Mr. Speaker, it is with great pride and honour that I stand today to represent not only my constituents but all those of Newfoundland and Labrador and all those of the country for which I consider to be a grave injustice that has been served upon this country and certainly upon our neck of the woods, as they say, which would be Newfoundland and Labrador.
Today's motion states:
That this House regret that the party now forming the government has abandoned the principles respecting the Atlantic Accords, equalization and non-renewable resource revenues as articulated in the motion it put before the House on Tuesday, March 22, 2005.
The motion that was put forward by the Conservatives at the time read:
That the House call upon the government to immediately extend the expanded benefits of the...Atlantic Accord to all of the provinces...revenues severely curtails the future prosperity of Canada by punishing the regions where the economy is built on a non-renewable resource base.
The point of all this is very clear, which is to ask the Conservatives at what point they will start practising what they used to preach.
This a point that is an ultimate deception to the Canadian public. This is a point that they have made time and time again, not just in the last election but in the one prior to that as well. It is one that allowed our provinces, many of which rely heavily on non-renewable resources, to become principal beneficiaries of their own resources, which is to say that it gives them a sense of ownership, a sense of pride and a sense of hope for their future.
A few years back, we instituted the Atlantic accords which provided two provinces, Newfoundland land Labrador and Nova Scotia, with the ability to maintain and remain principal beneficiaries of their own resources. In doing that, they have provided offset payments and it has shielded them from clawbacks made in the equalization program. It was a promise that was made, negotiated and delivered.
However, during the last campaign and all the rhetoric that was made during the campaign, the Conservatives said that they would do one better. They said that they would provide the province of Newfoundland and Labrador with the ability to bring about $200 million per year. With that they would have added on to the current agreement with the Atlantic accords. What they had promised to do was to take non-renewables out of the formula. Throughout this day we will be making the points very clear.
I want to congratulate my colleagues from Nova Scotia, New Brunswick, Prince Edward Island, British Columbia and the rest of the country for joining me here. I would also like to honour my colleague, the hon. member for in northern Saskatchewan for seconding the motion.
Mr. Speaker, I will be splitting my time with my hon. colleague, the member for
First I would like to address the budget directly. The budget talks about the exclusion clause and states:
As a result, the O’Brien formula provides both a substantial incentive to provinces to develop their natural resources and higher payments to most provinces than one that fully excludes non-renewable resources.
The attempt was made within the budget but what the government tried to do through the front door, it took away from the back. A promise was made and a promise was broken. Here is the essential element of this particular budget that outlines that.
Budget 2007 proposed to implement the recommendations of the O'Brien report. Basically it took it all. One item that is particularly alarming and basically negates the commitment that was made is the following:
--a fiscal capacity cap to ensure that Equalization payments do not unfairly bring a receiving province’s total fiscal capacity to a level higher than that of any non-receiving province.
I would like to illustrate something that was distributed within Newfoundland and Labrador during the last election. The Conservatives had written every Newfoundlander and Labradorian and had told them quite simply that there was no greater fraud than a promise not kept.
Here is what the Conservatives said:
That's why we would leave you with 100% of your oil and gas revenues. No small print. No excuses. No caps.
Here we are a year later and the cap is right here within this budget. A promise made and now a promise broken.
The injustice that we are debating here today is one that is of prime importance. I want to illustrate the lengths to which the government will go to get elected, to get seats and to be absolutely deceptive in all ways, shape and form. This is the crux of it for us in our province of Newfoundland and Labrador. The Premier of Newfoundland and Labrador, Mr. Danny Williams, had written every leader asking for certain commitments and intentions of how they would govern the country. He asked about the equalization formula and the response from the then leader of the opposition and the now and leader of the Conservative Party was that his government would remove non-renewable natural resource revenue from the equalization formula to encourage the development of economic growth in the non-renewable resource sectors across Canada.
That does not say anything about a cap. It does not say anything about going to either the old system or staying on the new system.
Interestingly enough, in the last budget the had said that side deals with provinces undermine the principles of equalization.
Let us try to follow the logic here. They were saying to Newfoundland and Labrador and Nova Scotia that they could either go to the new system or stay on the old system but for every other province and territory they need to go to the new system.
If that is the case, if Newfoundland and Labrador and Nova Scotia decide to stay in the old system, we have the same situation: two provinces now under a different equalization formula; a side deal supported by this party after saying unequivocally that side deals undermine the principles of equalization. It is one step forward, two steps backward.
Let us go to the deception once more. The following are some of the headlines in recent days from the moves made by this budget and the Conservatives' idea of fixing the fiscal imbalance and answering some of the concerns of the Newfoundland premier.
“N.S. to take big hit in program funding if it opts out of new federal formula”, is the headling from the Newswire in Halifax. Another headline is “Tory MP accuses Saskatchewan premier of lying as government defends budget”. Not only have the Conservatives deceived them, they are attacking them for saying to them “Where is your commitment?” Not only have they abandoned the premiers, they now have decided to victimize them as well.
An hon. member: Shame.
Mr. Scott Simms: Yes, shame, indeed. Every one of them, especially in Atlantic Canada.
I will say this in the House right now, and I am sure they know it and we know it, hell hath no fury like a Danny Williams scorned.
What they say to me is that maybe the premier does this all the time and that maybe he likes to use theatrics. However, I can tell members that Mr. Williams holds in his hand a commitment. Is he mad? Yes, he is. Does he have a right to be? Yes, he does. This was a blatant deception.
Mr. Tom Lukiwski: No, he doesn't.
Mr. Scott Simms: My hon. colleague across the way yells “No, he doesn't”. Yes, he does. He illustrates my example that all they are doing is trying to victimize a man who is only saying that the Conservatives made a written commitment and now they are saying it is over. The $200 million that they pledged in extras is gone, and deceptively.
Let me just illustrate some of the deceptions. Talking about the cap, two years ago the current said that the Ontario clause effectively gutted the commitment made to the people of Newfoundland and Labrador during the election campaign. That is an absolute shame.
Shame. That is an absolute shame.
A shame? We gave them more money.
Mr. Scott Simms: My hon. colleague says it was more money. I would like to point out to my hon. colleague that it is zero. The choice is either to take what we have now, which we got from the Liberal government, or take from the Conservative government, which is even less.
Mr. Speaker, as a proud Nova Scotian, I welcome the opportunity to take part in this debate.
February 14, 2005 was a great day for Nova Scotia. I was proud to be in Halifax that day, signing an accord on behalf of the Government of Canada, an accord that gave Nova Scotia $830 million upfront and a guarantee that it would be protected in future equalization programs.
It marked a new beginning for Nova Scotia.
But this past Monday, budget day, was a dark day for my province. It was a day of deceit, duplicity and betrayal.
Today we are asking why the has not lived up to the promises he made during the last election. Why is he attacking the integrity of the offshore accords?
This debate is about examining what Conservatives say to get elected and what they do when they are in power. It is about how mighty the words of Nova Scotia's Conservative MPs were then and how meek their actions are now.
Here is how the current explained the issue on November 4, 2004:
This is an opportunity and it is a one-time opportunity. It is a short term opportunity to allow these provinces to kick-start their economic development, to get out of have not status....
That is how he described the issue as opposition leader, but now he is showing his true colours. Now he is proving that he cannot be trusted.
Danny Williams thought he could trust him, but now the Progressive Conservative premier of Newfoundland and Labrador says the has betrayed his province. He sees a pattern of breaking commitments. He says:
This is the same prime minister who basically reneged on money for women, for literacy groups, for volunteers, students, minority rights, has not lived up to the Kyoto accord, for aboriginal people.
These are not my words. They are the words of a PC premier. It is a pattern of broken promises.
Rodney MacDonald thought he could trust the , but now Nova Scotia's PC premier says the federal budget forces Nova Scotia into a “fundamentally unfair” choice between cash today and rights to offshore oil and gas tomorrow. “Making that choice would be to roll the dice,” he said.
Conservative members from Newfoundland are admitting the government has effectively broken its word. VOCM Radio reports that the Conservative member for says he “lobbied to have non-renewable natural resources taken out of the equalization formula”, but the decisions are made.
An hon member: He failed.
Hon. Geoff Regan: He admits that he lobbied to preserve the Atlantic accord but lost. Now he is being bullied into submission by the and he has given up.
How about the member for , now the ? Surely he who was so vociferous in opposition would not give up on Newfoundland and Labrador. He told CBC News:
Would I rather see what we clearly committed done? Absolutely. But...if it can't be delivered, you try to deliver the next best.
It cannot be delivered. The decisions are made.
So mighty then, so meek now.
Failure to do what one clearly committed to is not good enough. Breaking one's word is not good enough.
Tearing up signed agreements with two provinces is not good enough.
Why will Conservative members from Nova Scotia at least not have the honesty and the dignity to admit what their Newfoundland colleagues have admitted, which is that they too are afraid of the and they are afraid to stand up for their province? Their actions now do not stand up to their words then.
Here is what the member for said in 2004:
This is about fairness and the future of Nova Scotia...This is about honesty and about keeping promises.
What is he saying now? When ChronicleHerald reporter Steve Maher finally cornered him Tuesday, the member for said, “ if Nova Scotia has to give up the accord, it wouldn't be so bad”. How could he? When did he stop being a Nova Scotia member of Parliament and become a harpocrit?
Here is what the member for said in 2004. He said:
I call on the government to stop the rhetoric, to stop talking about all these things it is talking about and just get down to the point and say, “We made a promise. Now we are going to keep it”.
What is he saying now? We do not know. He has suddenly developed a phobia of the media. We think he might be in the witness protection program. So mighty in words, so meek in action. It is so sad.
What about the biggest flip-flopper of them all? In 2004 the member for said, “MPs will be left to explain why they chose to abandon the interests of their province and in doing so betrayed the future prosperity of the people of Nova Scotia”.
Last year when the finance minister said that the deal with Nova Scotia had made a mess of equalization, the member said nothing. The obviously agreed, as we can see from the budget.
The member who has to do a lot of explaining today is the member for . He is the one left to explain why he allowed the to abandon the interests of his province.
Premier Williams says, “Conservative members from his province should reconsider their future with the party”. As Premier Williams says, “they have choices”. The same is true of Nova Scotia's Conservative members. They have choices. They can say no. They can stand up for Nova Scotia. They can demand the honour his commitment.
Here is how the now concluded his speech on the topic of the accords in 2004. He said:
What is at stake is the future of Atlantic Canada, an unprecedented and historic opportunity for those provinces to get out of the have not status...What is at issue is very simple. It is the honour of the Prime Minister, and all he has to do is keep his word.
I could not have said it better myself. The should honour his commitment.
Mr. Speaker, it is very interesting to listen to the Liberals opposite try to create a parallel universe based on the facts as they would wish them to be for politicking purposes, but not on the facts as they are.
The members opposite rightly point out that their government signed Atlantic accords with the provinces of Newfoundland and Labrador and Nova Scotia. This was a problem for them because all of a sudden some provinces had side deals, which completely destroyed the fairness and the equality of this program. Nevertheless, the Liberal government, for political purposes, entered into these agreements and our government said that we would honour those agreements.
This is the crucial point, and I hope members opposite are listening to this, because this is a fact that may assist them as they continue to pontificate and mislead through the day. Here are the facts that they should be keeping in mind.
I read from the budget document, which any citizen of Newfoundland and Labrador, or any citizen of Nova Scotia, or any citizen of any province can look at it on the website. It is in black and white and in plain English and French.
This is what the budget says, “To respect the offshore accords”. The budget does respect the offshore accords. “Nova Scotia and Newfoundland and Labrador may continue to operate under the previous equalization system”. That is what the budget says. The budget also says:
This fulfills and builds upon the Government’s commitment to respect the Offshore Accords and ensures that these provinces will continue to receive the full benefit that they are entitled to under the previous system.
The accords are fully and completely respected by the government. There are no exceptions, no exclusion, no caps, no changes. That is the truth. That is it. There is no change.
For those provinces there is actually a happy choice. If they no longer like the Atlantic accords, they can have another choice. Again, by the previous government and finished by our government, the equalization system has been fixed.
In fact, the previous government put together a blue ribbon panel, the O'Brien panel, to examine the equalization system, which had been badly broken and bent by years of Liberal mismanagement. The previous finance minister, the member for , said:
There are so many arguments among the provinces about what the right formula ought to be, that we will engage an independent panel of experts—people who don't have a particular bias, don't have any kind of regional, vested interest—and have them come up with recommendations for how the distribution formula ought to be changed...
The former Liberal finance minister said, “The main focus of this panel will be how to address non-renewable resources”.
The panel did its work. The panel, set up by the Liberals, reported and our government fully accepted the recommendations of the O'Brien panel. We have now fixed the equalization system according to the recommendations of this independent, unbiased panel set up by Liberals.
Because of the fixing of the system, the equalization program has been somewhat enriched. Now Newfoundland and Labrador and Nova Scotia are saying that the accords gave them one thing but this new system might give them something better. That may be true. What did our government do? Our government told those provinces that they had a choice. They could continue to operate under the accords which they negotiated and signed and which we are fully honouring without any exceptions, or if they wished, they could move to the new system.
What could be fairer than that? What could possibly be fairer than saying they can get the agreement they fought for and signed, or they can move into the new system. It is up to them. They have a choice. I might add that other provinces do not have a choice, but those two provinces do have a choice.
Let us talk about the new system that has been set up. The new system actually gives a choice to the provinces that are in the new system, which Newfoundland and Labrador and Nova Scotia could be if they want to be. The new system says that for every year, two calculations will be made for the provinces. One calculation will be based on the O'Brien recommendations that 50% of non-renewable resources will be included in the formula. That is what O'Brien said was fair and reasonable and right, so we will calculate on that basis. Where a province wants to have 100% exclusion of non-renewable resources, we will make a calculation on that basis too. Provinces can choose which one they want. They will get the best of those two calculations.
Actually, the provinces of Newfoundland and Labrador and Nova Scotia get three choices. They can choose to have equalization under the Atlantic accords, which are fully respected and open to them and honoured by this government, or they can choose the O'Brien formula based on 50% inclusion of non-renewable resources, or they can choose the best, if it is the best, of 100% exclusion of non-renewable resources. Yet, dishonestly I say, members opposite are trying to say that somehow the provinces that are given not one choice, not two choices, but three full choices are somehow being unfairly treated. That is so untrue.
Not surprisingly, when provinces are given a formula, there is going to be some unhappiness. The leader of the Liberal Party himself said just in January of this year that every province is arguing about getting shortchanged by Ottawa in one way or another and it would be difficult to make “all the premiers smile”. Did he ever get that one right.
The leader of the Liberal Party also said that we need to have a clause that says whatever is the formula of equalization payments, a province that received equalization payments cannot see its fiscal capacity going above the fiscal capacity of a province that does not receive equalization payments. There we go. It is called a cap.
That is exactly what the O'Brien panel said and what the new equalization fix put in place by our government delivers. This is a program to make sure all Canadians get an equal level of services, but provinces that are not receiving equalization cannot have a lower ability to provide their citizens with services than provinces that do receive equalization. It has to be fair for everybody. It has to be the same standard for everybody, whether it is called a cap or a same standard, or whether it is called equality or fairness.
That is a principle that all Canadians get except a few members opposite. Even the Leader of the Opposition gets it. I will read again what he said, “cannot see its fiscal capacity going above the fiscal capacity of a province that does not receive equalization”.
The formula, the equalization program has a standard that all provinces honour because that is fair. Provinces that get money from the equalization program are not going to have a better ability to serve their citizens than those who do not get money from the equalization program. What is there about that that the members opposite who just spoke do not like? Even their leader gets that; even their leader affirms that.
We have fixed the equalization system. I might add that here we have a system that has been gerrymandered, skewed and torn up by the previous government that could not make up its mind, could not stick to principles, could not make a strong decision. The Liberals could not do it, so we did it and now they do not like it, even though it is fair, even though we fully honoured the Atlantic accords and even though the new system gives provinces the best-of choice of two calculations. Somehow the members opposite do not get it and they are making trouble simply for political purposes where no trouble should be given. That is completely and utterly unfair.
What do Newfoundland and Labrador and Nova Scotia get from this enriched equalization program? They get full respect, no changes whatsoever to the Atlantic accords.
The new equalization system makes every single province better off. In fact, we have been criticized for how rich the equalization system is under the new formula. Over $12 billion will now be distributed to the receiving provinces under this formula. If Nova Scotia and Newfoundland and Labrador decide they are better off under this new enriched equalization program, they can opt into it. It is their choice. What can be better than a fair choice? Any time they want to during the life of the accord they can move to the new enriched system.
I want people in Newfoundland and Labrador and Nova Scotia to remember two things out of this debate. One is that the Atlantic accords that were signed are fully honoured and are available to those two provinces with no change whatsoever. The second thing is that we have a new system, a richer system, a system that will allow any province to receive benefits under a calculation that fully excludes non-renewable resources, or under a system which O'Brien recommended, a calculation that will include half of the non-renewable resources.
That is justice. It is clear. It is fair. It gives the provinces some certainty going ahead as they calculate their budgets, as they decide how best to provide to their citizens important services like health care, education, infrastructure, child care and social support systems for the most vulnerable. That is what the fixing of the equalization system is all about.
There are two provinces, one with the highest fiscal capacity in Canada, Alberta, and one with the lowest fiscal capacity in Canada, Prince Edward Island. What do these two provinces have in common? Their premiers are reasonable people. They know a reasonable accommodation when they see it. The premiers of these two provinces, one the newest premier and one the longest serving premier, are very pleased with this budget because we kept our promise to fully preserve the Atlantic accords and we restored fairness and balance to a disjointed system that we inherited from the directionless, knee-jerk government that Canada suffered under previously.
On top of that, the , the and this government recognize that a national government has a duty to all of Canada, to every province, every territory and every citizen, to be fair, to be equal and to have the same standards for everybody. This is something the previous government did not get.
It is essential to fairness that the provinces receiving equalization do not have a higher fiscal capacity than non-receiving provinces. That is what the O'Brien panel, which was set up by the previous government, said. It is what Canadians know to be fair, and that is what this new system puts into place.
Regarding all the distortion, all the misrepresentation, all the trouble making on the other side, members of Parliament are supposed to make this country work well for everybody. They are supposed to be fair, honourable and upright in the way they disagree. If the members opposite do not like the equalization formula that the Conservatives put into place and think they could do better, though we notice they never said how they would change it, then that is a fair debate. However, to misrepresent what was done, to say that promises were somehow broken when they were kept is completely unfair and deceitful to the people of this country who depend on their members, because their constituents listen to them. They believe their members and trust them.
Trust should be placed on the basis of truth, honesty and putting forward the facts as they actually are, not as what members opposite might want them to be so that they can attack a government that has it right for a change, that is keeping its promises and giving provinces not one choice, not two choices, but three clear, unambiguous choices. I hope as the debate continues today that it will be based on the truth. I hope it will be based on what is actually in the budget. I hope it will be based on what is actually before the good people of Newfoundland and Labrador and Nova Scotia because they deserve to make their assessment on what is true and actual, not a distortion of it.
I have tried to be as clear as I can to the House and Canadians about what is really happening: fixing the equalization system, fully honouring the Atlantic accords if the two provinces want to stay with them, fully honouring the commitment to provinces who want to exclude 100% of non-renewable resources, but at the same time honouring the O'Brien panel which spent many months making the best accommodation that can be made for our country for fairness, equality in provision of services to citizens.
This is where we are. We have a good system. It is not a system everyone is going to like because that is not human nature, but it is a system that is true to our promises, true to the choices that we said would be made, and true to fairness and the same standard for everyone at the end of the day.
Citizens in Newfoundland and Labrador, citizens in Nova Scotia are good Canadians, Canadians who want a fair deal for themselves and their children and services that they can count on. They want certainty but also to be part of this great country where there is equality for all.
We are glad to honour the deals that were made by the previous government even though they skewed the system. We recognize that but we will still honour them or move into an enriched system that gives an even better deal. That is what we are providing for people in these two provinces and all Canadians. We are proud of it and we hope that it will be supported by everyone.
Mr. Speaker, before expressing the position of the Bloc Québécois, I would like to come back to the motion we are debating. It is the motion presented by the Liberal Party, which reads as follows:
That this House regret that the party now forming the government has abandoned the principles respecting the Atlantic Accords, equalization and non-renewable resource revenues as articulated in the motion it put before the House on Tuesday, March 22, 2005.
I must say that such a motion was indeed put forward by the Conservative Party in 2005. I completely understand that to some regions in Canada it may appear that the Conservative Party is going back on its promise, with what it has proposed regarding equalization in the budget speech, and that is cause for frustration.
I also understand that roughly 2.5 million Canadians, who believed the current 's promise on income trusts, feel swindled by this government today. I want to remind the House that the promised during the election campaign not to change the tax rules as far as income trusts were concerned. He did not keep his promise. It is in the budget.
In this case, as with equalization, I understand the frustration of the people, whether they are from the Atlantic provinces or the western provinces. I also understand the frustration of the pensioners who believed the .
However, I must say that in the case of the moratorium—it is more than that, it prohibits the conversion of corporations into income trusts in future—we cannot disagree with the government. This caused a problem both in terms of economic development and of tax avoidance. That said, there could have been mitigation measures, as suggested in the Standing Committee on Finance.
As far as equalization is concerned, as I was saying, I can very well understand the frustrations of certain premiers, those from certain provinces in particular. But one fact remains: the equalization formula, even the one in the current budget, is not fair for Quebec. For that reason, the Bloc Québécois cannot support this motion. If we went back to the former principles of equalization, then Quebec would lose a great deal of money.
I would remind the House that the old formula would have given Quebec $5.202 billion for 2007-08, while the new formula, which we feel is incomplete, gives Quebec $7.16 billion, which is a difference of $1.958 billion. How could anyone think that the Bloc Québécois would masochistically support nearly $2 billion less in equalization for Quebec? Thus, it is entirely understandable that the Bloc Québécois will oppose this motion.
I would also remind the House that the government's proposal—we will see how the budget implementation bill will turn the budget announcements into reality—includes either 0% or 50% of natural resource revenues, to be decided by the receiving provinces. At least there is a choice.
I wonder why the government did not propose 100% of natural resource revenues, as the Bloc Québécois is calling for, and will continue to call for, and as the Quebec government, all parties of the National Assembly and the Séguin commission also called for. The provinces therefore have the choice.
The 10-province standard means the elimination of the floor and ceiling provisions, which we opposed in the old formula, because it seriously penalized Quebec. In that regard, there is some progress in terms of the fairness of the equalization formula.
The tax bases used in the calculation have been reduced in number from 33 to 5, which we find much more transparent. Quebec's argument was also accepted—and I imagine this is true for other provinces—that property values must be calculated at market rates.
As I mentioned, this is what budget 2007 proposes. This does not fully satisfy the demands of Quebec and the Bloc Québécois. While we now have an equalization formula that is headed in the right direction, it is not quite there yet, and therefore, it is entirely understandable that we will not lose ground or regress to a situation of inequity for Quebec.
What we want is to reform the equalization formula to take into account not only the ten provinces, but also 100% of revenues from natural resources, renewable or not, and to also take into account, as I already said, the true value of property taxes.
In our opinion, this would make it possible to increase the overall equalization envelope. In the budget, this overall envelope is currently valued at $12 billion. It would increase to $16 billion in 2007 and 2008. We have made some progress, and I had the opportunity to say so. My Bloc Québécois colleagues also had the opportunity to say so in our reaction to the budget speech. However, a definitive solution to the fiscal imbalance has still not been found. The formula proposed by the Bloc Québécois is the only one that enables equalization to meet its goal of providing recipient provinces with a per capita fiscal capacity equal to the Canadian average.
It does not make sense to have gone with only 50% of revenues from natural resources. One thing that explains the fiscal disparity between Canadian provinces, unfortunately still including Quebec, is the fact that some provinces have oil and natural gas in the ground. Of course I am thinking of Alberta, but also Newfoundland and Labrador. This geological accident explains why some provinces are richer.
Take Newfoundland and Labrador, for example. Last year and this year, growth was close to 11%. Why was this? It can be linked to the start of the Hibernia project.
If we do not take this reality into account, the equalization formula is biased, and we are preventing the equalization formula referred to in section 36(2) of the Constitution Act from working. The section states that equalization is meant:
—to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.
By not including any revenue from natural resources, equalization does not play the role set out in the Canadian Constitution. I am often amused when I point out to Quebeckers and my colleagues from other parties that the Bloc Québécois is about the only party that strives to ensure that the Canadian Constitution is respected.
In this case, I would point out, equalization plays an extremely important role for the regions of Canada. However, in order for it to play this role, we must look at the whole picture and not just parts of it. The former formula, which the Liberal motion would reinstate, was based on a standard calculated using five provinces. The poorest and the richest were excluded, which had the effect of lowering the national standard or, rather, the pan-Canadian standard—since this House has recognized that Quebec is a nation, I must set the example. It was recognized that the pan-Canadian standard, based on the average of the five provinces, was lower than if all provinces were included.
I would also like to remind the House that, at that point, the real value of property tax was not reflected. This value was determined by rent paid or mortgages paid by owners which resulted in property values of certain provinces being underestimated. As I already mentioned, all this led to Quebec being penalized. It still is because 100% of natural resources are not included in the equalization formula.
A solution for the fiscal imbalance—one which is just beginning to emerge—must have several components. First, we need an equalization formula that works. We need not retrace our steps. We must continue to work towards truly attaining the objectives of the Canadian Constitution, that is transfer payments that will enable provinces that fall below the pan-Canadian standard to have access to revenues that will allow them to reach this pan-Canadian standard.
Second, we need transfer payments that meet the needs of the provinces and Quebec.
As we have said, the last budget did not keep these promises and did not meet the expectations of the education system, particularly with respect to post-secondary education. This is true everywhere in Canada and in Quebec. So there is some work to be done on increasing transfers to the provinces and to Quebec.
To ensure that we no longer run the risk of the federal government making unilateral decisions, we recommend transferring the federal tax base to the provinces and Quebec. The Séguin Commission, the Government of Quebec and all parties in the National Assembly have recommended the same thing. With access to guaranteed, permanent and predictable revenues, Quebec will be empowered to address responsibilities in its areas of jurisdiction independently. Obviously, this applies to these areas of jurisdiction.
There also has to be some control over federal spending power. During the last two question periods, the was asked to commit to negotiations. Unfortunately, I must emphasize that yesterday, the Prime Minister said there would only be negotiations with a federalist Quebec government. That sounds a lot like blackmail to me, and it is unacceptable. If the Parti Québécois comes to power next Monday, March 26, which seems likely, the government will give it the silent treatment. I find that totally irresponsible.
Let me review the facts. During question period, the leader of the Bloc Québécois asked the about the federal government's willingness to begin negotiations to limit federal spending power. This was the Prime Minister's answer:
We are still prepared to consider the possibilities. To have such fiscal relations with the provinces, it is necessary to have a federalist government in Quebec and a government here in Ottawa that respects provincial jurisdictions.
This is truly a departure from democracy. Surely the misspoke himself because this would be a totally anti-democratic attitude and disrespectful of the people of Quebec.
However, he did say what he said. I imagine that during question period today he will be asked to tell us exactly what he is thinking. He certainly did not hold back. In response to a question I asked him, he said:
This government is prepared to meet with the new provincial government—which I hope will be a federalist government—to control federal spending power.
Does that mean that the not only wants to select judges and people to be on the immigration board, but he also wants to select provincial premiers, in Quebec in particular? This is totally unacceptable.
That is why we have to be able to free up some of the federal tax room and transfer it to the provinces that want it—Quebec wants it—in order to avoid this type of blackmail.
The best illustration of the fiscal imbalance is that the federal budget was dragged into the Quebec election campaign. Imagine if Quebec's budget had been brought down during the federal election campaign. Would anyone have been concerned during the federal election that Quebec's budget would have an impact on election results in Quebec? No one would have cared.
We can barely balance the books. Last year, Minister Audet had to sell off $800 million of the Government of Quebec's assets in order to balance the budget. This finance minister is not seeking re-election: he must be tired from trying to balance his budget. The auditor general, Mr. Breton, said that there was some accounting sleight-of-hand and that the budget had probably not actually balanced. This had no impact, which shows that the federal government has too much money in relation to its responsibilities.
Accordingly, we would like taxpayers to pay just enough taxes to the federal government that it can handle its responsibilities, yet pay enough to Quebec that it can handle its responsibilities as well.
Earlier I quoted the 's responses. He said that Quebec needed not only a federalist government, but also a government that wanted decentralized federalism, as the Conservative Party in Ottawa advocates.
I have watched governments come and go in Ottawa. I have sat in this House for seven years, but I have followed federal politics for a good 40 years now. My parents were very interested in politics.
In reviewing the budget, I noticed that the phrase job training kept coming up:
The Government is prepared to consider providing future growth in funding for labour market programs after consultations with provinces and territories on how best to make use of new investments in labour market training and ensure reporting and accountability to Canadians.
This is in the chapter or part that talks about the labour market program, which, as we know, falls under Quebec's jurisdiction.
What does it mean? This phrase can be found not only regarding education and job training, but also regarding post-secondary education, social programs and child care. It is repeated several times in the budget. These are not federal jurisdictions. The equalization formula is a federal jurisdiction. If the federal government wants to change it, it can. Naturally, we hope it would change the formula in a way that best serves the interest of all Canadians, and especially the best interest of Quebeckers. However, it does not need to ask for permission, as the and the seemed to suggest for months and months.
Besides, the Liberal government changed the equalization formula a number of times, to the detriment of Quebec. Based on the wording, we can say that, when it comes to provincial jurisdictions, the Conservative government is reserving the right to spend in consultation with the provinces, but it is not giving them the right opt out from these programs unconditionally and with full compensation. Thus, we still have a centralizing government in Ottawa. Only the paint colour has changed. They talk of open federalism but the reality is, we are dealing with a government that advocates a centralizing federalism. Quebeckers need to know this. If we want to be able to stand up to this government, as we have stood up to other governments, we must have a government that stands up for itself. Next Monday, we must have a Parti Québécois government.
As we can see, the work required to resolve the imbalance is far from over. Negotiations must continue, not matter who is in power. The Bloc Québécois will continue to pester the Conservative government and all governments as long as it is in this place. We will remain here until we achieve sovereignty in order to ensure that certain principles are respected and that the Government of Quebec, and the governments of other provinces, will have the financial resources needed to provide viable programs. That is also our hope for the others who share the Canadian political space. This requires accountability. That is found in the quote I just read.
However, when the Conservative federal government speaks of accountability, as did the previous Liberal government, it is referring to the accountability of the provinces and of Quebec towards the federal government. That is not the accountability I have in mind. I am referring to the accountability of provincial governments, of the Government of Quebec, towards their citizens, their voters, in their areas of jurisdiction. In areas of federal jurisdiction, the federal government must be accountable to the citizens of Canadian and Quebec when elections are held. We are not at all talking about the same thing.
In addition, equalization payments must be predictable. We are still in a situation where, tomorrow, the government could change its mind and amend the equalization formula or even reduce transfer payments in the areas of health or education. There are no guarantees and, after the election of a majority government,—whether Liberal, Conservative or NDP, and I say this to please you, Mr. Speaker; one can dream, as I always say—such a government could decide to tear up everything we now have in front of us. The only way to ensure that this does not happen is for Quebec to have an independent fiscal capacity, to have control over its revenues, in its areas of jurisdiction, and that means the transfer of tax points to Quebec.
Finally, and I do not know why the Bloc Québécois has to constantly repeat this point, jurisdictions must be respected. What I just read from the budget does not respect jurisdictions. Once again, the new Conservative federal government, just like the former Liberal government, wants to control what is done by the provinces, particularly Quebec, including what happens at election time, and that is unacceptable.
Mr. Speaker, on the great island of Cape Breton we have a Gaelic college. I want to recite a Gaelic proverb to the House. This proverb is a very worthy one and needs to be said over and over again: “There is no greater fraud than a promise not kept”.
Since the Conservatives have formed the government under the present , we have witnessed the reversal of the VIP promise. We have witnessed the reversal of the marine service fees promise. We have witnessed the reversal of veterans first and veterans care motions and the assistive devices deductions promise. We have witnessed broken promise after broken promise.
This is the same who, when he was in opposition, rightly criticized the then Liberal government for its broken promises. The Prime Minister was absolutely correct when he was in opposition when he said that the Liberals broke their promises on various issues.
Now he is the of our country and is breaking a very solemn promise that was made by the Government of Canada, with his support, to the people of Nova Scotia, Newfoundland and Labrador and, for that matter, Atlantic Canada.
If the people of Canada cannot trust their , we are in serious trouble. Politicians in general are held in low esteem when it comes to the Canadian public and the reality is that the actions of the Prime Minister will put us even lower.
It is interesting to note that a very important fellow from Nova Scotia, Mr. Brian Lee Crowley, formerly the head of the Atlantic Institute for Market Studies, AIMS, is now working in the finance department as a visiting chair. A couple of years ago, he warned the governments of the day that there was no such thing as a fiscal imbalance. What he said was that there may be a social and a development imbalance, but there is no fiscal imbalance.
We saw the other day the crass opportunity taken by the premier of Quebec. He took a $700 million transfer payment and, instead of putting it toward the concerns that he yelled about for years, such as health and education, the environment, seniors, single moms, infrastructure, training, et cetera, what did he do? He very crassly tried to tell the people that if they voted for him they would get tax cuts. If he can give out that amount of tax cuts, then how can Quebec argue about a fiscal imbalance?
The fiscal imbalance is a myth. We have a social and development imbalance in this country.
What an outrage for Atlantic Canadians. The premier of Nova Scotia and the premier of Newfoundland and Labrador, both Conservatives, not New Democrats or Liberals or Greens or whatever, are firmly outraged at what the government has done to their people.
But we know why it has been done. It is based on crass politics. The Conservatives did the numbers. They know very well that they can afford to lose a few seats in Newfoundland and Labrador and Nova Scotia, no worries, and if they can pick them up in Ontario and Quebec, all the better for them, they think.
It is unbelievable. The is supposed to represent every Canadian from coast to coast to coast, not certain Canadians within central and, possibly, western Canada. I cannot describe the outrage at the budget of that great province of Saskatchewan and my former home province of B.C.
It is unbelievable. The government has a surplus of $14.2 billion, which is more than it anticipated, and those members are the same people who yelled at the Liberals for discounting the amount of the surpluses year in and year out, but they have turned around and are doing things in the exact same way themselves. It is unbelievable.
Personally I wish we would have an election so we could go to the polls and tell Canadians what the true colours of this Conservative Party are. The first four letters of that party's name spell “cons” and we know what that means. Those members have done that to the people of Atlantic Canada and they have done it very well.
The people of Nova Scotia, the province I represent, are very firm and very clear on what they want to see in a budget. They want to see development assistance. They want to see the accords maintained. They do not want an either-or. This budget is almost like blackmail: if we take this, we will not get that, it is our choice. That is not how we do federalism in this country. It is unbelievable that the Conservatives get away with this.
I can assure members that we will be telling Nova Scotians loud and clear, and telling not just Atlantic Canadians but Canadians right across the country, what the government has been up to. This is the crassest form of politics I have seen in the almost 10 years I have been here.
We in Nova Scotia are very proud and hard-working people. In fact, many of our young people are across this country working in central or western Canada, helping out those provinces by working hard. Our people are willing to go where the jobs are, but we have asked repeatedly for various things to assist our own provinces. One of them was the Atlantic accord.
Our former premier was Mr. John Hamm. Although he was a Conservative, I found him to be very respectful and dignified and a decent gentleman. With Danny Williams, he fought very hard to get the Atlantic accords to benefit the provinces of Newfoundland and Labrador and Nova Scotia and, in many ways, to benefit all of Atlantic Canada. He did that on the basis of the solemn promise that those accords would remain intact.
Let us imagine this if former Premier Hamm were still here, understanding full well that those accords are now either-or: maybe we will keep it and maybe we will not. That is not how we are supposed to treat our friends. I can understand them treating Saskatchewan and its NDP government that way. I can appreciate the politics of that. But doing that to their own Conservative people in Newfoundland and Labrador and Nova Scotia is incredible.
I challenge my Conservative colleagues in this House, especially the members for , , and , to stand in this House and defend the interests of Nova Scotia. That is what the old Reform Party used to do. It put constituents first, regions second and party third, but that has changed now. Many of those people do not even speak about their regions any more.
In fact, the member from Bonavista-Trinity, up in Newfoundland and Labrador, said today that if he votes against the budget he is out of the party. I remind that hon. member, whom I respect greatly, that he is there to represent those constituents of his province.
An hon. member: Avalon.
Mr. Peter Stoffer: His riding is Avalon. I thank the member.
He is not here to represent the concerns of the . The people of that province said they wanted a voice from Avalon to Ottawa, not from Ottawa to Avalon.
I encourage the and the government to reverse these things, to get down to Nova Scotia, meet with Danny Williams and Rodney MacDonald, discuss this issue and straighten this out for once and for all. Maintain those Atlantic accords and do not blackmail the people of Nova Scotia and Newfoundland and Labrador. That is not how we do federalism in this country.
I can assure members that on the campaign trail my team and I work extremely hard, as do most of us. I can guarantee that this will give me an extra spring in my step to work that much harder. Any time I get an opportunity to debate whoever my Conservative counterpart will be in the election, I will welcome that individual to the debate. I will welcome that individual not just on this, but on veterans, seniors, the environment, health and education, all of these things that matter to the people of Nova Scotia and to people across this country. I welcome that debate.
In fact, I hope that person makes himself or herself public very soon because I would love to have a cup of coffee with that individual. I would love to knock on the doors opposite to that individual to see exactly how much standing up for the area that individual will do. The four previous Conservative candidates I ran against all said they wanted to be a strong voice for Sackville—Eastern Shore in Ottawa. We now find out that when Conservatives come to Ottawa, they become a strong voice for the Prime Minister's Office, not for the constituents they are elected to represent. That is a disgrace.
Mr. Speaker, I will be splitting my time with the hon. member for .
I am pleased to participate today in this discussion about Canada's equalization system, the way that the government has changed it and the deep concern in both Atlantic Canada and western Canada that the has failed to keep his word.
At least five provinces are upset. The Conservative budget is proving to be controversial and deeply divisive in Saskatchewan, British Columbia, New Brunswick, Nova Scotia and Newfoundland and Labrador.
The details of equalization vary across the country. It is a complex system with 1,432 moving parts and all of those parts fluctuate and change over a four year time span during which fiscal results in 13 different jurisdictions are measured and compared.
Reasonable people with different points of view can obviously have legitimate arguments about what formula is the best, but what cannot be argued, what is beyond all doubt, is that the Conservatives made a huge, specific equalization promise to buy votes in Saskatchewan in the 2005-06 campaign, and that promise, as of the budget, has been broken.
Saskatchewan firmly believes that it has been lied to. So says the NDP government of Saskatchewan. So says the Saskatchewan Party, that would be the Conservative Party, the official opposition. So says every reporter, every columnist sand every journalist who has covered this story in Saskatchewan.
They differ on whether the promise was a smart one to make in the first place. Some of them argue that the promise was foolish or misguided to begin with. However, Saskatchewan is unanimous that the promise was in fact made and that it has in fact been broken. The issue in Saskatchewan has now changed. It is no longer a narrow debate about the fine points of equalization. It is now a more serious debate, a lament really, about not being able to trust the government, not being able to believe, in particular, the .
The Conservative position, at least as it then was, was laid out in the House exactly two years ago today, on March 22, 2005. That day was designated as an opposition day, just like this day, and the Conservatives moved on that opposition day motion calling for the full exclusion of non-renewable natural resources from the equalization formula. The debate makes fascinating reading. I have it with me.
The Conservatives from Saskatchewan all joined in, one after the other after the other. The member for , the member for , the members for , for , the members for , for , for , for , the members for , for and even the previous Conservative member for Desnethé—Missinippi—Churchill River.
I would note that only the members for and missed that debate two years ago today but they quickly joined in the clamour a few days later.
They all called for non-renewable natural resources to be removed, not just a little bit but 100%, from the equalization formula and those Conservatives were good enough to calculate exactly what that would mean in dollars for Saskatchewan. They did not leave it as an abstract matter of some formula. They put a dollar figure on it: $800 million per year, every year for Saskatchewan. That is what they told the people of Saskatchewan. It was in their speeches. It was in their election campaign material. It was everywhere.
The repeated the promise. He went on television about the promise. Election ads were run about the promise. It was clear, unequivocal and undeniable that the Conservatives would fully remove non-renewable natural resources from the equalization formula and Saskatchewan would thereby get an extra $800 million every year.
If we look through all of that documentation, all the debate from two years ago, the full Hansard record on several occasions since, all the election advertising, all those brochures, all those letters and correspondence and all the speeches, never once does that little word “cap” appear, never once does it come up in the Conservative vocabulary until the budget of 2007.
That is where and that is how the Conservative government has broken its solemn promise to Saskatchewan. It drove a stake through the heart of its promise. It drove a stake through the heart of its integrity. The Conservatives betrayed Saskatchewan because the cap they have imposed on Saskatchewan's fiscal capacity means non-renewable natural resources will never be fully excluded from the formula. Saskatchewan will never get that promised, I repeat the word “promised”, $800 million per year, $800 million from equalization alone.
What is in the budget, and I have read it with a great deal of care, is the rather paltry sum of $226 million for Saskatchewan for equalization and that amount is not ongoing. It is there once this year, probably an election year, and if we look to next year it is gone. The budget shows for next year in that column a great big zero.
This is an absolute fraud on the people of Saskatchewan and especially so when we consider that last year's Conservative budget dug a deep financial hole for the province of Saskatchewan. Far from making the fiscal situation in Saskatchewan any better, the Conservative government last year made it worse: $105 million over four years was taken away from early learning and child care; $110 million over four years was taken away from labour market partnerships for workplace training; $130 million was taken away from financial aid for students seeking higher education; $80 million was taken away from the prairie grain roads program; $50 million was taken away from the innovation agenda. The loss in aboriginal programs and services was likely in the order of about $650 million over four years. That list goes on.
If we add that all together, the accumulated losses imposed on the Saskatchewan government and the Saskatchewan people by the Conservative government and its negative decisions in the past 14 months, the tally of the losses exceeds now $1 billion over four years, which is more than $250 million on average per year. That is the annual loss and it is an ongoing loss.
Saskatchewan, in light of that, will not be placated by a one time capped payment of $226 million. Neither will Saskatchewan be fooled by this flim-flam, this con job, that somehow it is gaining by other means some $878 million. The most recent spin from Saskatchewan Conservative MPs is that this budget gives Saskatchewan $878 million. It is just not true. It is just more Conservative deception, false promises, concocted figures, everything, including the kitchen sink and the toilet, thrown together to tell a tale but not the truth.
Their arithmetic includes a great deal of one-off, one time funding that is here today, gone tomorrow and is not ongoing on an annual basis. It includes some speculative projects that have not yet been approved by independent granting agencies that make the decisions, not the government according to the Auditor General. It even includes personal tax relief projections as if that is somehow an intergovernmental transfer of funding, and it is clearly not.
The Conservatives fail to mention that virtually all that tax relief has already been offset, cancelled out already, by the personal income tax increases imposed by the government last year. They give with one hand what they have already taken away with the other. For all Canadians nationally, it is a new ongoing personal income tax burden of $1.4 billion in effect since last July.
On the overall question of transfer payments, using the government's own figures as published in the budget, over the next five years the government is taking away about $10 billion from the provinces and is only giving back $11 billion. If we take away $10 billion and give back $11 billion, it is no wonder--
Mr. Speaker, I am very proud to represent Humber—St. Barbe—Baie Verte and less pleased to have to speak on this issue in the House of Commons.
There are two debates going on right now about budget 2007. One is occurring on the floor of the House of Commons between members opposite. The other is occurring between provincial legislatures and the federal government. We now know that several provincial governments have gone offside with budget 2007 from the Conservative minority government. Those are the provinces of B.C., Saskatchewan, Newfoundland and Labrador, Nova Scotia and as well New Brunswick. Others have expressed strong reservations about content in the budget.
However, one debate is no longer raging and that is among Canadians, who have rejected the budget. They are very concerned. They understand exactly what is being expressed by those provincial premiers and are concerned for the well-being of their provinces.
It is very clear that each and every one of us in this debate is fully engaged in what is in the best interests of our provinces. This is not a new debate in some respects. Previous debates have been categorized as being with strong acrimony, strong language directed at members, sometimes there were personal taunts and insults. I am very pleased that this debate has not come down to that because this is about a very important issue. It is about maintaining the best interests of not only our individual provinces but our country as a whole.
Strong concern has been expressed in my province of Newfoundland and Labrador. The issue at hand is about a promise being made and a promise kept. What is even more concerning is that when the promise was made, it was made emphatically, unconditionally and repeated over and again.
On January 23, 2006, a new minority government took office, one that held the smallest minority in the history of Canada, at only 125 seats. It reinforced again and again that it would maintain a commitment to remove 100% of non-renewable natural resources with no caps, no small fine print and no excuses.
For the last 14 months, that promise has been whittled away and not with a clear emphatic statement that the Conservatives would not honour the promise. We have heard messages, messages in budget 2006 issued by the . In a document called, “Restoring the Fiscal Balance”, the Atlantic accord was described as a side deal, not supported by the current minority Conservative administration.
We then heard statements from the and others that the Atlantic accords created an unfair advantage for Newfoundland and Labrador and Nova Scotia.
Today on the floor of the House of Commons, the for the first time, described it in very explicit detail. She said that the Atlantic accords established an unfair advantage to Newfoundland and Labrador and Nova Scotia and that the new budget would now create equality. Obviously this is an admission that the Conservatives are quashing the benefits of the Atlantic accords.
This is is of great concern to me. For the last 14 months, premiers across the entire country have been operating under a set of principles or an understanding that the precision of law and the language of law is equal to the precision of the language of a promise. They have been establishing their own fiscal frameworks based on an understanding that the promise would be maintained and upheld.
As they established their own budgetary processes, like the province of Newfoundland and Labrador is doing, such as consolidating and securing public sector pension plans, putting in place new transportation strategies, a new ferry rate system and establishing other progressive and positive measures for the people of Newfoundland and Labrador, it was based on an understanding that a commitment to remove 100% of non-renewable natural resources, no cap, no fine print, no excuses, would be maintained.
We have heard from the finance minister of Newfoundland and Labrador that the budgetary process will be maintained. The province is now developing its budget based on its understanding as it was, and that it will guide its actions accordingly.
However, it concerns me that we now have had statements in the House that the Conservatives were key players, instrumental in crafting the Atlantic accord. In fact, the said on the floor of the House of Commons this morning that as far as the Conservative Party of Canada was concerned, the Atlantic accords created an unfair advantage to the people of Newfoundland and Labrador and to Nova Scotia, that they would not have supported them and that budget 2007 was the correction to all of that.
I do not think this was the commitment given by that party, which now forms this minority government, when it put out campaign literature and literature during the Atlantic accord saying, “There is no greater fraud than a promise not kept”. The Conservatives promised they would have a regime for equalization that would exempt non-renewable natural resources at a level of 100%, with no caps, no excuses and no small print.
The government said that if it did not, then in effect the benefit from the natural resources would be removed 100% and it would maintain Newfoundland and Labrador as a have not province. Establishing the cap on equalization, as proposed, is effectively a cap, a clawback, and, therefore, by its own definition and words, is meant to maintain Newfoundland and Labrador, Nova Scotia and other provinces as have not provinces. That is not fair.
What the government has proposed in budget 2007, which is one of the many reasons why I cannot accept this budget, is to establish a dual track equalization system once again. The Conservatives will agree to exempt 100% of non-renewables or 50% of renewable and non-renewable natural resources from the equalization formula on the provision that a cap be instituted so provinces receiving equalization must be maintained as have not provinces in perpetuity. That is from the Conservatives own party literature.
Alternatively, the government suggests if those provinces that have received what it has deemed to be the unfair Atlantic accords, unfair in the national interest that create better benefits for Newfoundland and Labrador and Nova Scotia than other provinces, wish to maintain those Atlantic accords, they cannot accept the new equalization formula and, therefore, will also be left out of the 10 province standard. The government says the provinces cannot have it both ways. There cannot be a 10 province standard. The provinces cannot enjoy the enrichment of equalization to the tune of $1.5 billion and maintain the Atlantic accords.
In other words, Newfoundland and Labrador will not receive any benefit whatsoever from the Conservatives fix to what they call the fiscal imbalance. What has been created by this is several provinces feel very strongly that there is now a strong interprovincial fiscal imbalance in this country.
Why else would B.C., Saskatchewan, New Brunswick, Nova Scotia, Newfoundland and Labrador express the concerns and the frustrations that they have expressed since budget 2007 was presented in the House on March 19? Why would those provinces come forward and say that they no longer know if they can afford or provide the essential public services that they felt were able to if the promise had been kept.
Mr. Speaker, I will be splitting my time with my colleague and good friend the .
I am honoured to be able to reiterate our commitment to the people of Atlantic Canada on how we delivered on our promise to exclude non-renewable resources and honour the offshore accords.
All one has to do is read the budget as delivered by my esteemed colleague the on March 19 to see that the of Canada has kept his promise to Atlantic Canadians.
The described budget 2007 as a historic document, and with good reason. Underpinning the budget exercise is our commitment to strengthening our federation and fulfilling the vision of open federalism in which all governments come together to help Canadians realize their full potential. Nowhere is that more evident than in our Atlantic regions.
We all appreciate the incredible beauty and richness of our Atlantic regions and we recognize their considerable contributions to making this country great. However, we also recognize the unique economic and fiscal challenges faced by these same provinces, particularly Newfoundland and Labrador, and the strong commitment of that province to improve its fiscal situation.
It is evident that the development of offshore oil and gas projects over the course of the last decade has allowed Newfoundland and Labrador to benefit from one of the highest economic growth rates of any Canadian province in recent years.
However, the province also faces a range of economic and fiscal circumstances, notably, a high provincial debt burden and a declining population that will also give rise to unique challenges for the government of Newfoundland and Labrador in providing essential public services to its citizens.
In recognition of these special economic and fiscal circumstances, we made a commitment to work to ensure that Newfoundland and Labrador receives even greater financial benefits from its offshore revenues.
Similarly, our offshore agreement with Nova Scotia ensures that the people of Nova Scotia are primary beneficiaries of offshore resource revenues. This arrangement addresses the unique economic situation of Nova Scotia while also being fair to all Canadians.
The offshore accords with these two provinces provides them with a time limited payment to fully offset any reductions in equalization that would otherwise be triggered by their offshore revenues. With the protection of their offshore accords in the budget, Newfoundland and Labrador and Nova Scotia will continue to have the opportunity to make sustained improvements to their economic and fiscal situation.
It is important to note that we have honoured our commitment to Atlantic Canada by respecting the offshore accords as they were signed before the budget and after the budget. The Atlantic accord when signed was a historic day for Newfoundland and Labrador and Nova Scotia. When it happened in 2005, Premier Williams himself said:
A brand-new day has dawned in Newfoundland and Labrador—a day of hope, a day of joy, a day of pride and a day of promise.
It is important that Atlantic Canadians recognize that the Atlantic accords remain today as they were on that day, the day described by Premier Williams as a day of hope, a day of joy and a day of pride.
There is more than that. In budget 2007, our new government, outside of respecting the Atlantic accords, has also invested more than $1.5 billion in Newfoundland and Labrador for priorities such as health care, the environment, infrastructure and education.
This is also about building a strong, united Canada with a strong economic union. The budget makes some important inroads in restoring our fiscal balance by setting out a principled-base plan and taking immediate action through our commitments to restore fiscal balance with provinces and territories by putting transfers on a long term principled-based footing.
It also takes another step toward restoring fiscal balance with Canadian taxpayers through major tax reductions and our new tax back guarantee. It also makes governments more accountable to Canadians by clarifying roles and responsibilities. It will strengthen our economic union based on our plan set out in Advantage Canada.
Now that the fiscal balance has been restored, governments, including provincial governments, can focus on what matters to Canadians: strengthening our health care system; achieving excellence and accessibility in our post-secondary education system; ensuring that we have skilled workers to meet the needs of our economy and compete with the best in the world; help make training available to those who need it; and make progress on environmental challenges. We will create better roads and transit systems and again build a stronger economic union for Canada.
Canada's new government committed to pursuing a vision based on open federalism. This vision is based on a renewed federation which respects areas of jurisdiction and limits the use of our federal spending power. Budget 2007 fulfills this commitment. It presents a long term plan which reflects the needs of all provinces and territories.
It is also worth noting that fiscal balance and open federalism are not abstract concepts. In fact, for many Canadians, fiscal balance represents something very tangible. As my colleague the said, fiscal balance in essence is about better roads and renewed public transit, about better health care, better equipped universities, and cleaner oceans, rivers, lakes and air.
It is about training to help Canadians get the skills that they need and it is about building a better future for our country. That means getting adequate funding to provincial and territorial governments. That is exactly what we did in our budget and that is exactly what the has done in retaining the offshore accords in their entirety.
The has good reason to refer to this budget as a historic document. I am particularly proud to note that our approach to open federalism and restoring fiscal balance is the result of significant consultations conducted with all of our partners, including the provinces.
In the spirit of open federalism we worked with every province and territory, and sought views on ways to achieve a balance between a principle-based approach, to limiting federal spending power, and the need to ensure flexibility. We sought perspectives on lessons learned from the past, options for future consideration, and potential priority areas for action.
We also demonstrated to the provinces and territories our commitment to our new and open federalism. We provided an opportunity for provinces and territories to share their views on ways to achieve this level of accountability. We committed to returning the equalization program to a principle-based, formula driven footing as part of our plan to restore fiscal balance.
The equalization program was thoroughly studied by an independent expert panel chaired by Al O'Brien, a highly respected former Alberta deputy treasurer. The O'Brien report proposed a comprehensive, principles-based set of reforms to the equalization program. We reviewed this report and consulted extensively with Canadians and provincial governments. We have concluded that the O'Brien report forms a solid foundation for the renewal of the equalization program.
We now have a formula that is fair and principled to build a strong economic union in Canada. We kept our promise to the provinces and territories to exclude non-renewable resource revenues. Provinces have the option to receive payments based on full exclusion of resource revenues if it provides them a higher benefit. This is fair to all provinces and will help build a stronger and a united Canada.
We also kept our promise to Atlantic Canadians to fully respect the offshore accords. Newfoundland and Labrador and Nova Scotia will be able to continue to operate under the deal that they signed and we respect that. The new equalization program will also give provinces the higher of the payments calculated under 50% their natural resource revenues or full exclusion. This is also fair and principled. It is fair to all provinces and will also help build a strong, united Canada.
Giving provinces the benefit of exclusion, full exclusion, or 50% exclusion, fulfills our government's commitment to fully exclude non-renewable resource revenues without lowering payments to any province. And again, this is fair to all provinces. It is a principled approach and it is about building a strong economic union. We said that we would respect the offshore accords with Newfoundland and Labrador and Nova Scotia and we did. This is also fair and it was also the right thing to do.
I would quote again the premier himself the day that the Atlantic accords were signed. He said: “A brand-new day has dawned in Newfoundland and Labrador—a day of hope, a day of joy, a day of pride and a day of promise”.
Newfoundland and Labrador and Nova Scotia continue to get the same benefits of their offshore accords and receive the full benefits envisioned in these agreements by the people of Atlantic Canada.
We are proudly stating our commitments and keeping our promises in an open and principled way to the people of Atlantic Canada. In so doing, we have strengthened our federation, so that all governments can work collaboratively to build a stronger united Canada.
Mr. Speaker, let me thank my colleague for sharing her time.
Equalization is just part of the story. Under the new budget, this government has invested more than $1.5 billion in Newfoundland and Labrador for such priorities as health care, the environment, infrastructure and education. However, today's story is about equalization. I want to do two things. First of all, I want to put some factual information on the record.
Newfoundland and Labrador is quickly becoming a have province, something we are very proud of. Just eight years ago, in 1999-2000, Newfoundland received $1.169 billion, almost $1.2 billion, in equalization payments. Since then there has been a steady and steep decline in equalization payments to the province: $861 million in 2005-06; $632 million this year; $477 million next year; and $197 million projected for 2008-09. That is an 85% drop in equalization payments.
The numbers tell a dramatic story of a long dependent province using its own resources to achieve self-reliance. It has not happened very often in this country, and it is usually the reverse, but it is happening right now in Canada's youngest province, my province, so far out on the eastern fringe of the country that most Canadians do not even notice us until we yell.
Taking an 85% cut in equalization payments in 10 years cold turkey can be difficult. The Atlantic accord offset payments were negotiated to cushion that effect and to smooth the transition from an equalization receiving province to a non-receiving province, which we have always striven for, which is what we want to be. The accord offset payments do just that.
While equalization payments dropped, as I mentioned, to $861 million last year, Newfoundland received $189 million in offset payments under the accord for a total of $1.05 billion. This year equalization and the accord offset payments totalled $961 million. Some of that is because of our population drop. Next year they will total $971 million. In the following year when equalization payments drop down to $197 million, the accord offset payments will rise to $757 million for a combined payment of $954 million.
The accord offset money is not taken from the pockets of other Canadians. It is revenue from the development of our own natural resources that Newfoundland can hold on to at least for a while to make adjustments to become a self-reliant province of Canada.
Newfoundlanders and Labradorians are understandably concerned that those transitional accord benefits will be lost, reduced or kept in the new equalization plan that the put forward in the budget. When Newfoundlanders are concerned, they let us know, as they are doing now. There are no back doors in my province. Everything is up front and very personal. We accept that.
However, Newfoundlanders need not worry about the accord offset payments. The payments remain intact just as they were negotiated by Premier Williams in 2005. They have not been changed. They have not been capped or mutilated in any way, not one tittle, not one jot, as former member John Crosbie would say.
Let me come back to that. Accord offset payments will not go on forever. When the accord offset agreement was negotiated, the province and the federal government agreed to an expiry date which could come as soon as 2012 or as late as 2020, depending on whether or not Newfoundland and Labrador is still entitled to receive equalization in 2011 or 2012.
In any case, accord offset payments will run out either in 2012 or 2020. If Newfoundland and Labrador is still entitled to equalization when that happens or at any earlier time, the province may want to choose those payments to come through the new equalization program delivered in the budget. Under the new plan, all provinces will be able to exclude 50% of all their natural resource revenues or just non-renewable resource revenues from the calculation of fiscal capacity, whichever exclusion rate delivers the greatest benefits to each province.
The new program gives much greater protection against declining resource prices and production levels and provides greater incentive for a resource rich province like mine to develop its resources. Simply put, the old formula penalized problems for developing resources. The new one rewards them.
Let me come back to something stated this morning by the member for . He talked about promises. Yes, there were promises and they have been quoted correctly. During the campaign our party committed to take out 100% of the non-renewable resources from the formula. That commitment was made as he stated, by the way. He said that in response to Premier Williams the said that we would remove non-renewable resources from the formula. That is true. It is in writing not only to Premier Williams but to other premiers. That was a promise not to Newfoundland and Labrador but to the Canadian people.
There was one other promise and that occurred when the premiers themselves got together, when the finance ministers got together, when they met with federal officials and realized that the commitment would not be carried out simply because they could not agree. The premiers could not agree upon a common formula. They did not accept the 100% non-renewable resources out of the formula. The majority of them rejected it. They did not want it. A new formula had to be put in place.
Because equalization is a federal program, it was up to the federal government and the minister to find that compromise. The compromise was a report commissioned by the former government. It was a good report, supposedly a fair report that would put equalization on a fair and equitable base. However, it was evident that if that formula were accepted, as most premiers thought, at least one province that would lose, and maybe more, would be the province of Newfoundland and Labrador. Premier Williams, in his wisdom, asked for a second commitment and there was a second promise made.
The member for said this morning that the Conservative Party would leave Newfoundland and Labrador with 100% of its oil and gas revenues and there would be no cap. He said it was a promise broken. That is totally incorrect. He either did not read the budget, does not understand it or does not understand our province.
Premier Williams asked if the government went with the O'Brien formula whether it would make sure that the Atlantic accord was not capped. The commitment from this government to Newfoundland and Labrador is that the Atlantic accord will continue as it has and it will not be capped. Our province has not lost one cent, not one.
Could we have benefited if the premiers and the provinces had agreed to a new formula? Perhaps. It depends on who is in, who is out and what is brought or taken. However, we have not lost one cent and the commitment to deliver the Atlantic accord without a cap is there and will always be there until the agreement runs out. That is well into the future and Newfoundland and Labrador will be, not just well on its way, but it will be a have province.
What would have happened if the leader of the Liberal Party had been in place? This is what he said. He stated, “Don't ask me to pretend there is a fiscal imbalance and elect me and hope I will fix it. I don't want to create these kinds of expectations”. We would have gotten nothing at all from the Liberals.
Let me say that the commitments to our province will be kept. We will not interfere with the Atlantic accord. There will not be any cap on our Atlantic accord. We have not lost one cent in the transition, not one cent. It is up to the premiers to start negotiating with governments again to try to improve upon their lot.
We are very lucky to have the resources we have. We are benefiting greatly from them. There is a very bright future, thanks to the provincial government and thanks to our efforts for the great province of Newfoundland and Labrador.
Mr. Speaker, I will be sharing my time with the relatively capable and, most times, eloquent member for .
It is sad to think that as an elected member from Nova Scotia, representing the people of Cape Breton Canso, I must come to this chamber and again fight for what is theirs and fight a battle that has already been won.
When we look at the accord, the deal that was signed by a past government with the premiers of two provinces, it is shameful, as a result of the budget last week, that we are forced to once again go back and plead our case and make it look like it is cap in hand politics coming from the east coast. That is shameful and it is as a result of the actions of the government.
The saddest part for me is that the Conservatives, through today's debate, have been able to look straight into the camera and spin to the people of Nova Scotia and the people of Newfoundland and Labrador that this is a good deal for them, that there is no loss and that they are supportive of the people in their provinces. We know that it is just not true. However, it is not surprising because we have seen this time and again: a break in the trust, a word given by the government and promises made by the government but yet all we get are broken promises.
However, I can say that Nova Scotians know. The government is not going to spin Nova Scotians who know the difference on this particular issue. Atlantic Canadians know the difference.
I want to mention a comment by the premier of Newfoundland and Labrador, Danny Williams, because when he came out hard against the budget I thought he nailed it early. He referred to a written promise by the that he would have received in a lead up to the last election. The letter reads.
A Conservative government would support changes to the equalization program to ensure provinces and territories have the opportunity to develop their economies and sustain important core social services. We will remove non-renewable natural resource revenue from the equalization formula to encourage the development of economic growth in the non-renewable service sectors across Canada.
That was in writing to the premier of Newfoundland and Labrador. We know the result of that. We know how things have changed and of the broken promise to those people. We know the comments of Premier Danny Williams. He stated that the “should not be trusted”. Surprise, surprise. We have seen time and again the actions of the . He has broken faith and broken promises continually, not just to the provinces, but to the people of Canada.
What about income trusts? We can take another blurb from the campaign platform, from the .
A Conservative government will stop the Liberal attack on savings and preserve income trusts by not imposing any new taxes on them.
We know the break in trust there, the big trust bust of a 31.5% tax on income trusts; $25 billion in losses for hard-working Canadians. It drove the TSX down over 300 points. We saw that promise made and we saw that promise broken and yet the Conservatives will look straight into the camera and tell us that we are getting one heck of a deal from them.
I spoke earlier in the debate with the member from Eastern Shore. Both he and I have raised in the House the promise in writing to the widow of a second world war veteran, Joyce Carter, a fabulous lady who has done a temendous amount of work for the veterans independence program. Prior to the last election, she had in her hand an assurance from the then leader of the official opposition that if put in power his party would deliver provisions under the VIP for all veterans, second world war veterans, Korean War veterans. All veterans would be covered under VIP immediately.
A little bit of time has passed. The Conservative government has had two cracks at it. It has had two budgets and both times it failed to deliver on that VIP promise. It failed to support the promise that was made to the veterans of this country and the widows of those veterans. The government has broken faith.
Premier Rodney MacDonald has put forward a resolution in the provincial legislature. Danny Williams came out strong as a result of the budget announcement by the government. Premier MacDonald was a little more tentative. He said that the budget was disappointing. I was a little surprised by that because it is sort of like Britney Spears walking out of the barber shop two weeks ago and looking in the mirror and saying “It is a little disappointing”. If we think Britney was skinned, the people in Nova Scotia were skinned with this budget.
Today in the Nova Scotia legislature the premier has rallied the support of all parties. The premier understands that the intent of the Atlantic accord was to be a stand alone, economic tool to support Nova Scotia's goal of self-sufficiency. I want to quote the premier today. He said:
The federal government has laid down a discriminatory budgetary hammer on the people of Nova Scotia.
In altering the formula and treating our accord money as equalization, the federal government has done exactly what it said it would not do, and pushed us backward.
Those statements were made by the Conservative premier of the province of Nova Scotia. The entire legislative assembly has rallied around this. There is a call to the to ensure that the intent of the Atlantic accord is respected and honoured.
I am sure my colleague from Sydney--Victoria would support me on this. Although both he and I are of different political stripes from the former premier of Nova Scotia, John Hamm, we held a great deal of respect for the former premier. He was a man of his word and he was honourable. He certainly was not scared to deliver bad news. We were able to work with him on a number of different files. I can look at the Sydney tar ponds file and the money that was peeled out for that of $400 million; $280 million federal and $120 million provincial. The premier and both of us as elected federal officials worked with the community, which put a tremendous amount of time into the project. We moved forward with the moneys allocated to clean up that project, and it will be done.
It was sort of cute that after it made an announcement about what technology it would use, the Conservative government sent down the to do its dirty work and said that nothing had been done in the last 13 years. It was a kick in the teeth to the community.
When the agreement was negotiated, Nove Scotia was guaranteed that it would receive 100% protection from clawbacks resulting from any increase in non-renewable resource revenue. The former Liberal prime minister went beyond that and wrote a cheque for $800 million, which the former premier applied to Nova Scotia's debt. That money loosened up $40 million a year for schools, roads, health, education, those types of initiatives.
I am standing with the legislature of Nova Scotia and with all Nova Scotians and I am asking the to honour the intent of the Atlantic accord through a revision to the budget.
Mr. Speaker, I am very pleased to have a chance to speak to this motion and to try to live up to the performance of my colleague from .
I want to congratulate my other colleague, the member for , for bringing this forward. I particularly want to congratulate my colleague from , who was the regional minister in Nova Scotia and who negotiated the Atlantic accord along with Premier Hamm and with the former prime minister of Canada and our former finance minister.
If I may, I would like to preface my comments with a thought. As MPs, most of us come to this place with what I think are the best of intentions. We come here to represent our constituents. We also come here to act in a respectful and honourable manner, but every day at about 2:15 that kind of goes out the window, except on Fridays. Outside of question period, we get along. We travel together. We discuss issues. That is the way it should be.
Every now and then things go beyond question period, and November 4, 2004, was one of those days, when the motion brought forward as an opposition day motion was prefaced by this statement: “That this House deplore the attitude of the Prime Minister of Canada at and following the First Ministers' Conference...”. It was a motion designed so that Liberals could not support it, even though at that very moment we were negotiating the Atlantic accord, which came into being about a month later and was enacted a month after that.
On those occasions, we had allegations. We had charges. As Liberal MPs, we were pilloried for no reason except politics. That is shameful, because at that time the prime minister, with the member for , then the minister of finance, and the member for , who was then the minister of fisheries and oceans, and Dr. John Hamm, the premier of Nova Scotia, a good and decent man who represented his province well, were negotiating the Atlantic accord. We had worked on it for a long time.
Whenever I saw the member for anywhere in the parliamentary precinct, and I am not alone in this, he would tell me they were working on it and it was not easy. I know it was not easy. We knew that other provinces might say it was not fair. But when it came forward and the Atlantic accord was produced, not only was it adopted by the prime minister, the finance minister and the members from the Atlantic caucus, but I am proud to say that my Liberal colleagues from other provinces, where this accord was attacked, stood with us and voted for the Atlantic accord. It was difficult. It was not easy, but it got done.
Today I stand here with my colleagues to talk about this motion that we have put forward. From my friends on this side we have heard about comments made on that day, November 4, that have backfired on Conservative MPs. We have heard the comments of Danny Williams. We have heard from Rodney MacDonald. We have heard from the premier of Saskatchewan.
I am not going to give members a lot of quotes from other politicians. I want to give members some sense of what the media are saying in Nova Scotia, because they are very unbiased. In fact, most of them in Nova Scotia are not particularly friendly to Liberals.
However, here are some headlines we had the day after the budget: One was that the “wants to keep Nova Scotia a have-not” province.
Another one was, “We need a fighter”, and as well, this article by David Rodenhiser states:
Nova Scotians are left asking themselves: Who's standing up for us?
Right now, the answer is no one.
Certainly not our federal cabinet minister...who's defending Ottawa rather than Nova Scotia on this.
Rodenhiser says that not even the premier is defending Nova Scotia and “is content to pursue process rather than take action”. And that was after the premier had taken some action, at least moderate action, to indicate his displeasure.
Here is another headline: “Note to Rodney: [the Prime Minister] played you big time” In the text of this article, “Message to Rodney”, Marilla Stephenson writes:
[The Prime Minister] has played you like a fiddle.
If any theme rang through the Harper budget...it was that the have-nots are to remain...have-nots.
I did in most cases, Mr. Speaker, but I missed a couple.
The article was headlined, “[The Prime Minister] stoops to conquer” and stated:
Jeering from the sidelines were the budget's unlucky trio of obvious losers: Nova Scotia, Newfoundland and Labrador, and Saskatchewan. All are now victims of a calculated insult--the effective federal clawback of resource revenues under the new equalization scheme.
It is not just Liberals and New Democrats who are saying that this is a bad deal for Atlantic Canadians. It is everybody in Atlantic Canada, with the exception of a few Conservative MPs. We have seen hints coming. In the last budget document, the Atlantic accord was questioned. It is stated in this document that:
The February 2005 agreements to provide Nova Scotia and Newfoundland and Labrador additional fiscal Equalization...were widely criticized as undermining the principles on which...Equalization...is based.
We saw quotes from the earlier this year, in fact, from Corner Brook on March 8. Corner Brook is a great part of Newfoundland and Labrador, with great representation. The Minister of Finance told reporters, “I can say, as the Prime Minister has said, that we will respect the Atlantic Accords”.
Another Conservative member from Newfoundland said that the Atlantic accord will not be adjusted. Will not be adjusted? The member said that it is written in stone, it is signed, sealed and delivered, and that this is something that the province need not have any fear of. Clearly that is not the case.
Today we heard the suggesting that the Atlantic accords were gerrymandered and that previous fiscal arrangements were disjointed and knee-jerk. I can tell the House that in Atlantic Canada no one thinks the Atlantic accords were disjointed and knee-jerk.
We have some good guys representing the Conservative Party in Nova Scotia. I like most of them. The member for is a good person. He is a little too far left of his current crew and I think he has been marginalized. He would not tell us that, but I think he feels that way. He does not have any say in this sort of stuff. He got hammered with this.
The member for is married to a cabinet minister in the Rodney MacDonald government, the government that slammed the deals. How did that conversation go Monday night? I have to wonder.
These guys know that they have been betrayed by a government that does not care about Atlantic Canada because we do not have enough seats.
Today, an article in the Globe and Mail has the headline “Budget bashers displaying regional jealousy, says [the Prime Minister]”, suggesting that those who do not like the budget have a regional jealousy, but that is what we are elected to have. We get elected to come here to represent our people. We do not come to Ottawa to bring the message back to the people. We get elected to Ottawa to bring the message here from the people. That is what we are supposed to be doing here. That is our job.
The people of Nova Scotia expect their MPs to represent them here in Ottawa. In the last election, we were bombarded with Conservative ads. Members may recall them. For example, there was a sign and a car going by honking the horn twice, with a beep, beep, meaning “Stand up for Canada”.
That horn is sounding again and the people back home are saying to the MPs from Nova Scotia, “Honk, honk. Stand up for Nova Scotia”. And they should do that.