Oh, oh!

Mr. Johnston:

-and "let us roll back some of those bloated ministerial assistants' salaries." It is pretty obvious that the Government needs highly paid assistants over there, but $80,000 is a bit much.

In addition, the Prime Minister and Cabinet Members will take a 15 per cent cut and a 10 per cent cut respectively. Having read this document and the accompanying material to the extent I have, I think that cut is modest. I am sure everyone on this side of the House, with the exception of the two rumps, will agree. In fact, if they had any humility, they would at least double that cut on the basis of the work they have done for this country to date.

Hear, hear!

Mr. Johnston:

I see the Minister of Finance has taken his leave. I am concerned. I have expressed the opinion certainly of everyone in this caucus, and probably even the Members of the NDP, although they probably have not had time yet to check it with Dennis. My concern is to learn whether the Minister of Finance is really his own man. There is an important tradition in Cabinet that Ministers of Finance have the final word. They set-

[ Translation]

-the framework for economic policy and they also have a policing function, which is extremely important, especially with the crowd across the floor.

I ask you, can we take the Minister's rhetoric at face value, considering what his actions have been up to now, including what he announced in his statement this evening? I say there is no comparison, and I would like to give two examples.

Economic Statement

I read the Minister's speech which he gave in Ottawa to the Strategic Planning Forum Conference. He took a few gratuitous swipes at the previous government. He said that throwing money at individual problems without treating or even examining the whole patient was surely unconscionable quackery. I am delighted the Minister of National Revenue (Mr. Beatty) is applauding that. Would he also applaud the $15 million investment in Petromont against the recommendations of all experts, against the recommendation of the principal shareholder, Union Carbide? Or, did he recognize that for what it was-political expediency of the worst kind. That is where the Minister of Finance is to exercise discipline, over his colleagues, which he failed to do. Not only that, Petromont was there during the election. Our government and our Leader recognized that that was not an investment in the interests of the taxpayers of the country. If there was ever a moment for political expediency, it was during the election campaign. The former Hon. Member for Vercheres will testify to that. That is what I mean by: Is the Minister of Finance his own man? [Translation]

Unfortunately, he is not and I would like that to change. [English]

I should like to make another point. The Minister speaks of certainty in the tax system. This is the same Minister who, together with his colleague the Minister of National Revenue, decided to suspend advance tax rulings on certain kinds of tax credit transfers which were within the law and upon which advance rulings had always been given. This created a climate of uncertainty; proceed at your own risk because you do not know where you stand. What has the result been? Ask Algoma what the result has been. Ask Tembec what the result has been. The result has been direct job losses in the private sector. That is how the Government plans to re-energize the private sector.

So, if we want the Canadian taxpayers to know exactly where they stand, that policy must be changed tomorrow.

Nobody gave this Government a mandate to govern by uncertainty and instability, having run on the premise and with the rhetoric that what ought to be established in the country was a solid investment climate where people knew exactly where they were going, with the tax system set out, with advance rulings and so on. Frankly I find it incomprehensible.

I have another great concern with the Minister of Finance. I mentioned his tennis at the beginning. I would like to extend the metaphor. What we have seen in the Throne Speech debate and here in this financial statement is a series of lobs. I see that the Deputy Prime Minister (Mr. Nielsen) does not know the term. That is when one hits the ball into the air, sometimes as high as one can, to see if one can get into position before it lands. We have task force lobs, consultation

November 8, 1984

Economic Statement

lobs, committee lobs. We have a series of lobs thrown up by the Minister of Finance. That is not his style, because I have seen him on the court. However it is the style of this Government. Take him off that short leash. Let him give us the kind of programs in which he believes. Do not let him be the servant of the "happy hackers"; the Deputy Prime Minister, the Prime Minister with his generous promises, and the Minister of Regional Industrial Expansion. It is a shameful way to govern.

Also I have to spend a moment on this quite extraordinary introduction about the national legacy inherited by the Conservative Government-a decade of-I cannot remember the term. I fear I will have to read the document again, much as I would rather not. The cupboard is bare, we were told.

The cupboard is bare.

He garbs himself as Mother Hubbard. Mother Hubbard as I recall the nursery rhyme-but others have probably read it more recently than I-was not a hypocrite. She did not know that the cupboard was bare when she went to it. There is not one Member on that side of the House nor one Canadian who followed budget debates in the country over the last several years who does not know that the cupboard is bare. With a projected $29 billion deficit, would anybody suggest that the cupboard was not bare? Would anybody suggest that it would be barer at $31 billion or $32 billion? Now they are saying $37 billion, but I doubt that very much. It has always been known that the financial cupboard was bare, but there was a very rich legacy hidden away in that cupboard which the Minister of Finance studiously avoids mentioning, although he paid some tribute to the remarkable progress of the country in bringing down inflation, the greatest evil which can beset any society.

When I look at some of the comments made by the Prime Minister during the election campaign, he certainly knew the cupboard was bare. He was predicting deficits of upwards of $36 billion per year. Now he has the culot, as we say in Quebec, to come in here and tell us that they did not know the cupboard was bare. In fact, in many respects the situation is much healthier than they led the Canadian population to believe.

In fairness to previous Liberal governments of the last several years, I want to read a few facts into the record which will never be read by any other Party in this House. They were contained in various speeches given over the years. Now that we are in Opposition, perhaps someone will listen to us. I should point out in looking at this, and it may come as a surprise to many, that Canada now in terms of inflation is in fact lower than the United States. Based on the recent three-month period, our inflation rate July through September is 2.6 per cent. Put that in your cupboard.

Let me just give a few facts. We have been criticized for growth. Let us go back over the period from 1968. The Canadian Economy has grown on average 3.4 per cent per year, at a rate equivalent with France, faster than the United

States, Germany, Italy, or the United Kingdom. Among the summit countries, only Japan has had a higher growth rate in that period.

Listen to this carefully because I have a feeling that most of the Conservatives in this House do not like to be inhibited by facts. Nor do our friends in the New Democratic Party. I will be brief.

In 1984, earlier this year, 3 million or 42 per cent more Canadians were employed than in 1968. The comparable average for the other six summit nations, including the United States, admired so much by our Prime Minister (Mr. Mul-roney) and some of his colleagues, is only 15 per cent. That is the comparable average in the other summit countries. We created new jobs at about three times the rate of our major economic partners under Liberal governments, under Liberal policies.

Hear, hear!

Mr. Johnston:

That is what the Minister of Finance (Mr. Wilson) and the Prime Minister also found in the cupboard. Our record for absorbing new workers into the economy, at least until the mini-budget that we heard here this evening, has been a remarkable one, especially as regards women. In 1968, 2.5 million women, or 37 per cent of working age women in Canada, were employed. In 1983, these figures had risen to 4.5 million and 52.6 per cent of working age women in this country. That is another fact. That is another part of the legacy which we have given, involuntarily, to the Conservative Party.

We have had a faster growing labour force than any other OECD country. Without going through all of these, let me touch one in particular which destroys the credibility of the rhetoric which we find in this particular document about how dreadful things have been in the past 10 years.

Real disposable income per capita, which as we all know is a widely used measure of the standard of living, grew about 60 per cent in Canada over that period, which is well above the 44 per cent increase in Canada over the previous 15 year period. It compares with a 35 per cent increase in the United States durng the same period.

I do not think I need go on. I will be happy to table this document, if Members wish, in both official languages. It will give them the opportunity to educate themselves a little bit on the legacy which has been left to them. If they do as well in the period in which they have the over-all direction in this country, all Canadians and all of us will be grateful.

I must say that tonight portends terrible news for Canada. The prospects which we read about in this document are in no way represented by the particular actions, the particular steps that have been taken and put before the Canadian people tonight.

In concluding my remarks, Mr. Speaker, I could go on all night, but I was told that I have as much time as the Minister of Finance. However, I am not interested in talking about

November 8, 1984

every aspect of his budget. I mentioned a few which may turn out to be the most dangerous for our society. But I must say that it is an extremely shaky start for the Minister of Finance (Mr. Wilson). We are very disappointed and let down.

I am bitterly disappointed by what I saw there this evening.

I had great expectations that finally, after all the rhetoric, after all the speeches, the Throne Speech and the election campaign, even though we are partisan, hidden away somewhere there was some approach that would be different, that would be creative, that would light the way to greater prosperity, to a lower deficit, meeting as many of the irresponsible promises put forward by the Conservative Party as possible. We have not seen that period. We are in darkness. All I can say is on behalf of my colleagues-

[ Translation]

I would like to urge the Prime Minister to give more freedom to his Minister of Finance. He cannot be kept on a short leash as we saw this evening simply to protect the new government's credibility, which will no longer exist after tonight. He must be given more freedom of action, he must really have the mandate required to steer the government and the country. Since he does not have that, it is imperative to take action to avoid the consequences and the disastrous effects of the budget he brought down this evening. I, for one, always found the Minister to be a very flexible and reasonable man. It is obvious that he has detected the flaws in the statement he made here this evening.

If we were completely partisan politicians, we would rejoice. We would be chortling over here at this extraordinarily incompetent piece of economic strategy that has been put forward for Canadian consumption. But we do not. I say that more in sorrow, frankly, than in anger. If they continue down this road, I would predict that before the next election the sky will be dark, dark with chickens coming home to roost.

Mr. Nelson A. Riis (Kamloops-Shuswap):

Mr. Speaker, on September 4 Canadians voted for a change. They had been told during the election campaign that the priority of the Progressive Conservatives, to quote the Prime Minister (Mr. Mulroney), was jobs, jobs, jobs. Immediately after the election, we noticed a significant change in their priorities, to the deficits, to cuts, to tax increases. We have seen a move away from jobs to tax increases, to a reduction of services that Canadians have traditionally been used to.

What is interesting is that here is a government that for years and years has said to the people that we have to get government off of our backs, that we have to lighten it up, we have to get government off the back of the ordinary Canadian citizen. Tonight in the economic statement of the Minister of Finance (Mr. Wilson), Canadians are being asked to pay more in gas taxes. They will be expected to pay another 10 cents a gallon or 2 cents a litre. There will be more tax for watching television. Those with cable television will have to pay more.

Economic Statement

When you take out a divorce certificate, you have to pay for that. When you take out a citizenship certificate, you must pay for that. If there is a security investigation for your Visa application, you have to pay for that. When the government inspector comes to inspect scales, those who run shops and service stations across the country will have to pay for that privilege. All of the people who work in agricultural producing firms and have people coming in to check on their facilities will now have to pay for those federal inspectors to come on site. Those people who visit national parks will have to make increased payments. Those entrepreneurs who have a new idea or patent to register will have increased costs when registering that patent. It goes on and on, Mr. Speaker.

This was the Government that wanted to get the government off people's backs. We now have a document containing pages and pages of new and creative ways for the Government to be on the backs of ordinary Canadians once again.

In the Throne Speech on Monday night, we heard of a new era that was about to begin, a new era of co-operation, a new era of economic renewal and social justice. Tonight we see the reality. The reality is the same old policies that we have seen year after year, but with a Conservative face on them. We have seen cuts to services to ordinary Canadians. We have seen increases in taxation to ordinary Canadians. The result of this will be continual confrontation, continual economic stagnation and a continuation of the social injustices that exist within our country.

There has been no change, Mr. Speaker. The Prime Minister said earlier today that we would be applauding the economic statement of the Minister of Finance. Let me tell you, Mr. Speaker, that we are not applauding that statement. Ordinary Canadians will not be applauding the statement they heard tonight. The Government promised jobs and we have tax increases and cuts in service.

A number of symbolic actions were included in the statement. For example, for the benefit of Bay Street, the Government's net cuts out of this year's expenditures will be $2 billion in a $200-billion economy. Again, this is a symbol. The net effect will be job losses.

Our analyses to this point have indicated very clearly that while the Government says that the unemployment level will be 11 per cent next year and will slide down a percentage point or two between now and 1990, that will only happen assuming that the deficit and the interest rates in the United States will be decreased substantially. With the cuts in government services, the cuts in government programs and the increased taxes that Canadians will be paying as a result of this statement tonight, our analyses indicate that we will be seeing the loss of between 50,000 and 100,000 jobs in the months ahead.

We do recognize that there are positive items in this statement. The introduction of the measures proposed by the Auditor General was, I believe, accepted by all Members of the House as a positive step. The rebates in fuel costs that will be available to farmers, loggers and fishermen is certainly

November 8, 1984

Economic Statement

good news. Increases in spouse's allowance for those over the age of 60 and slight increases in pensions to veterans is good news. The Government said that it added $1 billion to job-creation funds, but, in a sense, that was a bit misleading. What the Government meant was that while the Liberals had promised a cut in the coming year, the Conservative Government was not going to make that same cut. It would keep the same levels of funding that existed this year. In a sense, there is no increase from the status quo.

The real news in tonight's economic statement is that there is good news for those on Bay Street. The billions and billions of dollars worth of tax loopholes that exist in our tax system were not plugged tonight. They were not touched at all. However, for the unemployed in Canada, for the underemployed in Canada, for the poor, for those people struggling to make mortgage payments, for the hard pressed small business person, for the farmers and fishermen, for those in the forest and mining industries, there is nothing in this budget. For the ordinary Canadian citizen, there is nothing in tonight's statement that will benefit them.

What is in the statement for the average, ordinary Canadian citizen is increases in the price of gasoline by 10 cents a gallon or 2 cents a litre and an increase in unemployment insurance contributions. The Government will again introduce all of the tax increases first introduced by the Liberal administration. This will result in $9 billion being taken out of the pockets of ordinary Canadians over the next four years. It will be taken out of the pockets of the small communities across Canada, of the rural areas across Canada and will be focused here in Ottawa. Those are Liberal tax increases that this Government has simply re-introduced. At least the Liberals had the courage to say how much the increases would cost. Liberal Members said that they would cost $9 billion over four years. In this statement there is no mention of that. There is only mention that there will be cost increases that have been in the pipeline as a result of the actions of the Liberal Government. The Government did not have the courage to admit what was going to happen.

I suppose the biggest surprise of all is that the oil companies, the corporate sector and all Parties in this House have agreed that one of the biggest boondoggles in tax give-aways is the PIP program. Each year, $1.5 billion is shovelled out to the oil companies to bribe them into exploring and developing our frontier areas. They say they do not need that. There was a cut, Mr. Speaker, but it was cut so that this coming year the oil companies will only receive $1.6 billion in PIP grants. However, there are significant cutbacks for research and development in the energy sector, and particularly in the area of renewable energy or the conservation of energy. There have been nearly $70 million in cutbacks to research and development in that critical area.

There have been cutbacks to research and development funding in the forest industry. If there is one item that Members of Parliament have been briefed on time and time again, it is the serious problem of research and development through to production in the forest industry. What is this

Government's response to that critical and growing catastrophe in that critical sector? It is to cut back on further research and development in that particular area.

Presumably the Government may have indicated that the National Research Council would take up the slack. We have learned that funding to the National Research Council will be cut by $35 million. We know that we must explore and develop new markets for our manufacturers. What do we find? We find that export market development funding will be cut back by a few million dollars in this coming year.

What about social housing programs? In today's Toronto Sun, I read that housing starts across the country on an annual basis are now at about 129,000 a year. On the business page it is indicated that that is a virtual catastrophe for that critical sector. What is the response? The response is to cut out social housing on top of the cuts to the tune of $10 million made by the Liberal administration.

What about the RAPP program, the one program that hundreds and hundreds of thousands of elderly Canadians took advantage of? That program enabled people to make renovations to their home to extend its life for another 20 or 25 years. It was labour-intensive and helped seniors across the country, particularly those who live in some of the older neighbourhoods in the older parts of the country. What was the response? The response was to cut back on the RAPP program funding by a few million dollars. Funding to that critical program was reduced by $30 million.

Most Members of Parliament have sons or daughters, nieces or nephews, grandsons or granddaughters who take advantage of the Summer Canada Program, which affords them summer jobs and enables them to return to their studies in the fall. That program will be eliminated by this Government. The Government is saying that it will not help the young people of this country with summer jobs and that $85 million will be cut from Summer Canada. What a low blow that is to the young people of the country!

When the small business sector has ideas, skills and is developing markets but needs a little seed money to get its operations going, it looks to the federal Government or the provincial Governments to provide that seed money to enable it to take that first and critical step. The response of the Government is to cut funding to the industrial incentive programs to the tune of $200 million. The Government has said to the small business sector of the country that its good ideas will have to stay where they are just a little while longer.

There were cuts of $84 million to the CHIP program. Fisheries is a critical resource which is in difficulty on both the East and West Coasts. Funding to development and assistance of that particular sector has been cut $12 million. Of course, where funding is needed most, in research and development, it is cut by $1.5 million.

Research and development is critical to the future of the Canadian economy and in virtually every sector of the Canadian economy. But, the Government has cut it out. It has been

November 8, 1984

totally removed. Research and development is not necessary! Every other western industrialized nation is increasing both private and public investment in research and development, except Canada. We are now notable for cutting back in that critical area. The Japanese have built 19 centres in the last year to develop research through production programs, at a time when Canada is cutting back. What a regressive step!

There is no mention of cutting back on the hundreds of thousands of dollars which Ministers spend each year on flights across the country in government jets. One could make comments about nannies and so on that are on the public purse, but one need not get into that.

This was an opportunity for the Government to send a clear message to Canadians that now is the time to change the course in this country, now is the time when action will be taken and the process of putting Canadians back to work into meaningful, long-term, permanent jobs will begin. The Government did not do that. It could have set not only targets to reduce the nation's deficit, but set targets to reduce levels of unemployment in this country. One can make the case that when there are 1.5 million people officially unemployed and hundreds of thousands unofficially unemployed, and when there are literally hundreds of thousands of small businesses and farms across this country on the verge of going into receivership, backruptcy, or on the verge of simply closing their doors and walking away disappointed, the Government could have taken some positive steps. It could have set targets for reducing unemployment. It could have sent a clear message to Canadians by cutting the increase in the federal sales tax, introduced by the Liberals when they were in power. The Government did not do that. That is a billion dollars which will be taken out of the pockets of ordinary Canadians. They are valuable dollars which will not be circulating in the small communities of Canada.

Where the Government really missed was on its opportunity to say something strong about interest rates. I realize the Minister of Finance said that he wished interest rates would come down and he hoped they would come down in the future. It sounds like the fairy tales my young sons used to read-if you wish it will come true. Having a lower made-in-Canada interest rate policy would have been a signal which would have kick-started the economy back into life. I do not know whether Canadians are aware of this, but we now have the largest real interest rates of any country in the western industrialized world. Most of our trading partners do not have the same real interest rates that we have. I think it is time that Canadians asked themselves: Why is it that we have the largest real interest rates in the western world?

As others have indicated, we just learned in the last few hours that as a result of these large spreads in interest rates the Canadian banking establishment managed to accumulate the largest profits of any banking establishment in any country of the entire world. I think we must ask ourselves if it is necessary to have those high real interest rates in Canada. Is it not time to introduce-as we suggested during the election campaign-measures which would ensure that the Bank of

Economic Statement

Canada would set rates which would result in a real return- which is traditional in this country-between 2 per cent and 3 per cent? Today the real return is about 8 per cent. What would happen in a country with interest rates in the 6 per cent or 7 per cent range? It is the kind of situation in which you find small businesses being able to afford their operations, where jobs would be created and homeowners could start to build their homes once again. If the interest rates in this country were at 7 per cent, the price of a typical Canadian home would be cut in half. In other words, homes would be affordable again and we would be moving away from the crisis situation which we are facing in our homebuilding industry.

Is it not time to review the tax system of this country? The Finance Minister had very little to say about changes in the tax system. He did say that we needed to look at a minimum tax for those thousands and thousands of wealthy Canadians whose incomes year after year may be $100,000 or $200,000 and who pay absolutely no income tax, not a single cent. Maybe they should pay something. But, rather than act on it, rather than take action and set up a committee to introduce legislation and programs to close off the loopholes, the Government said that it would think about it. It will study it, contemplate it, medidate on the concept, and sometime in the future it may act. That is not the kind of change that the people of Canada voted for on September 4.

Hear, hear!

Mr. Riis:

We can imagine what Bay Street is doing tonight. The champagne is flowing. The federal Government is subsidizing corporations by more than $18 billion a year, and that will continue. The second largest area of welfare in the country is the billions and billions of dollars which we hand out to corporations with no expectation that jobs be created and with no expectation of affirmative action programs. In other words, you take the taxpayers' money and they will get nothing in return. If we are to continue to take taxpayers' money and give it to corporations, is it not time for Canadians to expect something in return, particularly jobs, for that kind of tax incentive?

We must change our tax system. We must take action on our tax system. When the tellers in the banks of Canada are paying more in income tax than the Royal Bank of Canada and the Bank of Montreal combined, in terms of dollars and cents, something has gone wrong in the country. Our major banks are now among the richest banks in the world. They did not pay a single penny in income tax in 1982. Plus, they received a deferral for the next year of $22 million. That is the kind of tax system which we have. Canadians wanted change but there was no mention that that was the kind of change which Canadians could expect in the months and years ahead.

We feel it is time to start investing in our young people through programs such as the Youth Initiatives Program. That would result in substantial amounts of money being provided to our young people, which would allow them to develop the kind of employment opportunities that the country requires and that they are able to take. We feel that it is time to invest

November 8, 1984

Economic Statement

in a resource policy that would result in the upgrading of our resource sector, such as forestry. Significant increases ought to be placed in those sectors, which would result in economic return to the country such as reforestation programs, programs for disease control and pest control, silvaculture programs and fire control programs. We are talking about the need to create jobs in order to get the people of Canada back to work. We feel that that is how the deficit can be dealt with most effectively.

If small businesses are expanding their operations, if consumers feel confident, are employed and can purchase the necessary goods and services that they require, if farmers, fishermen and ranchers are in a mood of expansion and development, that means that sales taxes will start to flow into the federal coffers. It will mean that personal income taxes will start to flow back into the coffers. It will mean that the corporate sector will start to pay its taxes with a fair tax system. That is the way in which we would like to see the deficit reduced in this country, by putting people back to work and by expanding the economy. That is the kind of change that we feel Canadians wanted on September 4.

One can go on and on, Mr. Speaker, about what this document did not do tonight. We knew from the comments of the Minister of Finance and the Prime Minister that the cupboard was bare. What ordinary Canadians did not realize was that as a result of this economic statement their cupboards will be bare. As a result of this economic statement, rather than changes which will result in jobs, economic development, hope for the small-business person, what we have is an economic statement which will result in tax increases for ordinary Canadians, costs for government services which traditionally one would expect to pay as part of their taxes, and significant cuts in programs which will result in job loss and a reduction of assistance for economic development across the country.

We feel, Mr. Speaker, that this economic statement was not introduced in the best interests of ordinary Canadians but that it was introduced in the best interests of Bay Street.

Mr. Speaker:

It being approximately 8.45 p.m., pursuant to order made Wednesday, November 7, 1984, this House stands adjourned until tomorrow at eleven o'clock pursuant to Standing Order 2(1).

At 8.42 p.m. the House adjourned.

Friday, November 9, 1984