November 6, 1997

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The Acting Speaker (Mr. McClelland)

Is that agreed?

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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BQ

Francine Lalonde

Bloc Québécois

Mrs. Francine Lalonde (Mercier, BQ)

moved:

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.

Topic:   Government Orders
Subtopic:   Supply
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BQ

Stéphane Bergeron

Bloc Québécois

Mr. Stéphane Bergeron (Verchères, BQ)

Mr. Speaker, I would simply like to mention that the Bloc Quebecois will split the first speech, with the member for Mercier speaking first followed by the member for Louis-Hébert.

Topic:   Government Orders
Subtopic:   Supply
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BQ

Francine Lalonde

Bloc Québécois

Mrs. Francine Lalonde

Mr. Speaker, it is with a true sense of the importance of this motion that I table it in the House. I will read it again:

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.

Why did I move this motion? Because we are convinced that Quebec is being treated with blatant unfairness regarding the harmonization of the provincial sales tax with the GST, compared to the three Atlantic provinces.

This is blatantly unfair to the people in Quebec who have had to support their share of the cost of the harminonizing carried out in the Atlantic provinces, while paying alone for harmonizing their own sales tax with the GST. It is also unfair, and I am saying so as industry critic, to Quebec businesses, out of which the Quebec government had to get more money not only by increasing their tax burden but also by putting restrictions on input tax credits.

This is such a major restriction that, through its finance minister, the Government of Quebec undertook to put up $500 million, if the federal government agrees with Quebec's figures, to complete the incomplete business harmonizing.

It is extremely important to mention that, like the Bloc Quebecois' position on this matter, this motion in no way constitutes an attack on the Atlantic provinces, which benefited from the federal proposal. We have nothing against equalization, on the contrary. But this is a completely different matter.

The way we see it, discouraged at being unable to convince all the provinces except for Quebec, which had readily agreed to harmonize, signing an agreement to that effect with the federal government back in 1990, the federal government looked for some way of proving that it had acted, in part, on its promises. Finally, an agreement was reached with the Atlantic provinces, providing that they would harmonize their sales tax with the federal sales tax in exchange for $1 billion.

In so doing, and this is one of our main reasons for presenting this motion this morning, the federal government gave the Atlantic provinces the means to intensify economic competition, by enabling Mr. McKenna, who was Premier of New Brunswick at the time, to compete unfairly with Quebec using full page ads announcing that better conditions could be found in New Brunswick for businesses. Quebeckers were stunned to see him do that.

In fact, the federal proposal allowed the Atlantic provinces to reduce their sales tax by four percentage points and to fully refund the tax paid by businesses on their input, which Quebec cannot do, since it paid for all this without any assistance.

How did the federal government achieve this result? Simply by devising a formula designed to favour the maritimes. Without getting into details, the federal government's compensation formula provides that only the reduction of the sales tax level is to be compensated, and since that level exceeds 5%, it means the formula was tailored to the needs of the Atlantic provinces.

Topic:   Government Orders
Subtopic:   Supply
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LIB
BQ

Francine Lalonde

Bloc Québécois

Mrs. Francine Lalonde

Of course it is true. We are not lying.

The federal government's formula does not recognize the type of losses incurred by Quebec. Yet, these losses are very real, because with a harmonized sales tax rate of 7%, revenues would have been $969 million less than those generated in 1990 with Quebec's retail sales tax.

This confirms that the federal government does not recognize the costs involved. Over a four-year period, the shortfall will be $1.9 billion, or $2 billion if you take into account the federal finance department's own figures. This amount of $2 billion is what the Quebec government and the opposition are claiming.

And we are not alone. All the partners at the economic summit in Quebec City supported this $2 billion claim. Moreover, the support does not only come from Quebec. When they met in St. Andrews, all the premiers supported Lucien Bouchard's claim for $2 billion. So, everyone in Quebec and all the provincial premiers support it. What are the federal government and the finance minister waiting for?

In order to give a chance to the government, we say “Let us ask experts—one appointed by the federal government, one appointed by the Quebec government, and a third one appointed by the first two—to evaluate the amount”. If the government is so confident in its calculations, why does it refuse to establish such a committee? And I would also say that, if the Government of Quebec was worried, why would it go along with the idea of a committee?

This is an extremely important issue. Take the deep cuts Quebec suffered in the central government's deficit reducing exercise, and add the fact that it was the province that lost the most in the UI cuts, and that it was very hard hit by the cuts in health, education and social assistance, and two billion dollars adds up. The cost to Quebeckers is phenomenal and it is unacceptable.

So, if the government thinks it is right, then it should at least be willing to submit its figures to a panel of experts for review. And if it is not willing, we will continue to say, with the support of Quebec's partners, with the support of Canada's premiers, that the central government treated Quebec with blatant unfairness in the matter of the harmonization carried out by that province, the first with the federal GST, a promise made by this government it will be recalled.

I hope that this motion will be passed unanimously by the House as a sign of minimal good faith towards Quebec.

Topic:   Government Orders
Subtopic:   Supply
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BQ

Hélène Alarie

Bloc Québécois

Ms. Hélène Alarie (Louis-Hébert, BQ)

Madam Speaker, it is with pleasure that I take part in this debate on the opposition motion by the Bloc Quebecois, which asks:

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.

Let me outline the background for the motion moved today in the House of Commons. In 1990, Quebec and the federal government signed a memorandum of agreement on harmonization of the provincial sales tax and the goods and services tax at 7%. Compensation was calculated for the calendar year during which the federal government and the province signed the memorandum of understanding.

Quebec did what it had to and harmonized its sales tax. It did so without any financial assistance. There were of course considerable financial costs involved. These costs were absorbed by increasing the tax burden for corporations and by applying restrictions to input tax refunds.

Under the Quebec sales tax system, large corporations can apply for an input tax refund only on certain goods and services acquired to conduct their business. For these corporations, this represents additional costs totalling $500 million annually.

So those who are in fact being penalized by the federal government, which refuses any financial compensation for the Government of Quebec, are Quebec businesses. These still cannot benefit from the tax breaks that harmonization gave to competing firms in the three Atlantic provinces. This situation is especially unfair when you consider that the tax benefits given to corporations in the Atlantic provinces were in part financed by the taxes paid by individuals and businesses in Quebec.

With this compensation, the Atlantic provinces were able to harmonize their sales tax in one single operation. In Quebec, harmonization is not yet completed; it is being phased in over several years due to the fact that it is impossible to remit the input tax refund to businesses because this would entail, according to conservative estimates, a loss of around 10% in provincial sales tax revenues.

On April 23, 1996, the federal government announced the signature of memorandums of understanding with the three Atlantic provinces, whereby their respective sales taxes would be harmonized beginning April 1, 1997, at a combined rate of 15%. To compensate financial losses in these three provinces, the federal government will grant them, under a readjustment program, compensation totalling almost $1 billion, the equivalent of $423 per capita. The federal government also announced that Quebec, the only jurisdiction to have harmonized its tax, could not benefit from this new readjustment program.

Questions are being raised concerning this financial compensation program. Was it designed so that only certain groups could receive this funding? The financial assistance program that is benefiting the Atlantic provinces does so at the expense of Quebec. It only considers sales tax revenues instead of the whole tax base representing the provinces' global tax policy.

It should be noted that the share of provincial sales tax revenues compared to total tax revenues for 1994 was 8.6% for Quebec compared to 12.9% for the Atlantic provinces. These figures are real and can be verified, since they come from statistics on government revenue published by the OECD and Statistics Canada.

The federal government established that the compensation is equal to 100% of the cost of harmonisation exceeding 5% of the provincial sales tax returns before harmonisation for the first two years, 50% for the third year and 25% for the fourth year.

Quebec believes it is entitled to compensation and the Bloc Quebecois supports that claim. On Friday, December 13, 1996, Bernard Landry and Jacques Brassard held a press conference to demand that Quebec receive compensation of $2 billion for having harmonized its PST to the GST. Quebec acted alone and without any financial support. This compensation would represent an amount of $273 per person, which is clearly less than the amount of $423 paid to the Atlantic provinces.

Yet, the federal government still refuses to pay compensation to Quebec on the ground that harmonization of the PST and GST has cost it nothing. Now, one only has to look at the public accounts and budget documents to see the magnitude of the costs involved.

The annual conference of premiers of August 1996, which was held in Jasper, supported the position of the Quebec finance minister by saying that all provinces should benefit equally from the agreements on harmonization, including compensation. We have had support from various sources. Participants to the 1996 socio-economic summit, even the Leader of the Opposition in Quebec, whose political leanings are well known, supported Quebec's position. Last but not least, premiers meeting in St. Andrews in 1997 renewed their support for Quebec's position.

On the strength of such overwhelming support, the Bloc Quebecois would like the federal finance minister to admit his calculations are flawed. This is the reason why, during the last federal election campaign, the Bloc Quebecois leader asked the Liberal government to create an independent arbitration panel to put an end to the deadlock.

To this day, the minister has turned a deaf ear to this request. He insists his numbers are accurate and says that he has taken the right decision. Why then is he so afraid to face independent experts and show he is right when Quebec's deputy premier and finance minister are willing to compare their numbers with Paul Martin's so that justice may be done?

The Bloc Quebecois believes that voting against this motion means that the arguments used so far by the federal finance minister would not stand the comparison with Quebec's. We want to settle this dispute once and for all so that independent experts may come to a clear and fair decision.

I would even go so far as to amend the motion. Therefore I move:

That the motion be amended by deleting the word “blatant” and substituting the following therefor: “flagrant”.

Topic:   Government Orders
Subtopic:   Supply
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LIB

Alex Shepherd

Liberal

Mr. Alex Shepherd (Durham, Lib.)

Madam Speaker, I listened with intent to the hon. member for Mercier and also the last intervener.

The harmonization of the GST is a positive thing economically. I will give one example. My riding is highly influenced by General Motors which pays provincial sales tax on its input costs. When it exports it does not get a relieving provision which is what the GST basically does.

It means that the costs for automobiles manufactured in Ontario and landed in the United States are greater than for those produced in St. Therese, Quebec, for instance.

The fact that Quebec harmonized the GST quickly gave it a tremendous economic advantage. If there is anyone who should receive compensation I would argue that it is the laggers such as my own province, which has refused to move into the area of harmonization. The Quebec economy has received great economic advantage for doing that early.

I wonder if that is part of the calculation, how much benefit has been realized from looking forward to export trade which Quebec has already received by harmonizing quickly.

Topic:   Government Orders
Subtopic:   Supply
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BQ

Hélène Alarie

Bloc Québécois

Ms. Hélène Alarie

Madam Speaker, the member is right on one thing: we had a vision. We were the first ones, in 1990, to harmonize our tax without expecting anything in return. Speaking of shortfall, we feel it is only fair to receive compensation. A loss of $500 million on inputs is a lot of money for Quebec businesses.

If they want to argue over numbers, let us talk numbers. Let us talk numbers before a committee where there will an expert designated by your government. There will be an expert from Quebec and both experts will designate a third one so we can have a non-partisan committee addressing all these issues.

Topic:   Government Orders
Subtopic:   Supply
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BQ

René Laurin

Bloc Québécois

Mr. René Laurin (Joliette, BQ)

Madam Speaker, our colleagues on the other side seem to forget one thing when they say the sales tax harmonization was profitable for Quebec.

Of course we benefited from that, but we paid what was required for it before we could reap the benefits. I would compare that situation to a landlord investing $100,000 in renovations on a house in order to increase the rents afterwards.

Members opposite are saying: “Because the landlord refurbished his house, he earned a higher income from the rents, so it was profitable”. But the $100,000 the landlord spent on repairs in order to harmonize his building with standards, they refuse to take it into account, they will not give it to Quebec. However, they grant it to the Atlantic provinces because they presumably suffered some losses.

The costs of harmonization for the Atlantic provinces are reimbursed, but Quebec is denied compensation for the same costs. They will only take into account revenues and advantages obtained by Quebec because it implemented harmonization voluntarily but they will refund New Brunswick since that province was somehow forced into harmonization because the Liberal government wanted to show it had changed its GST.

When comparing things, one should do it properly. If the government is so certain it was not both judge and jury in this instance, it should submit its figures to a committee, as we are asking. Let the government submit its data and let the committee look at them impartially.

Topic:   Government Orders
Subtopic:   Supply
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BQ

Hélène Alarie

Bloc Québécois

Ms. Hélène Alarie

Madam Speaker, I would like to add a comment to what my colleague just told the House.

When the Government of Quebec began working on harmonization, it was wise enough to avoid penalizing people with a tax on fuel and tobacco. Had it done so, it might have jeopardized the businesses concerned. In any case, consumers would have been very unhappy.

The fact that a sales tax is calculated only on the sales tax and not on the tax base harshly penalizes the province of Quebec. We will get back to this later today. However, we demonstrated a lot of wisdom.

Topic:   Government Orders
Subtopic:   Supply
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?

The Acting Speaker (Ms. Thibeault)

The amendment proposed by the member for Louis-Hébert is in order.

Topic:   Government Orders
Subtopic:   Supply
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LIB

Jim Peterson

Liberal

Hon. Jim Peterson (Secretary of State (International Financial Institutions), Lib.)

Madam Speaker, the reason why Quebec and other provinces entered into an agreement with Canada to harmonize sales taxes is very clear.

Instead of two taxes, there is only one; a single tax base, a single tax form and a single tax administration. For small and medium size businesses this means an end to the burden of overlap and duplication. This is the reason why Quebec entered into an agreement with Canada. Quebec acted in a very practical manner.

With today's motion, the Bloc is again shooting blanks. Its motion is based on the wrong assumption that harmonization of the Quebec sales tax and the GST was unfair to Quebec.

I would like to go over some facts which have been pointed out many times in this House over the last few years.

In a sense, what the Bloc is doing today is really business as usual, it is twisting the facts to try to discredit the federal system, a system which has no place in the separatists' future.

On several occasions, our government went over the facts with representatives of Quebec and explained to them why Quebec did not meet the objective eligibility requirements for adjustment assistance. Moreover, officials received a detailed technical brief on this subject explaining, among other things, our federal program.

In 1996, provinces were offered an adjustment assistance if they were willing to implement a value added tax which would be fully harmonized with the GST and who, as a result, would suffer significant losses in sales tax revenues. It has been clearly demonstrated that Quebec demands did not meet the factual eligibility requirements to get this kind of financial assistance.

In the preset formula, we consider that significant losses should be higher than 5% of sales tax revenues. The trigger level has been set at 5% for two reasons.

First of all, heavier losses between 7% or 8% would be too hard to factor in, and the revision of already established fiscal plans a difficult exercise. And losses of less than 5% are similar to normal revenue variations governments can adjust to when they reorganize their programs and services.

Secondly, the same percentage is used, and for the same reasons, in the federal stabilization program. With this formula, Ontario, Quebec, British Columbia and Alberta would not qualify for assistance. Sales tax revenue losses in Quebec would not have been high enough to warrant any adjustment assistance.

Actually, it has been just the opposite. Sales tax revenues in Quebec have increased significantly. Moreover, the stated goal of the Quebec sales tax initiative was not only to avoid any revenue loss, but also to generate higher revenues. Since the tax was harmonized, revenues have gone up $3.46 billion. They did not drop. Even the Quebec government public accounts confirm this.

What the Quebec government is trying to do right now is to include annual losses resulting from a reduction in the tax rate on fuel and tobacco products. That has nothing to do with the sales tax.

With these losses excluded, the amount the Quebec government is demanding would be $1 billion less. Elimination of other irregularities would bring the estimated amount to zero. The Quebec government has also underestimated by more than $300 million its harmonized sales tax revenues.

The federal government co-operated fully with Quebec officials in these discussions and this analysis.

In August 1996, we provided Quebec with the precise method used to determine adjustment assistance, the results of our calculations and the figures Quebec could use to determine its own eligibility.

The federal government had numerous discussions and exchanges of information in order to clarify its numerous figures.

Once again in the history of our great country, facts prove that Quebec, far from suffering a loss, benefited in fact from Canadian federalism by harmonizing its provincial sales tax with the GST.

In conclusion, this matter proves once again that BQ members do not know how to add, subtract and multiply; they only know how to divide. That is the only role of the Bloc Quebecois.

Topic:   Government Orders
Subtopic:   Supply
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BQ

Yvan Loubier

Bloc Québécois

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ)

Madam Speaker, I would like to ask a question to the Liberal member. If he says that this legitimate request from Quebec is like shooting blanks, if he says that our case is weak, if he says that we have no reason to submit a bill for $2 billion to the federal government, why is the federal government refusing our offer, which is very reasonable in this case? This is to avoid constant wars with numbers.

Our offer is to appoint an independent committee of experts that would analyze our numbers and the government's numbers. If this assessment would show that we are wrong, we would humbly admit it. However, if we are right, the committee would have the power to force the federal government to pay the $2 billion. That is my first remark.

I have a second one. If this is like shooting blanks and if this is a feeble attempt by the Bloc Quebecois to sow dissension, I would like the member to explain to me how it is that all provincial premiers, who are not members of the Bloc Quebecois—Mr. Harris and Mr. Clark are not members of the Bloc Quebecois—support the Quebec government in this request for a payment of $2 billion? I would like him to explain this to me.

Topic:   Government Orders
Subtopic:   Supply
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LIB

Jim Peterson

Liberal

Hon. Jim Peterson

Madam Speaker, it is obvious. We openly and on several occasions provided the details of our program. According to its own calculations, the Quebec government did not incur any loss of sales tax revenues. Following harmonization, the province's sales tax revenue increased by more than $3 billion. The figures were openly discussed with Quebec officials.

For all those who remain objective in this debate and really want to know the facts, instead of trying to demolish the Canadian Confederation, the facts are so obvious that it is pointless to waste any time discussing them.

Topic:   Government Orders
Subtopic:   Supply
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BQ

Ghislain Lebel

Bloc Québécois

Mr. Ghislain Lebel (Chambly, BQ)

Madam Speaker, I would like to tell the member who just spoke and seems refuse to admit the obvious that the Atlantic provinces had chosen. Rather than having a higher income tax rates they had chosen, as a way to collect taxes, to have a higher sales tax. Of course, in the Minister of Finance's calculations, they could lose 5% of their revenue by harmonizing. But it was a political choice they had made. Rather than having a fairer tax rate they had preferred to have a higher tax rate. The fact remains that harmonization has cost and is still costing a lot of money to the Government of Quebec.

I would like to ask a question to the minister who just spoke. If there had been a sovereignist government rather than a federalist one in Quebec City when this deal was signed in 1990 might things have been the same? In fact, I put this question to Quebecers: Do you see how a federalist government in Quebec City has served us in the harmonization process with the federal government? I would like him to answer that.

Topic:   Government Orders
Subtopic:   Supply
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LIB

Jim Peterson

Liberal

Hon. Jim Peterson

Madam Speaker, my colleagues will indicate exactly what Canada has given to the province of Quebec. That being said, the hon. member opposite is wrong because what we have done under the harmonization scheme with those three Atlantic provinces was very simple: the sales tax levels in these three provinces, among the poorest in Canada, were at 19%, almost 20%. As part of our harmonization scheme, we found that it would be necessary to bring this level down to something much more reasonable. That is why we established a 15% tax rate, reasonable under the circumstances. That is why there resulted a loss of revenue.

Topic:   Government Orders
Subtopic:   Supply
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REF

Monte Solberg

Reform

Mr. Monte Solberg (Medicine Hat, Ref.)

Madam Speaker, it is a pleasure to rise to this motion today. I must tell members that our party will be standing in opposition.

I do think that my hon. friends from the Liberal Party and from the Bloc both missed the most important point. I want to make my argument on three different tracks.

First of all, while we know that the Atlantic provinces did receive compensation in the harmonization deal, we should not assume for a moment that compensation was the right thing to do.

Second, if it was wrong to give that money to Atlantic Canada, then it is equally wrong to offer that kind of compensation, if you want to call it that. I think it is euphemistic to call it compensation. It is wrong to offer it to Quebec.

Finally, we should point out that Quebec entered into this deal willingly. It asserted its independence and made this deal quite willingly in 1991.

I want to expand on those points. The first thing is was the money that was paid to Atlantic Canada really compensation? We should ask ourselves how this all came to pass. We look back on this, back to 1993, to the deputy prime minister's promise on national television about scrapping the GST.

We all know about the sorry episode that followed thereafter. We ended up with the deputy prime minister's having to resign and run in a byelection. She was eventually demoted. She lost her job as the deputy prime minister. It was a sorry episode in the history of the Liberal Party.

Of course, what happened when the government was trying to find some way to make it look like it fulfilled its promise, it rushed out to Atlantic Canada and said “we will give you $1 billion in political hush money if you will go along with our harmonization deal”.

Where do my friends in the Bloc think that comes from, that billion dollars? It does not just come from the mint. We do not just print it. It comes from taxpayers, including from taxpayers in Quebec who already face the highest tax burdens in the country almost and probably in certain ways they do.

We need to remember that taxpayers had to cough up that billion dollars from all across the country. Just because Atlantic Canadians received this money in what I think was kind of an unseemly way does not mean we should also offer it to the province of Quebec. Two wrongs simply do not make a right. They never have and they never will. We absolutely disagree with the premise.

I want to touch for a moment on the last point I made which was that this money comes from Canadians. Where is this money supposed to come from in the current context? The government is talking about a fiscal dividend, however we want to define that, but certainly it will have a surplus.

Instead of that money going toward reducing the debt, which sits at $600 billion, instead of reducing the tremendous tax burden that people face in this country, personal income tax rates that, relative to our G-7 trading partners, are 52% higher than the average, which is absolutely shameful, instead of granting relief to those people, including the people of Quebec who stagger under even higher burdens than the Canadian average, according to the Bloc Quebecois plan we are going to give the money to governments to do with it what they will.

We argue that the money is much better left in the hands of taxpayers. We will make that argument forcefully over the next several months as that issue grips the nation. It is certainly a big issue today. We say let us remember where that money is coming from.

The final point I want to make is that Quebec is the one that entered into this deal willingly, presumably because it thought it would help its economy. It asserted its independence, which is always the argument of the Bloc Quebecois members, “we are an independent nation, we are a people, we will go ahead and make our own deals”. They did make their own deal. Now they are saying “we have decided that we want to change our mind; not only did we make a bad decision back then but we want compensation for making a bad decision”.

They cannot have it both ways. I point out to my friends in the Bloc that almost every program we have in this country today is a transfer program of some kind. Inevitably my friends in Quebec do extraordinarily well, which is one of the most compelling arguments we can make to keep them in Confederation. Why in the world would they step out into the great unknown when they know that they have not only very generous equalization programs but even in programs like the Canada health and social transfer they do extraordinarily well. Almost every program has become a transfer program of some kind; the harmonization deal obviously for Atlantic Canada, but two wrongs do not make a right.

Even the infrastructure program was based on a formula that included unemployment so that higher unemployment provinces like Quebec got more money. What about employment insurance? Huge amounts of money are sent into a province like Quebec because we have regionally extended benefits primarily as an inducement to keep provinces like Quebec in the fold.

We have regional development which overwhelmingly benefits provinces like Quebec. Even the cultural grants in this country disproportionately go to the province of Quebec.

I am making the point that Quebec has already done extraordinarily well by Confederation. With the greatest of respect to some of my friends in the Bloc, this is beyond the pale. They are simply asking too much.

I am going to conclude simply by saying that compensation to Quebec for the GST deal which it entered into sets a horrible precedent. Canadians simply cannot afford it. If we do it for Quebec then we need to do it for every province. We are talking about not a few billion but tens of billions of dollars. Ontario would want $3 billion and on and on it would go.

Where is this money supposed to come from? Where does it come from? It comes from the pockets of ordinary Canadians. We simply cannot afford to tax them ever more to give money to provincial governments. It is absolutely ridiculous.

That is the first point I want to make in summarizing as we enter this whole debate about the fiscal dividend. Let us not give the money away before we even get to the point where we have some money to give away.

Second, let us remember that two wrongs do not make a right. It does not make any sense that because money was paid to Atlantic Canada as sort of political hush money because of a dirty political promise that the then deputy prime minister made that it necessarily follows that we give the money to Quebec.

That is ridiculous. Two wrongs do not make a right. Every child knows that and I am surprised that some members in the House do not understand that.

I point out to my friends in the Bloc that they entered into this deal willingly. They made that decision in 1991 and rushed headlong in. They undoubtedly will enjoy the benefits of harmonization. They claim they already have. Are they to argue then that if they do better in the long run on harmonization than they projected they will turn some of the benefit back to the federal government? I doubt it. I do not think we will hear that.

Let me conclude by saying that Reformers will be voting against this motion. We think it is a foolhardy motion. We think the best solution of all is to take that fiscal dividend and turn it back to ordinary Canadians to spend in the most productive way possible.

Topic:   Government Orders
Subtopic:   Supply
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LIB

Alex Shepherd

Liberal

Mr. Alex Shepherd (Durham, Lib.)

Madam Speaker, I was happy to hear the member for Medicine Hat admit that the harmonization system may well be a benefit. It seems to me it was that party that argued against the harmonization in this House.

I listened with intent as the member talked about the importance of reducing taxes and getting taxes back in the hands of everyday Canadians. He also asked where the money was coming from.

We have in this country a program of equalization payments. It is a very complex formula but basically the object is to bring everybody in the country to common standards in health and education. Through the mechanism of the equalization payments certain portions of this country are already sending money to the Atlantic provinces. As a nation we want to build a dynamic economy. One of the features is a harmonized sales tax in the Atlantic provinces to allow those provinces to compete internationally.

One of the big features of a harmonization package is to reduce sales taxes for Canadians in the Atlantic provinces. It did just what the member is talking about. It reduced taxes and allowed more disposable income in the hands of Atlantic Canadians. Can they not see that?

Topic:   Government Orders
Subtopic:   Supply
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November 6, 1997