FINA Committee Report

BLOC QUÉBÉCOIS DISSENTING OPINION

Report of the Standing Committee on Finance

The Bloc Québécois cannot in any way endorse the report by the Liberal majority, because its overall orientation does not reflect the needs and concerns of the people of Québec and Canada. It contains no measure to top up transfers to the provinces for health, education or assistance to seniors. Only two of the Bloc Québécois’s recommendations have been included in the report. Of these, the one dealing with the disability tax credit has been stripped of any mention of the problem of access to the credit. The Bloc Québécois is however pleased that its recommendation on reducing the excise tax on microbreweries has been retained. If at first glance some of the Liberal majority’s recommendations strike us as acceptable, we deplore the fact that they involve more cosmetic change and lip service than genuine willingness to respond to the social and economic realities faced by Quebeckers and Canadians.

The Report does not reflect Québec’s priorities.

The budget surpluses

The Bloc Québécois very much regrets that the report makes no mention of either the underestimation or the use of the federal budget surpluses. We note that Finance Minister John Manley is continuing with the shell game practised by his predecessor, Paul Martin, when it comes to any genuine estimates of the value of the federal government’s budget surpluses. It should be recalled there was a discrepancy of over $65 billion between the Liberal government’s forecasts and the actual value of the surpluses since 1997. Since then, the federal government has paid down the national debt by more than $45 billion without any public debate, which is undemocratic. According to the Bloc Québécois’s projections, the federal government will next year have available to it a budget surplus of $10.4 billion. Over the next three years, the federal surpluses will reach a minimum of $33 billion. If the economic slowdown comes to an end, the surpluses could reach $47 billion.

According to the Conference Board, the federal government is going to be squirreling away more and more of its future budget surpluses, while Québec and the provinces accumulate larger and larger deficits. Given its spending needs, Ottawa is collecting far too much tax.

The fiscal imbalance

With surpluses estimated at $10.4 billion for the current year, the federal government has the means at its disposal to correct the fiscal imbalance partially right now. The Bloc Québécois estimates that $5 billion should be transferred to Québec and the provinces in the form of tax points or a transfer of a portion of the GST, starting with the 2002-03 fiscal year. Over the next three years, Ottawa could transfer a minimum of $15.5 billion, including $3.7 billion to Québec, without any risk of running a deficit.

If nothing is done, the federal government will continue to make use of its accumulated surpluses to invade areas of jurisdiction belonging to Québec and the provinces. For example, between 1997 and 2000, Ottawa spent more than $15 billion in areas that do not come under its jurisdiction, thereby causing a proliferation of waste, duplication and chicanery.

The other consequence of the fiscal imbalance is that Québec is being financially suffocated. Taxes paid by residents of Québec go largely to Ottawa, while their needs are here at home: health care, education, anti-poverty measures, day care, road maintenance and construction. The Québec government cannot increase taxes to meet the needs of the people of Québec. The solution lies elsewhere: the federal government must transfer to the Québec government the supplementary fiscal capacity that will enable it to invest where the needs are most pressing.

Employment insurance

For several years now, the Liberal government has been poking its fingers into the employment insurance fund, at the expense of the workers. The Bloc Québécois considers that contributions paid by employers and workers should come back to them, and to that end it is proposing that the fund be administered jointly by representatives of the contributors. With an independent fund, the federal surplus would decrease by nearly $3 billion a year. A fund of this kind would also make it possible to negotiate rapidly with the Québec government the introduction in Québec (where population growth is lower than in Canada) of a made-in-Québec parental leave program. There is also the serious problem of workers who find themselves unemployed and often unable to get another job because of their age. The Bloc Québécois recommends that the Program for Older Worker Adjustment (POWA) be re-established.

Other measures

At the end of the day, the federal government will have $1.4 billion for other measures, such as infrastructures, the environment, foreign aid, the airport security tax, abolition of the GST on books, and prudent economic management.

Infrastructures

The time has come to reinvest in infrastructures like roads and water mains that benefit the whole community. A joint infrastructure program with the governments of Québec and the provinces, controlled by them, would make possible considerable progress in this regard. The Bloc Québécois is proposing a five-year program with federal funding of $500 million a year.

The environment

With ratification of the Kyoto Protocol on the horizon, Ottawa must offer incentive programs to the renewable energy industry. The Bloc Québécois is proposing a support program for industries that use or generate renewable forms of energy, in particular wind power, for a five-year period. Significant federal investment in renewable energy could make it possible to create 15,000 jobs in Québec. The Bloc Québécois is also calling for the introduction of a tax credit for users of public transit. These measures would cost $500 million a year. The Bloc Québécois insists that the Climate Change Action Fund be divided up on a pro rata basis according to population. At the present time, Québec receives only 8.8% of the money from the Fund, even though it has almost 25% of Canada’s population.

Foreign aid

In its recommendation on foreign aid, the Liberal majority does not propose any timetable for achieving the aid target of 0.7% of GDP.

We note that among the 4.6 billion people living in developing countries, almost:

The Bloc Québécois recommends that the federal government keep its promises on foreign aid and achieve the international objective of 0.7% of GDP by 2010-11.

Airport security tax

In the wake of the events of September 11, 2001, the federal government felt under pressure to improve security at airports. To do this, it decided to finance new security measures through a tax imposed on users of air transportation. When the tax was imposed, the Finance Minister and his Secretary of State admitted that they had not done any impact studies. Several months later, the number of users of air transportation had dropped significantly. Since the costs linked to the security of air transportation should be financed out of the government’s general revenue, as are all other important aspects of national security, the Bloc Québécois recommends that the airport security tax be abolished.

Abolition of the GST on books

Access to knowledge is so vitally important in a world where the knowledge-based economy predominates, that it seems self-evident that the federal government should imitate a progressive measure already adopted by the Québec government and abolish the GST on books. The Bloc Québécois recommends the abolition of the GST on books.

Economic prudence

In looking at the Finance Minister’s estimates, it becomes obvious that not only is he using the same strategies as his predecessor, but also that he is finding new ways of hiding his surpluses better, in particular by setting up a new “economic prudence” reserve. The Minister was not able to explain to us the difference between a contingency reserve and an economic prudence reserve. If the economic slowdown ends in the United States, the Bloc Québécois anticipates that the federal surplus could reach $14 billion, thereby making it possible to introduce other measures, including debt reduction.