BLOC QUÉBÉCOIS DISSENTING OPINION

 

Report of the Standing Committee on Finance

The Report Does Not Meet Quebec Priorities

 

Despite some progress regarding the recommendations to re-establish funding cut by the Conservative government on September 25 (literacy, women’s groups, Aboriginals, social economy, assistance to museums, open diplomacy, etc.) and renew energy efficiency programs, the Bloc Québécois in no way supports the general direction of the report adopted by the majority of the members of the Standing Committee on Finance because it fails to take into account the needs and concerns of the Quebec nation.

 

The Quebec nation

 

Even though the House of Commons passed the motion recognizing the existence of the Quebec nation, the Standing Committee on Finance refused to correct expressions using the word “national” and referring to Canada as a whole, which, we know, includes many nations, including the Quebec nation. Quebeckers are very proud of finally being recognized for who they are, but the federalists are offering absolutely nothing to the Quebec nation.

 

For example, the Bloc Québécois would have liked the recommendations of the Standing Committee on Finance to respect the constitutional jurisdictions of the provinces and Quebec, which most of the recommendations fail to do. Recommendations throughout the report allow the government to implement programs in areas that are exclusively under the jurisdiction of the provinces and Quebec, such as health, education, municipalities and securities. It is unfortunate that the Committee’s report does not reflect what it heard, not only in Quebec City, but also in the Canadian cities where hearings were held.

 

The fiscal imbalance

 

A majority of the members on the Standing Committee on Finance rejected putting forward concrete solutions to correct the fiscal imbalance. The Bloc Québécois feels it would have been more responsible for the Committee to recommend that the federal government increase the health transfer so that it assumes 25% of health expenditures by the provinces and Quebec, on a recurring basis, which would represent an additional $1.7 billion in federal transfers for all of Canada and $400 million for Quebec.

 

The Bloc Québécois believes it would also have been more responsible for the Committee to recommend that the federal government increase transfers for social programs and post-secondary education to 1994–95 levels, that is, before the Liberal cuts. At the time, these payments corresponded to $10.6 billion. In the 2005–06 budget, the amount for social programs and post-secondary education totalled $8.4 billion. This $2.2 billion shortfall, indexed to inflation, today represents approximately $5 billion more for all of Canada and $1.2 billion for Quebec. This request for increased funding was supported by the post-secondary community, not only in Quebec but also across Canada.

On December 19 last year, during the election campaign, Stephen Harper committed himself to resolving the fiscal imbalance as soon as he won office. He made this solemn promise to all Quebeckers. He repeated it in the Speech from the Throne and the Budget Speech.

The Conservative government has an obligation to achieve results, and the next budget must contain the answers that Quebeckers are waiting for to decide whether the Conservative government has broken its promise to correct the fiscal imbalance.

According to the Séguin report, and in the opinion of a number of experts, the methods of resolving the fiscal imbalance are well known and the federal government has the means to do so, as demonstrated once again by the so-called “unexpected” surplus of $13 billion last year and the increase in federal spending. Over the past eight years, increases in federal spending totalled $235.5 billion and budget surpluses, $67.1 billion. In all, the federal government had an additional margin of $302.6 billion over 1997–98. Armed with these figures, the Standing Committee on Finance could have proposed savings we have assessed at $15.9 billion over three years, without cutting a single program, without cutting a single transfer and without laying off a single person, while continuing to recruit in a reasonable manner.

The Bloc Québécois is of the view that any solution to the fiscal imbalance must be based on certain principles:

            - First, we must say no to piecemeal agreements. There must be a comprehensive agreement that covers all the aspects of the fiscal imbalance. For example, lowering the GST cannot be a factor in the equation unless it is part of an overall, concerted agreement reached between the federal government and Quebec and the provinces.

            - Second, we must say no to excluding certain provinces or certain income sources from the calculation of equalization payments. Natural resources are the main reason for the disparity in fiscal capacity. The federal government’s equalization program that is funded by all Quebec and Canadian taxpayers is intended to ensure equivalent quality and quantity of public services, regardless of the tax base. This is clearly not the case today, as the proportion of federal revenue that goes to equalization has dropped by 25% in 10 years. Using the most conservative estimates, an improvement to equalization that introduces the 10-province standard and that takes into account 100% of provinces’ revenues, regardless of whether renewable natural resources are included, would increase equalization to $4.4 billion for Canada and $2.1 billion for Quebec.

            - Finally, any solution that is found must be consistent with constitutional jurisdictions, and of course it must add to the financial resources of Quebec and the provinces.

Updating the figures in the Séguin report shows that there must be an increase in federal transfers of at least $12 billion for Canada as a whole and $3.9 billion for Quebec if a fair solution is to be reached. Last April 12, Québec’s Minister of Finance, Michel Audet, also stated in the National Assembly that the fiscal imbalance totalled $3.8 billion and he concluded, and I quote, “that is what we asked for.” Our request must be heard by Ottawa, and the first thing Ottawa must do is increase its direct transfers for health, postsecondary education and social programs.

Once the level of transfers reaches $3.9 million for Quebec, the transfer of the tax room corresponding to the transfers for health, postsecondary education and social programs together must be negotiated.

In the 1960s and 70s, the Government of Quebec managed to have tax fields transferred in its favour. Without this major breakthrough, the Quebec state and nation would never have been able to accomplish the Quiet Revolution.

Environment

The Bloc Québécois is delighted that the Standing Committee on Finance recommended reinstating and increasing funding for energy efficiency programs such as EnerGuide and renewable energy programs such as the Wind Power Production Incentive. However, we are deeply concerned that the Committee refused to recommend, while recognizing the objectives of the Kyoto Protocol, that the government reduce the capital cost allowance rate of 100% for tar sands projects to 25%, the rate for conventional oil and natural gas projects.

Corporate taxes

While we are very pleased that the Committee recommends introducing an accelerated deduction for railway equipment that reduces noise pollution and other types of pollution, the Bloc Québécois is deeply concerned that the Committee did not retain the idea of a study on making the scientific research and experimental development tax credit refundable. However, we are very happy with the recommendation to limit the use of tax havens by Canadian businesses and taxpayers.

School taxes

The Bloc Québécois supports the recommendation to provide a full rebate on the GST paid by universities, colleges, school boards and hospitals. However, the Committee should have recommended that the federal government withdraw the amendment to the Excise Tax Act to make the cancellation of the GST rebate retroactive for school boards in Quebec and Ontario. Lastly, the Bloc Québécois deplores the attitude of the Committee, which refused to include in its recommendation on a possible pan-Canadian grants and loans system the right of Quebec (which already has its own system) to opt out with full compensation.

Culture

While satisfied with the recommendation to increase funding to the Canada Council for the Arts to $300 million over two years, the Bloc Québécois is disappointed that the Committee refused to recommend that the federal government introduce a progressive measure already adopted by the Government of Quebec by eliminating the GST on books. Access to knowledge has such importance in a world where the knowledge economy dominates that it should be a given.

International assistance

 

The Bloc Québécois calls on the Conservative government to follow up on the recommendation that Canada shoulder its responsibilities by dedicating 0.7% of its GDP to international assistance.

 

The boîte à science

 

Finally, the Bloc Québécois deplores that the Committee did not retain the following recommendation: so that the 20 largest cities in Canada have a science centre, that the federal government fund the establishment of a science centre in Quebec City (the sixth largest city in Canada) as proposed by the boîte à science and the community by funding 50% of the project, as follows: $18 million in 2007 to build the centre and $2 million each year for 10 years for the centre’s operation.

This would boost Canada’s credibility on the international stage, which was seriously undermined by its withdrawal from the Kyoto Protocol.

Conclusion

Following the pre-budget consultations and in view of the disregard of the members of the Standing Committee on Finance for the needs and concerns of the Quebec nation, it appears to the Bloc Québécois members on the Committee that, now more than ever, a sovereign Quebec is the only option that will truly meet the challenges our nation faces.