May 9, 1989

ROUTINE PROCEEDINGS

PETITIONS

NDP

Nelson Andrew Riis (N.D.P. House Leader)

New Democratic Party

Mr. Nelson A. Riis (Kamloops):

Mr. Speaker, it is my honour and privilege to present a petition on behalf of a number of residents of Kamloops, British Columbia. The petitioners point out that only 2 per cent to 3 per cent of prime time television drama on English language television is Canadian, that 77 per cent of all magazines sold in Canada are foreign, and that 85 per cent of all records and tapes sold in Canada are foreign.

Therefore, the petitioners call upon Parliament to promote and adequately support Canadian cultural agencies to ensure that Canadian cultural institutions remain in Canadian hands, and to ensure fair funding for artists and cultural organizations in every region of the country.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   PETITIONS
Sub-subtopic:   SUPPORT FOR CULTURAL INSTITUTIONS
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NDP

Nelson Andrew Riis (N.D.P. House Leader)

New Democratic Party

Mr. Nelson A. Riis (Kamloops):

Mr. Speaker, I have another petition on another topic, again certified correct pursuant to Standing Order 36. The petitioners are from Kamloops, British Columbia. They point out that the tax burden on average families is roughly $1,000 greater than it was in 1984. This petition must have been presented prior to the last Budget, because they could have added on another $1,700 on top of that $1,000 if it were more timely. The petitioners point out that there has been a shift in the burden of taxation from corporations to wage-earners.

The petitioners call upon Parliament to establish a minimum tax on profitable corporations, and to ensure

that the burden of taxes is more fairly spread among individual and corporate taxpayers.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   PETITIONS
Sub-subtopic:   MINIMUM TAX ON CORPORATIONS
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NDP

Rodney Edward Murphy (Whip of the N.D.P.)

New Democratic Party

Mr. Rod Murphy (Churchill):

Mr. Speaker, today I have the honour to present five petitions. One is from the City of Thompson and the community of Wabowden. Another one is from Winnipeg, Lorette, Dugald, Anola, and Hazel Ridge in Manitoba. Another petition is signed by residents of the Dauphin and Sifton areas of Manitoba. Another petition is signed by residents of Heading-ley, Oakburn, Strathclair, and St. Francois Xavier.

All petitions are on the subject of the Port of Churchill. The petitioners are calling upon the Government to utilize fully the Port of Churchill because it would improve the economies of Canada's prairie provinces. The petitioners believe that there is a need for the federal Government to develop the obvious potential of Canada's only inland seaport.

Therefore, the petitioners humbly call upon Parliament to direct the Minister responsible for the Wheat Board to ensure that, at the very least, 3 per cent of Canada's annual grain shipments be shipped through the Port of Churchill, and that the Government pursue aggressively additional ways to utilize this important seaport and to ship exports other than grain.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   PETITIONS
Sub-subtopic:   FULL UTILIZATION OF PORT OF CHURCHILL
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NDP

Ian Gardiner Waddell

New Democratic Party

Mr. Ian Waddell (Port Moody-Coquitlam):

Mr. Speaker, I have a petition signed by the residents of the Village of Belcarra which is in my riding of Port Moody- Coquitlam. Whereas the federal government funding for the Supernumerary Special Constable Program previously allocated to the Royal Canadian Mounted Police in Coquitlam detachment for policing the rural area where they live has been cancelled, the petitioners call upon the Government to reinstate the funding for the Supernumerary Special Constable Program, thereby alleviating the negative impact on an already intolerable situation. They need the police service, especially when summer arrives.

May 9, 1989

The Budget-Ms. K. Campbell FERMI II NUCLEAR PLANT

Topic:   ROUTINE PROCEEDINGS
Subtopic:   PETITIONS
Sub-subtopic:   FUNDING FOR SUPERNUMERARY SPECIAL CONSTABLE PROGRAM
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NDP

Steven W. Langdon

New Democratic Party

Mr. Steven W. Langdon (Essex-Windsor):

Mr. Speaker, the petition which I would like to present this morning, and which has been certified, comes from approximately 500 people in the constituencies throughout Essex County and the City of Windsor.

The petition notes that just a few kilometres from our border the Fermi II nuclear plant is continuing to operate. It continues to pose a clear danger to lives and to property in our part of the country because of the "abysmal record of accidents at the plant".

The petitioners therefore call on our Government to take as strong action as possible to push the United States Government to accept an independent review process which will ensure that this plant is assessed fairly, to see if it is safe for the future.

jjc

Topic:   ROUTINE PROCEEDINGS
Subtopic:   PETITIONS
Sub-subtopic:   FUNDING FOR SUPERNUMERARY SPECIAL CONSTABLE PROGRAM
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QUESTIONS ON THE ORDER PAPER

PC

Pierre H. Vincent (Parliamentary Secretary to the Minister of Finance)

Progressive Conservative

Mr. Pierre H. Vincent (Trois-Rivieres):

Mr. Speaker, I ask that all questions be allowed to stand.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   QUESTIONS ON THE ORDER PAPER
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PC

Steve Eugene Paproski (Deputy Chair of Committees of the Whole)

Progressive Conservative

The Acting Speaker (Mr. Paproski):

Shall all questions stand?

Topic:   ROUTINE PROCEEDINGS
Subtopic:   QUESTIONS ON THE ORDER PAPER
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?

Some Hon. Members:

Agreed.

Topic:   ROUTINE PROCEEDINGS
Subtopic:   QUESTIONS ON THE ORDER PAPER
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GOVERNMENT ORDERS

THE BUDGET


The House resumed from Monday, May 8, 1989, consideration of the motion of Mr. Wilson (Etobicoke Centre) that this House approves in general the budgetary policy of the Government, and the amendment of Mr. MacLaren: That the motion be amended by deleting all the words after the word "that" and substituting the following therefore: "this House regrets that the Government has imposed unfair taxes and has cut vital programs, including child care, regional development and agriculture, in an effort to reduce its annual deficit, despite the fact that this effort has been rendered futile by the Government's ill-conceived high interest rate policy; and That this House condemns the Government for pursuing these policies that fall most onerously upon lower and middle-income Canadians and that are certain to hinder the further development of the Canadian economy."


PC

A. Kim Campbell (Minister of State (Indian Affairs and Northern Development))

Progressive Conservative

Hon. Kim Campbell (Minister of State (Indian Affairs and Northern Development)):

Mr. Speaker, it is a pleasure to participate in the debate on one of the most important functions of government, that is to create a fiscal plan, a budget whereby the Government can function for the coming year and whereby we can ensure the continued prosperity of all Canadians.

As Canadians, we have a serious problem. It is our large and growing national debt. The national debt is growing by $3 million an hour. By this time tomorrow the debt will be larger by more than $80 million. In just two weeks it will have grown by more than $1 billion.

The interest payments on the debt are also increasing rapidly. Only 20 years ago, just 12 cents of every dollar the taxpayer sent to Ottawa went to interest payments. When this Government came to power four and a half years ago, that figure had already increased to 32 cents. This year it is over 35 cents.

The debt is a major obstacle to building the kind of future we all want for ourselves and for our children. In the House yesterday, the Member for Esquimalt-Juan de Fuca (Mr. Barrett) talked about the Budget and said that it did not say anything about food banks, that the Budget did not say anything about poor people in Canada. I think the Budget deals directly with the problems of poverty and the disadvantaged in Canadian society.

Unlike the New Democratic Party, our Government does not view Canadians as victims and does not see it as being the role of government to perpetuate weakness and dependency. Our Government sees the role of government in Canadian society to strengthen individuals, to strengthen people in their communities, to give them the wherewithal to stand on their own two feet. Without careful fiscal planning that addresses the fundamental problems of poverty, the problems of unemployment, the problems of training, these goals cannot be achieved for Canadian society.

Without addressing the problems of public debt, the Government of Canada cannot address the question of income disparity in Canadian society. The Government of Canada cannot provide training for Canadian workers who are displaced by technological change or other shifts

May 9, 1989

in the economy, and the Government cannot play its role in enabling individual Canadians to stand on their own two feet.

I think the question of the public debt, which is the most important theme addressed by this Budget, is fundamental to all Canadians and fundamental to achieving the social goals we have set for ourselves as a society.

How did Canada acquire its debt? Like any family or individual might have done, Canada acquired its debt by living beyond its means. The national debt is simply all of the yearly deficits added together. The deficits are simply the difference between the amount of revenue the Government receives and what it spends.

Although we now receive as much revenue we need to pay for program expenditures, we have another expenditure which is creating our deficit, that is the cost of interest on the national debt.

Only 20 years ago Canada had no deficit. Our total debt after an entire century of Confederation was only $18 billion. The cost of servicing our debt was well within our means.

During the 1970s and the early 1980s we spent freely. Regardless of the question, the answer was always government. The problem of yearly deficits began in these years. The deficits were relatively small in the beginning, but year after year they grew in size and began to take their toll.

In 1984 when we came to power, the $18 billion debt had risen to nearly $200 billion and the annual deficit, the shortfall between revenues and expenditures, was more than $38 billion. By then Canada had built into its public finances a self-propelling force that threatened to undermine our valued reputation for fiscal prudence and responsibility.

The sad reality of debt is that it feeds on itself. Each year more effort is required from the citizens to produce new revenues that merely go to pay the interest on a growing debt. It places the nation on a treadmill.

We must ask ourselves: Should this enormous debt be our legacy to future generations? Let us be clear about what it means if we continue year after year, government after government, to borrow and borrow just to pay interest on the debt. We could be paying in the years ahead for programs and policies of yesterday.

The Budget-Ms. K. Campbell

Not long ago there was an advertisement in The Globe and Mail by an advertising company that was expressing its particular concern about the national debt. Of course, advertising companies are very skilled at putting forward their views in vivid images. I think the image in this advertisement was extremely effective. It was a picture of a baby with a ball and chain, and that ball and chain are the national debt. Unless we address the national debt, we have put a fiscal ball and chain around the legs not only of today's infants but of infants yet to be born. We would be paying in years ahead for programs and policies of yesterday. Our government resources would be spent to pay the interest on our commitments of the past rather than addressing the problems of today or the challenges of tomorrow.

We live in a very changing world, a world in which the challenges of tomorrow are in many ways unknown to us.

One of the main themes of our Throne Speech was a concern for the environment. More and more industrialized countries are coming to recognize that many of the processes and practices that they rely upon are inconsistent with the survival of the planet. We will have difficult choices to make in the future.

We may have additional environmental catastrophes to deal with in order to clean up the environment. We look at something like the oil spill in Valdez, Alaska and recognize the limitations of our own ability to deal with those situations. We may have to make difficult choices with respect to technologies, with respect to products, with respect to sources of energy. These choices, in order to protect our environment and our planet, may require us as a country to engage in considerable expenditures. How tragic if our children discover that 50 cents or 35 cents of every tax dollar they send to their government to engage in those activities which are part of the national purpose are devalued because most of those tax dollars are required to pay a national debt incurred by their parents and grandparents. That is a legacy we cannot leave to our children.

We have a changing workforce. Although it has been an integral part of our Government's policy to provide training and training opportunities for a changing workforce it has also been an integral part of that policy to call on the private sector to play its role. Nonetheless, opportunities for training and our commitment to education for all our people throughout our lifetime is essential in order for us to be able to meet the challenges of a

May 9, 1989

The Budget-Ms. K. Campbell

changing economy and the demands of a changing workforce.

What a tragedy if we do not have the money to meet those challenges because that money is going to pay interest on the national debt.

Our workforce is changing in other ways. We now hear from many industries in Canada about labour shortages because of a shortage of skills. My generation, the baby-boom generation, perhaps has created a false impression about the availability of labour in Canadian society. However, by the 1990s we will be facing serious labour shortages. For example, we cannot afford to take women out of the workforce. It is with a considerable amount of regret that the Government has deferred the third prong of its child care policy. However, today's demands are very small compared to the demands that we will see 10 years or 20 years down the road for assistance to enable a broad range of Canadian people to remain in the workforce.

What a tragedy if we do not have money to support those social goals because our tax dollars are increasingly going to pay interest on the national debt.

We have an ageing population. I speak particularly of my own generation. I have a strong vested interest in the fiscal health of my country because I am at the cutting edge of the baby boom. When my generation finally retires it will not be at the age of 65. They will not be able to retire at 65 because they will be needed, which is wonderful. We have already opened up opportunities for workers over the age of 65 to remain in the mainstream of our working population. However, the challenges of an ageing population are in many ways as yet unknown. Our elderly are healthier than they used to be. Yet we do not know what the impact on Canadian society will be when that huge demographic bulge, the baby boom, gets into its 80s and 90s.

I can tell you, Mr. Speaker, that I do not want to have to face a young generation who will reproach me with the debt that I have incurred and put on their backs because I was not prepared to take tough decisions to reduce the national debt.

There are many challenges that face the future of Canadian society, challenges that we will not be able to meet successfully if we do not remove that legacy of debt. We would be borrowing from our children and not paying our own bills.

It is easy to borrow from future generations because they have no voice in this debate. They have no vote. Yet it is they who must live with the consequences if we do not act.

The Government therefore acted. The Minister of Finance (Mr. Wilson) presented a budget that helps build our future instead of mortgaging it. We are reducing our expenses and improving our efficiency and our operations. We also call upon all Canadians to play a greater role in solving this national problem.

We recognized the seriousness of the debt problem when we came to office. We have been acting to get it under control. I find it amusing to hear comments in the House that somehow the Government's approach to reducing the deficit is some kind of new departure in policy, that we did not talk about it during the last election campaign, that it was a secret agenda. I tried often to talk about it during the last election but, unfortunately, my opponents were not interested in talking about the deficit.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   THE FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some Hon. Members:

Oh, oh!

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   THE FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

A. Kim Campbell (Minister of State (Indian Affairs and Northern Development))

Progressive Conservative

Ms. Campbell (Vancouver Centre):

They wanted to talk about free trade. We have been talking about the deficit for a long time. We have been doing something about it since 1984. We will continue to do something about it. Not only have we been acting to get it under control but we have succeeded, since 1984, in reducing the growth of the debt from almost 24 per cent a year in 1984 to less than 10 per cent last year. Despite that progress the debt is continuing to grow more rapidly than our national income.

An interesting aspect of public discussion about the national debt is the statement made by some, including some economists, that somehow the national debt is not itself a problem. They say that we owe it to ourselves, so it is not really a problem that should concern us because it is simply the left hand lending to the right one, or it is simply borrowing within our own community.

In an article in yesterday's The Globe and Mail it was stated that as a result of the national debt we have about $150 billion in secure investments that have been available to small businesses throughout Canada. That is only half the national debt.

May 9, 1989

It has also been argued that the national debt is not a problem because, after all, it is secure, we have the value in our economy to support it.

I think all those arguments against concern about the national debt really miss the main point. First, it is not true that we just owe it to ourselves. On the contrary, our rate of foreign borrowing is increasing. This makes us very vulnerable.

Furthermore, with Government being such an important borrower in the financial markets of our society it edges out private borrowers. It reduces the supply of capital available to businesses large and small who want to put that capital to work for economic growth. Therefore, it increases the cost of that capital to Canadian society and has an inflationary impact on interest rates.

Let us say for the sake of argument that all those concerns about the deficit and about the public debt were not serious. Let us suppose that the arguments which state that we only owe it to ourselves, that we have created secure investments for business around the country are true. What is missed is the most fundamental aspect of the national debt, that is to say the question of cash flow.

There are many expensive houses in Vancouver. I could go with a downpayment of $100,000 and make an offer on a house worth $1 million. I do not think I could afford a house for $1 million but perhaps the bank would give me a mortgage for $900,000 because maybe the house is really worth $1.2 million and my debt is secure. The bank knows that, if it has to foreclose on the mortgage, the value will be there. The only problem is that there is no way I could service that debt. It would take every penny I earn and more simply to pay the interest on the debt. It does not matter that the debt is secure. The fact of the matter is that if I cannot afford food, clothing and transportation then I am over my head in debt. That is the point that I think is missed by all the commentators on the national debt.

The problem with the national debt is that it is simply taking too much out of the Government's cash flow to service it. It takes 35 cents from every tax dollar. That is too much. It restricts the flexibility of the Government, and thereby the Canadian people, to reach and meet their common social goals in society. Therefore, all the arguments that suggest that the national debt is some-

The Budget-Ms. K. Campbell

how a figment of the Government's imagination, that it is not important, are spurious. I repeat again that when the Government of Prime Minister Trudeau came into office, the payments on the national debt were about 12 cents on every dollar. When he left office in 1984, they were 32 cents on every dollar. That is more than is healthy for the Government. It is more than is healthy for any individual or family to be paying in interest on its debts.

The recent surge of interest rates in Canada and abroad show us just how our huge debt has left us exposed. In just one year the projected cost of paying the interest on the national debt has risen by more than $6 billion. This year alone interest will cost us $39 billion. That is more than we spend in total on health care, family allowances, old age security and social assistance.

The Minister of Finance (Mr. Wilson) announced a number of expenditure and revenue measures to deal with the debt. These debt control measures will amount to more than $5 billion this year and $9 billion next year. The Budget measures will cut the annual deficit in half by $15 billion by 1993-94. This will restore the flexibility that we need to continue to maintain the programs Canadians value.

In terms of my own Ministry and in terms of Canada's natives these programs are being maintained right now. Hand in hand with fiscal responsibility comes social responsibility. The Government's concern for and commitment to native people is evident from its actions. DIAND, my Ministry, is in a period of transition. It is a facilitator, helping Indians help themselves. What is important to native people is important to the Department, notably aspirations of self-government and economic self-reliance. I mentioned earlier about not borrowing from our children, from the next generation. At DIAND we are investing in the next generation.

The Government remains committed to native economic development. As you will recall, the Throne Speech announced our intention to continue this program. Once decisions have been made, the Ministers of Industry, Science and Technology and Employment and Immigration will join the Minister of Indian Affairs and Northern Development in implementing this important Government priority respecting Canada's first people.

May 9, 1989

The Budget-Ms. K. Campbell

With respect to the area of Established Programs Financing, the federal Government makes these payments to the provinces for both health care and post-secondary education. The responsibility for funding education for Indians on reserves rests with the Ministry of Indian and Northern Affairs and is not affected by this Budget. Furthermore, funding for such items as post-secondary education, housing, and social assistance remain unaffected. Services and funding have in fact been increased.

I have just come back from British Columbia where I met with a number of groups, including non-profit organizations from my riding, as well as business leaders. After a week of meetings in my region, I was struck by how responsible and responsive this Budget in fact is. I can tell you, contrary to the comments made yesterday by the Hon. Member for Esquimalt-Juan de Fuca (Mr. Barrett) the business community was not overjoyed by this Budget.

The challenge of making expenditure reductions often seems very simple to business. It is more complex for those of us trying to do it within Government. Members of the Opposition have tried to paint this Government and this Budget as friendly to big business. I can tell you that the business community had some pretty frank words for this Budget. They did not think we went far enough.

My meeting with the non-profit groups provided me with another vantage point. They were concerned, naturally, with expenditure reductions. I took the time to listen to both of these opposing views, as well as to representations from many other groups. I have come to the conclusion that the approach of the Minister of Finance was both fair and even-handed.

As a national Government, we have an obligation to Canadians to get our fiscal house in order and at the same time to invest in programs and policies that provide a return to our society in general. This is a Budget that does not simply deal with the problems of today. It does not simply deal with the questions and programs the Government has to deal with in today's society. It is a Budget that ensures that we will be able to continue to deal with the issues and the important challenges of Canadian society for the future.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   THE FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

Steve Eugene Paproski (Deputy Chair of Committees of the Whole)

Progressive Conservative

The Acting Speaker (Mr. Paproski):

Questions or comments. The Hon. Member for Broadview-Greenwood.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   THE FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Dennis Joseph Mills

Liberal

Mr. Mills:

Mr. Speaker, I have a question for the Hon. Member. I listened with fascination to your concern about the debt. We are all concerned about the debt. However, I would like to ask you a very specific question.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   THE FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PC

Steve Eugene Paproski (Deputy Chair of Committees of the Whole)

Progressive Conservative

The Acting Speaker (Mr. Paproski):

I would like the Hon. Member to direct the question to me, please.

Topic:   GOVERNMENT ORDERS
Subtopic:   THE BUDGET
Sub-subtopic:   THE FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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May 9, 1989