Mr. Speaker, I will clarify. I thank the hon. member for the correction. I did kind of ad lib. The word bribe is not in the report.
Here are his startling concerns: "The inclusion of transitional assistance of $961 million in the 1996 deficit and accumulated deficit represents a departure from both sound accounting practice and the government's own accounting rules. In my opinion the transitional assistance of $961 million should be included in the deficit subsequent to the 1995-96 fiscal year. Failure to comply with generally accepted practices resulted in an overstatement of the annual deficit and accumulated deficit of $961 million".
The transitional assistance of $961 million has been recorded as a liability at March 31, 1996 and as an expenditure, a resultant increase in the deficit for the 1995-96 fiscal year.
As I said at the outset of my intervention this afternoon, this agreement does not come into effect until April 1, 1997, two fiscal years later, the year ending 1997-98.
Is this bribe or transitional assistance, as the government prefers to refer to it, a liability as of March 31, 1996? Clearly this is not the case because according to generally accepted accounting principles and the government's own rules: "Financial obligations are recorded as liabilities if the underlying event occurred prior to or at year end". It did not occur prior to March 31, 1996 and it did not occur at year end March 31, 1996. In fact, it is occurring now. Agreements are being signed now and they will take effect April 1, 1997, which is the next fiscal year, not even in this one ending in 1997.
Also: "Transfer payments are recorded as expenditures when paid and when the recipient has fulfilled the terms of a contractual transfer agreement". Clearly this is not the case. They have not fulfilled the terms of the contractual agreement. The auditor general agrees with me because he states in the Public Accounts:
"Eligibility criteria had not been met by the three provinces by March 31, 1996 and, accordingly, the $961 million of compensation should not have been recorded in the accounts at that time. Although the government is committed to compensating the provinces once agreements are signed, the $961 million is not payable until the agreements are signed".
The government and its officials hung their hats on memorandums of understanding. Mr. Speaker, I know you were an outstanding lawyer when you where practising and know the terms of law very well. You and I both know that letters of agreement, memorandums of understanding have a certain way of sometimes changing. That is why the auditor general is right. That is why generally accepted accounting principles cannot be departed from. Shame.
The integrity of government financial statements is at stake. This action on harmonization impairs the integrity of the process. Shame. Shame on the finance minister, the deputy finance minister, the President of the Treasury Board, the secretary of the Treasury Board and the receiver general and the deputy receiver general, who have all compromised some integrity, walking a fine line on interpreting generally accepted accounting principles and prior government practices, setting a new precedent just to help the Liberals fulfil a self-serving political promise and to help the finance minister bury the high cost of harmonization in a prior year ending in 1996 just because the government had bettered its deficit target and done better than it had projected in that year. Therefore this was a good time to bury it, hide it and then forget about it and we will not have to record this transition cost, this bribe, this enticement, whatever anybody wants to refer to it as. This is nothing more than political self-serving and I say shame.
I have given examples and testimony to prove conclusively that this feeble, partial, half-hearted effort of replacing the GST with something that is revenue neutral is not. I quote from the red book. I am trying to interpret legitimately, accurately what the Liberals now say they promised door to door.
Knock, knock. Hi, I am the member for Broadview-Greenwood. I will replace the GST with a tax that is revenue neutral, that will take as much money out of pockets as it does now and then we never worry about the GST again. That is what the Liberals said they promised. I believe with the examples I have given I have pointed out how misleading, hypocritical and self-serving have been their remarks for a period of four years.
This is an important issue. The GST is a bad tax. In and of itself it can be good in terms of consumption taxes. But when it was introduced the Liberals in opposition argued against it, as they should have. Now that they are the government they promised to get rid of it. They have not. They have entrenched it.
Most everyone acknowledges that the GST has been the biggest cause of the growth in the underground economy. How is it then that by entrenching a 15 per cent tax is going to eliminate the growth in that economy and eliminate the activity within that economy?
The Liberals brag about how this is a step in the right direction, how this will replace the GST and be revenue neutral. We will still have the high cost of administration of the GST type of tax that we had. Reformers feel that the government should get out of this domain altogether, leave it to the provinces. The $15 billion net revenue required should be put into a simplified tax system featuring a dual rate. That is how to raise that revenue. That is simplifying it. That is eliminating the GST. That is making it revenue neutral. That is solving the problem.