjustments(6) - 135 - 145Total Expenditures, National Accounts Basis. 23,925 29,300 *0 Numbers in these columns should be interpreted as mid-points of ranges of estimates. *21In the National Accounts, budgetary appropriations to various funds and agencies are replaced by the expenditure actually made by these funds and agencies. *31In the Public Accounts, deficits of government business enterprises are a charge to budgetary expenditures whereas in the National Accounts, these deficits are deducted from remitted profits of other government business enterprises. (11In the Public Accounts, the government pensions and social security receipts and benefits are treated as non-budgetary transactions whereas in the National Accounts, these transactions are reflected in the determination of government revenue and expenditure. 161 As in the case of revenues, the miscellaneous adjustments arise as a result of conceptual differences between the two forms of presentation. These items represent, for example, reserves and write-offs; purchase of existing capital assets; budgetary revenue items offset against budgetary expenditure; expenditures of reserve accounts and revolving funds; imputed items; and, an adjustment for the treatment of expenditures in the supplementary period.


LIB

John Napier Turner (Minister of Finance)

Liberal

Mr. Turner (Ottawa-Carleton):

In conclusion Mr. Speaker, the budget I have brought down tonight is a fiscally responsible budget. It is an equitable budget, aimed at raising revenue where it hurts least, distributing it where it helps most. It is an economically sound budget which attacks the scourge of inflation at its source-the shortage of supply. It recognizes that the fundamental cure to both inflation and unemployment is to overcome the physical limits on our capacity to produce by expanding the agricultural and industrial base of the country. And this budget further extends our policies of protecting those least able to protect themselves from the ravages of inflation and of moderating price increases of a number of goods that play an important part in daily living.

I have always tried to be frank with parliament and the people. In this budget I have rejected cosmetic policies- the easy, popular course at the sacrifice of realism and of the best long-term interests of the Canadian people. I am gambling that Canadians are too smart to be taken in by gimmicks, slogans or slick jargon-that they want to know the facts, whether they are pleasant or unpleasant, and they ask only for a man's best judgment in meeting them.

This budget reflects my determination to deal with inflation. It presents a responsible fiscal and monetary policy. It recognizes the need for all governments, including this one responsible to parliament, to restrain spending. It focuses upon the pivotal issue in the economy-the physical constraints on capacity. It proposes solutions within the context of Canada's place in the markets of the world, where we are not helpless, but neither are we immune to universal price trends.

[Mr. Speaker.J

May 6, 1974

When I first faced the House as Minister of Finance, I said that no economy is working as well as it should if there are men and women earnestly seeking work who cannot find it. The scene has improved but I am still not satisfied with the results. Now that our cost of living absorbs our attention, I say that I won't be satisfied if this country merely does better than our major competitors. I do not believe that is good enough. My goals are not relative but absolute ones: to moderate our rate of inflation, to relieve the pressure of prices on incomes, on savings and on the peace of mind of Canadians.

It can be done. It will take time to do. But it will happen-partly because international commodity prices will yield, partly because this government's policies will be proven right.

I am confident that most Canadians will accept what I have been saying tonight and will support the thrust and tone of this budget. The people of this country are gifted with good common sense and an open mind. If this House can bring itself to judge my budget with the same common sense and open mind, then I am sure that the measures I have proposed will commend themselves to enough members to ensure its passage.

Topic:   GOVERNMENT ORDERS
Subtopic:   GOVERNMENT OF CANADA EXPENDITURES PUBLIC ACCOUNTS AND NATIONAL ACCOUNTS RECONCILIATION
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PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Hon. Marcel Lambert (Edmonton West):

Mr. Speaker, if that was to be the swan song of the Minister of Finance (Mr. Turner), it certainly was a long one. I think we must commend him for his physical endurance, and commiserate with the physical plight of the people who have had to listen to this rather long review.

The minister proposes to remove the sales tax on bicycles, but this budget demonstrates in him and his advisers the mentality of the bicycle age in dealing with modern day inflation. The minister and the government have finally come to admit that inflation is the number one problem facing this country. Last year, in February, the matter that the minister was after was unemployment. I casually looked over the motions that have been tabled by the opposition in all the budgets since 1968-the Secretary of State for External Affairs (Mr. Sharp) was then minister of finance-and they all warned of inflation.

The government, outside of that halting and bungling step taken by the Prime Minister (Mr. Trudeau) in 1969, did nothing to contend with inflation, and now the savings of Canadians are being eroded to the point that they must be bribed to buy Canada Savings Bonds which are supposed to be the yardstick and as good as cash. There is a cash bonus which, incidentally, when you read the fine print is a lot more complicated than the Minister of Finance indicated, that is, it is not available until maturity. Is it not a crying shame that what the public really buys must be subject to premiums during the currency of the bond and at the end, much in the way that we have seen financial institutions operate, the government is trying to bribe investors with a turkey-or a bicycle-for the opening of the new account? This is what the minister is trying to do in order to keep Canadians buying Canada Savings Bonds.

One question the minister did not answer tonight refers to whether the minister has reserved the right to close off

The Budget-Hon. Marcel Lambert the present series of Canada Savings Bonds. When will that happen? We know that this year an investment in Canada Savings Bonds, because of inflation and the government's lack of concern for inflation, has meant a loss to individuals. Smallholders, estates, educational funds and all who depend on Canada Savings Bonds will find that because of inflation their savings have been eroded. Is it not a reflection that the past week's Bank of Canada weekly report indicated that the average rate on government long-term obligations has gone up to 8.91 per cent, in effect 9 per cent? That is what this government must pay for its money, all because it has neglected inflation shamefully.

The budget that the Minister of Finance has presented tonight contains some cosmetic proposals that sound very nice and will appeal to people superficially. Some of them have some merit-I will concede this; I think there are some good measures in this budget. But basically the minister reminded me-I have said this before-of a man who is trying to save a patient from bleeding to death simply by putting on bandaids. The minister will run out of bandaids. He is putting on a plaster here and a plaster there without going to the root source of inflation in any way.

It was very instructive to learn that the minister has rejected the idea of a comprehensive incomes policy to turn the corner of the inflationary anticipation that exists in Canada. He is prepared to do nothing, and he has ridiculed the policies put forward by this party.

Topic:   GOVERNMENT ORDERS
Subtopic:   GOVERNMENT OF CANADA EXPENDITURES PUBLIC ACCOUNTS AND NATIONAL ACCOUNTS RECONCILIATION
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?

An hon. Member:

What policies?

Topic:   GOVERNMENT ORDERS
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PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert (Edmonton West):

Yet last Friday, when I asked the Prime Minister what was the contingency plan to deal with inflation, he said: a wages and incomes policy. Yes, there it is, when everything comes down in ruins and everything is a shambles, when this administration fails to recognize the problem of inflation, it decides that we shall have a wages and incomes policy. At the moment we are getting selective price controls; we are getting palliatives. The Minister of Finance has frankly told the Canadian people, "I am hoping that we will be able to outrun inflation. We will give you fuel and we will try to help you outrun inflation." Well, they cannot do it. In effect, the attitude of the administration is that they hope inflation will go away somehow, somewhere; that there will be an event, that someone will discover some magical formula which will relieve them of the difficult decisions that must be made with regard to inflation.

This House has been in session for over an hour and a half, and I think hon. members want to study this budget. Incidentally, Mr. Speaker, there is one point that I would like to draw to the attention of the Minister of Finance on behalf of all members of the House. It came to my attention tonight that while members of the House were denied the contents of the budget, all that was required was for anyone to listen to radio or watch television at about 8.15 or 8.20 p.m. However, that would not have helped that brilliant member for Ottawa Centre (Mr. Poulin), because what I am saying is that a colleague of mine brought in the total of the minister's proposals by 8.20 tonight. They went out through the media-the total proposals that the minister made.

May 6, 1974

The Budget-Hon. Marcel Lambert

If it is to be the case-and this is not just idle carping- that members are denied copies of the minister's proposals, but all you have to do is listen to the radio and by 8.20 you have the total budget, while members here had to wait until 9.30 to get the minister's speech in total, then there is something wrong and I would suggest that the matter be looked into so there is no repetition. This would apply also to whoever may be minister of finance next year.

In the event that the government House leader has quit having fun and games with the continuation of this debate, and if he can indicate to us when the budget debate will resume, bearing in mind the traditions of the House and all that goes with the serious consideration of a budget, I would move, seconded by the hon. member for

Saint John-Lancaster (Mr. Bell), the adjournment of this debate.

On motion of Mr. Lambert (Edmonton West) the debate was adjourned.

Topic:   GOVERNMENT ORDERS
Subtopic:   GOVERNMENT OF CANADA EXPENDITURES PUBLIC ACCOUNTS AND NATIONAL ACCOUNTS RECONCILIATION
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PC

Thomas Miller Bell (Official Opposition House Leader; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Bell:

Mr. Speaker, bearing in mind what the government House leader said the other day regarding debate on the budget to be announced as late as Monday, is it late enough now for him to tell us when this debate will be resumed?

Topic:   GOVERNMENT ORDERS
Subtopic:   GOVERNMENT OF CANADA EXPENDITURES PUBLIC ACCOUNTS AND NATIONAL ACCOUNTS RECONCILIATION
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LIB

Allan Joseph MacEachen (President of the Privy Council; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. MacEachen:

Yes, Mr. Speaker. In accordance with the request of the Leader of the Opposition (Mr. Stanfield), the budget debate will commence practically immediately, which in my understanding will be tomorrow.

On motion of Mr. MacEachen the House adjourned at 9.43 p.m.

Tuesday, May 7, 1974

Topic:   GOVERNMENT ORDERS
Subtopic:   GOVERNMENT OF CANADA EXPENDITURES PUBLIC ACCOUNTS AND NATIONAL ACCOUNTS RECONCILIATION
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May 6, 1974