November 6, 1997

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The Acting Speaker (Ms. Thibeault)

Does the whip have the unanimous consent of the House to motve the motion?

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Some hon. members

Agreed.

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The Acting Speaker (Ms. Thibeault)

Is it the pleasure of the House to adopt the motion?

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Some hon. members

Yes.

(Motion agreed to)

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The House resumed consideration of the motion and of the amendment.


LIB

Denis Coderre

Liberal

Mr. Denis Coderre (Bourassa, Lib.)

Madam Speaker, I am always greatly pleased to participate in these debates and today we are obliged to respond to this Bloc motion, with which they are trying once again to cause instability.

When one is a member of the Bloc, things are easy. One makes all sorts of motions. All that one has to do is to say it is the federal government's fault—

Today we are talking about harmonization, and, once again, the Bloc Quebecois is looking for a lifeline. With all they have done in recent weeks, the issues of the biker gangs and drinking water, their flailing away in the water, they are looking for something to cling to. They think they have found one more life raft to cling to called the harmonization of the GST and the QST, and they say they need compensation.

I am not an economist, but I know how to count. In 1990, the governments of Quebec and Canada announced they had signed an agreement. In agreeing to harmonize, they realized over the years that revenues increased by over $2 billion.

You seek compensation because you have been misled. You seek compensation because you have lost something. Perhaps they lost their credibility, but for sure Quebeckers gained a lot.

They started by setting up a Quebec sales tax. This tax cost them over $1.3 billion. They understood that harmonizing would make things a lot more attractive for businesses. They would become more competitive. What happened? Harmonization was indeed a positive thing.

They are still going after the government, and we certainly know why they are. Why? Simply because elections are coming up in Quebec. We have seen the disastrous state the PQ government is in. It does not know how to administer its own funds and has to come up with something. They need to find ways to get elected.

What is in the PQ separatist stew every time? It is the federal government's fault. In order to win votes, they say it is the federal government's fault.

We had a federal election in 1997. What happened? In 1997, the Bloc Quebecois lost 500,000 votes and 11 seats. If the Bloc were so strong, if it had the absolute truth, it would have won.

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BQ
LIB

Denis Coderre

Liberal

Mr. Denis Coderre

We won in terms of votes and in terms of seats.

If an election were held tomorrow morning, the Bloc Quebecois—and I am quoting our friend Jean Lapierre, the former Bloc member, who says the Bloc has no reason to be in Ottawa—would take quite a beating. It would disappear from the political map.

In 1993, it was passion that brought Bloc members here. In 1997, it is pensions, because they have no other reason to be here. Year in year out, they look for reasons to save their leader's political life. They have to apologize. They always have to say that errors of judgment were made. We saw that.

On what was said about biker gangs, I personally would have been ashamed. It is sad, so sad. And when we get back to the economy, they show us once again that it is just a shot in the dark.

One thing is certain: we were right and, to paraphrase what my good friend and colleague, the hon. member for Outremont, said, our government acted without engaging into partisan politics. When we choose to protect the interests of Quebeckers and all Canadians, we can see that we are doing something positive. Why? Because we have the figures to prove it.

In 1991-92, Quebec's revenues increased by 20,4%; in 1992-93 by 17.4%; in 1993-94, by 9.1%. It is with this money that, together, we can help improve people's quality of life.

I took some courses in economics. My knowledge of macroeconomics tells me this is positive. Even editorialists agree. However, when one has nothing to say, when one constantly tries to justify one's existence, we end up having to put up with things like this. I find it most unfortunate.

The figures speak for themselves. When Reformers take the floor, all Canadians start laughing. Flip-flaps, flap-flops, flip-flops, you name it, they do it all.

In 1990, when, unfortunately, a Reformer was elected for the first time, he said “We will scrap the GST”. In 1991, the current leader of the official opposition changed the Reform Party's position on the GST. He said:

It could not be repealed because it would increase the deficit, but in public speeches the Leader of the Opposition talked about applying part of it to the debt, which would keep it even longer.

In 1992 the Reform changed its position again, saying that it would reduce the GST in stages after the budget was balanced. In 1994 in the finance committee minority report on the GST the Reform Party supported harmonization.

I do not understand. On the one hand, they are saying it is terrible, that we are trying to buy Canadians. On the other hand, they keep changing their minds.

Do you know why we have been elected? Because we look after the interests of Canadians and we have a consistent policy. When we all work together as partners with the Quebec government, when the separatist government understands that we have to co-operate in the interests of Canadians, we all benefit from it. Statistics confirm this. More improvement is needed. There is always room for improvement. I hope we will keep on improving things, but, at some point, we have to stop talking about allegations and stick to the facts.

What we want to do is make sure Canadians can have a decent living. Our policy has been effective. Thanks to its revenues and good management, the Canadian government will finally balance its budget. All countries that are members of the OECD and other countries throughout the world speak about the Canadian miracle. We will balance the budget because everything is going just fine, with increasing revenues and good management in the government. Obviously, we will then look for ways to ease the tax burden. I will certainly be doing that. We have demonstrated that we were a responsible government, we have made the right decisions, and that is what Canadians think also.

Later on, we will have to look for the means to make our businesses more competitive. Facts prove it: compensation would mean losses. Once more, Quebec has had a winning partnership with the federal government. Despite all the partisanship of the Bloc Quebecois, we realize one thing: when Canadians and Quebekers are given the facts, they understand that the federal government has looked after their best interests.

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The Acting Speaker (Ms. Thibeault)

The hon. member for Winnipeg North Centre, for questions and comments.

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LIB

Denis Coderre

Liberal

Mr. Denis Coderre

Madam Speaker, excuse me but I had said that I would share my time with the hon. member for—

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The Acting Speaker (Ms. Thibeault)

Yes, that is the information that was received by the Chair, and that is what was understood.

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NDP

Judy Wasylycia-Leis

New Democratic Party

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

Madam Speaker, I have a question for the hon. member. He talked a great deal in his speech about inconsistency and hypocrisy on the part of others in the Chamber. Certainly when it comes to understanding the Reform Party there is some merit to his argument.

However, if we are talking about inconsistency, where there is the greatest question, it comes down to the Liberal Party.

How could the member make those comments in view of his party's record with respect to consistency or lack thereof on the GST? In 1993 his leader, the prime minister of the country, said the GST would be gone within two years. Now, four years later, it is still with us. In fact it is being expanded and harmonized in terms of provincial sales tax in parts of the country.

How is it consistency in terms of Liberal policy when we have such obvious gaps and discrepancies in income tax policy and such unfairness in the whole system?

How does the member find it consistent that we have a situation before us today whereby Revenue Canada has allowed a family trust of $2.2 billion in assets to be moved to the United States, thereby avoiding taxes?

How is it consistent that we have today in Canada close to 8,000 Canadians with incomes over $100,000 paying no tax?

How could it ever be consider consistent to have untaxed corporate profits amounting to somewhere in the neighbourhood of more than $41 million every day?

How is it consistent to see such discrepancies in terms of the burden being shifted more and more to low and middle income Canadians and to see such wealthy individuals and such large corporations avoiding paying any taxes at all?

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LIB

Denis Coderre

Liberal

Mr. Denis Coderre

Madam Speaker, I would like to know where the member was when we were grappling with the economic mess and succeeded in taking this country out of that slump.

We acted with transparency. We were stuck with a $42 billion deficit. We have a debt to control. We acted responsibly and with speed and, moreover, we will reach a zero deficit in 1998.

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LIB

Marlene Jennings

Liberal

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.)

Madam Speaker, there is a really unpleasant aspect in the opposition motion presented today. It is something that is worse than the false claim that an injustice was done to Quebec when it harmonized its sales tax with the GST.

Once more, the Bloc is trying to convince Quebeckers that they are victims of Canadian federalism. But Quebeckers are neither victims, as the Bloc claims they are, nor fools.

Quebeckers established a dynamic and strong society within the Canadian federation. This explains why recent polls clearly show the failure of the separatists' strategy based on lies and fairy tales.

The truth is the country we built together is an incomparable success, as is evidenced by the United Nations' statistics that show, year after year, that Canada is the best country in the world to live in.

Even on the issue of the financial advantages of federalism, the Bloc is mistaken when it describes Quebec as a loser. The facts are clear.

Let us start with today's motion. This motion claims that Quebec is treated inequitably because it did not get billions of dollars as compensation for harmonizing its sales tax with the GST.

In this, the Bloc is echoing its provincial masters. It espouses the position of the Parti Quebecois government. But I would say to members of the Bloc that we are getting close to year 2000 and that in a couple, one member is no longer subject to the will of the other, nowadays.

The Quebec government referred to the assistance received by the harmonized Atlantic provinces, expressed in proportion to their populations, to justify its entitlement to adjustment assistance. This wrongly implies that federal programs are structured in such a way.

First of all, let us make one thing clear: the federal government still pays the province of Quebec for the administration of the GST. Quebec has received some $100 million a year since 1992-93.

However, as other speakers mentioned today, the fact remains that the only purpose of adjustment assistance is to compensate for part of the revenue shortfall experienced by some provinces after they agreed to participate in an harmonized sales tax system. Again, its only purpose is to compensate for part of the revenue shortfall, not for the revenue increase.

Federal government programs are designed to meet the specific needs of each province and to take into account their particular situation, but not to distribute benefits equally among provinces on the basis of population.

Thus, the equalization program is aimed at providing the provinces with a lower tax capacity with the resources they need to pay for high quality programs and services for their residents.

With this program, Quebec, which has less than 25% of the population, will receive this year 48% of total equalization payments, or $4 billion in federal transfers, when other provinces like Ontario, British Columbia and Alberta are not even eligible.

Equalization is not the only direct transfer to Quebec. The province also receive its fair share of the CHST, which will reach $6.8 billion this year.

In 1997-98, these two transfers to Quebec, that is to say, the GST and equalization, will amount to $10.4 billion, which is more than for any other province. This amount represents over 27% of Quebec's anticipated revenues and almost $1,400 per person, about 25% more than the national average.

When faced with a particularly acute cigarette smuggling problem, Quebec asked the federal government to reduce its tobacco tax. We agreed. We reduced the tax by $10 a carton, more than in any other province. Indeed, in giving Quebec what it wanted, the federal government lost revenues estimated at $300 million in all of Canada in 1994-95.

Quebec also receive other benefits from the federal government. I would like to enumerate a few. Companies established in Quebec receive about 40% of research and development tax credits. To date, 57% of the funds invested by the Canadian technological partnership program went to Quebec companies.

As for middle and long term financing, the Export Development Corporation spent 47% of its budget in Quebec, more than in any other province. That is strong strategic support for our exporting companies. Thirty-seven percent of the Business Development Bank of Canada investments are concentrated in Quebec. That is a significant contribution to the financing of small and medium size businesses in Quebec.

Under the Canadian infrastructure program, the federal government gave $683 million to Quebec as its 33% share of the cost of rehabilitating local infrastructure.

In closing, to go back to the issue of compensation for the harmonization of the GST, I will repeat that the adjustment assistance offered to the provinces, who needed it in their transition to a more effective sales tax system, was fair and equitable.

Quebec benefits greatly from several federal programs in areas where such assistance is needed. With regard to the adjustment assistance program put in place as part of the harmonized sales tax system, the need obviously does not exist. However, I remain convinced that Quebec's initiative to introduce a value added sales tax similar to the federal tax is legitimate and beneficial to both businesses and taxpayers.

As you can see, the facts in no way indicate that Quebec was treated unfairly. On the contrary. We have convincing proof that federal programs are based on equitable rules. When Quebec's needs and situation warrant federal assistance, such assistance is always provided and often exceeds the share that province should receive in proportion to its population.

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REF

Eric C. Lowther

Reform

Mr. Eric Lowther (Calgary Centre, Ref.)

Madam Speaker, I would like to address a few comments to the members across the floor, particularly to the last two who spoke from the government side.

I think we have to consider a couple of things with what is being put forward with this motion. We must recognize that in Canada today, through the democratic process, Quebec Canadians have elected the Bloc members who are here in the House. There is something that has caused them to get frustrated to the point where they would choose to elect the Bloc members on this side of the House.

Although I do not agree with the motion that has been put forward by the Bloc, I do recognize some of the frustration that Quebeckers feel with the current government. I was interested in hearing some of the comments that members across the way made earlier in talking about the integrity of the Liberal government.

I am reminded again of the GST promise that we have not had anything delivered on. Taxes have increased. We heard the member misquote our leader. He even said that the figures prove the Liberals' good performance. I refer to a $600 billion debt, to taxes that take us six months to pay, $45 billion in interest payments every year, 29 new spending increases in the throne speech. With all this he says they are lowering the tax burden.

They come in here and with this litany of tax and debts, they hold up the UN's announcement of how we are the favoured nation and the chosen nation.

If we are the best of a bad lot, is that the best we can do? I say that Canada has a great potential to do even more than we have, but we are limited by the government to the point that Canadians in Quebec have become so frustrated that they are electing Bloc members.

I ask the member who spoke previously when will this government realize that Canadians are asking for lower taxes and some integrity in government instead of the misguided increased tax and mismanagement that we continue to see from this government? That is the crux of the question.

If we could have integrity and proper management of the fiscal issues in this country, perhaps we would not be faced with Bloc motions such as the one we are dealing with today.

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LIB

Marlene Jennings

Liberal

Ms. Marlene Jennings

Madam Speaker, I have a hard time keeping a straight face. When I listen to this member of the official opposition it makes me think that I am watching the film about Sybil. I am not denigrating people who suffer from psychiatric disorders. Sybil suffered from multiple personality disorder, which meant that each individual personality was not aware of what the other one was doing or saying.

Here we have a party which has changed its position regarding GST numerous times, even before 1990, and its members do not seem to remember each individual change. How many times have they changed their position? Let me count the times.

Before 1990 they exploited public opposition to the GST to get two of their members elected to this House. In 1991 the leader of their party reversed that position, saying it would not be repealed because that would increase the deficit, and yet in speeches he gave he talked about applying it to part of the debt.

Anyone with a brain in their head knows that if you apply it to the debt it increases the amount of time the tax would be in force.

Then in 1992 they changed their position again. My God, how many times is that?

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BQ

Gilles-A. Perron

Bloc Québécois

Mr. Gilles-A. Perron (Saint-Eustache—Sainte-Thérèse, BQ)

Madam Speaker, I want to thank you for giving me the opportunity to speak to the motion regarding the harmonization of the GST and the QST in Quebec.

The motion reads as follows:

That this House condemn the government for blatant unfairness to Quebec in the matter of the GST, the government having denied it compensation without letting it submit its arguments to an independent arbitration panel made up of three experts, the first to be appointed by the federal government, the second by the government of Quebec, and the third jointly by the first two.

The GST Act came into force on January 1, 1991. As everyone knows, the federal government of the day implemented this new tax in great haste without a thorough analysis of its application, causing many technical difficulties.

Today, this legislation is still criticized, mainly by small and medium size businesses which are forced to collect this tax for the federal government, thereby incurring considerable administrative costs. A business must collect this 7% tax from the consumer. It is reimbursed through an input tax credit. This tax credit may be requested by each individual in the production and distribution chain, with the result that it is the consumer, and the consumer alone, who pays the GST.

It would be normal and fair for the consumer to have some say over where his money goes, since he is well aware that the GST is a very important source of federal revenues. Furthermore, this is why, despite their 1993 red book promise, the Liberals have not yet abolished the GST. Yet this tax adds considerably to the tax bill of already overtaxed citizens.

We in Quebec were good sports. We were the first to harmonize the tax, just as we were the first to defend Canada's interests in the free trade issue. Now that other provinces want to follow Quebec's lead and harmonize the GST, the federal government is getting generous. If the federal government gave $1 billion to certain governments in the maritimes, why is it refusing to give the people of Quebec their fair share for harmonizing the GST? Is it the size of the cheque required that is scaring it off?

Speaking of the size of the cheque, in the interests of fairness, we in the Bloc Quebecois are suggesting through this motion that the federal government create a neutral arbitration panel, with one representative to be appointed by the federal government, one by the Quebec government, and one to be neutral. One of the things this committee would be called upon to do is to work out the amount of this cheque.

Imagine what the Government of Quebec would do with this $2 billion it has coming to it. It could certainly improve its public image, which has taken a beating because of the cuts of over $2.237 million made by the federal government in social transfer payments to Quebec. And this does not stop the Minister of Finance from tooting his own horn in every public forum about the good job he is doing.

It is not difficult to arrive at a zero deficit with the methods used by our dear Minister of Finance; all you have to do is cut social transfers to the provinces by 54% and shamelessly dip into the employment insurance fund. This money belongs to the unemployed and to the employers who contribute to it. In fact, speaking of the employment insurance fund, we recommend strongly to the Minister of Finance that he lower the employment insurance premium rate from $2.90 to about $2.50.

With these new rates, small and medium-sized businesses could, among other things, start investing in job creation. Even with these rates, the employment insurance fund surplus would allow the Minister of Human Resources Development to reevaluate the eligibility requirements for employment insurance.

Yes, it would be interesting if the Minister of Finance, instead of digging directly or indirectly into the pockets of the less privileged in society, could respect the commitments he made in 1995 to reduce departmental expenditures by 19%. It is much easier for the government to act as it does than to tackle the real waste problem.

Has this government really taken steps to stop waste? No. Think of the billion dollars that this government foolishly let slip from the state's coffers when it privatized our air traffic control system.

Let me remind you of the facts. The Minister of Finance himself had estimated our air traffic control system at $2.6 billion. As for the Minister of Transport, he had estimated it at $2.4 billion. So we can say that the average value of the air traffic control system is $2.5 billion. Why was this system sold for $1.5 billion, as the Auditor General of Canada asked in his latest report.

I repeat the question: How can this government shamelessly and without regret justify this billion dollar shortfall that could have been used, for example, for our young people, our single mothers, our old people?

Speaking of young people, I must tell this House how appalled I am that in 1997, children are going to school in the morning on an empty stomach. This does not seem to sadden our Heritage Minister, when you consider how freely she is throwing our money to the wind.

We must not forget that it is that same minister who was forced to resign because of an 1993 electoral promise that was not kept, namely that “we Liberals will abolish the GST”. Not only did she come back, but she continues to waste people's hard-earned money with her bogus projects. We have for instance her flag project, which is blowing in the wind and scattering taxpayers' money around. In 1996-97, this foolish initiative cost $15.5 million.

I will mention only that project, but I can tell you today that with all her useless programs, that minister has spent $94.6 million of the taxpayers' money.

What a disgrace! Let us think about hungry children.

I cannot go on about this government's shameless wastefulness because it makes me ill.

Before wasting money needlessly, let us think of all our people who are living in poverty.

I believe that any self-respecting government which is interested in making proper use of its taxpayers' money should, before it spends money needlessly, get the go-ahead from all of its elected representatives, without any partisanship. Second, it ought to follow the recommendations of the auditor general to the letter. We must not lose sight that the auditor general's function is to watch out for the taxpayer's interests. Third, all governments ought to follow the lead of the municipal governments and pass anti-deficit legislation. Fourth, they should reform the corporate tax structure so that it helps create jobs, and the personal income tax system so that it will be more equitable.

At the present time, we know that this supposedly sensible government is on the verge of spending hundreds of millions of dollars on helicopters without having the decency to reveal all the pertinent details of the purchase.

I am imploring the Minister of Public Works and Government Services to have the courage to break the chain and to consult his colleagues in the House before he issues a purchase order to the tune of several million dollars. This would offer him a golden opportunity to practice what he preaches, the transparency of government operations.

Indirectly, it is GST funds with which the Minister of Intergovernmental Affairs is allowing Guy Bertrand to take the case of the legitimacy of Quebec's sovereignty before the Supreme Court.

He and his colleague, the Minister of Justice, must put an end to this legal wrangling, which is costing the taxpayer a fortune.

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LIB

Denis Coderre

Liberal

Mr. Denis Coderre

Madam Speaker, on a point of order. I will be happy to hear my colleague, but on the subject matter of the debate.

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The Acting Speaker (Ms. Thibeault)

I would ask the hon. member to speak to the motion under consideration. You may continue.

First, the hon. member for Saint-Hyacinthe—Bagot, on a point of order.

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BQ

Yvan Loubier

Bloc Québécois

Mr. Yvan Loubier

Madam Speaker, I would ask my colleague of Bourassa himself to stick to the subject. I listened to him and he did not say a word on the motion we moved. The only thing he tried to do was to destroy the reputation of my colleagues and of the Bloc Quebecois and he talked about everything but the motion. He should apply his remarks to himself.

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November 6, 1997