Mr. Wilson would say: "We had to face financial reality. We had to take tough measures that will transform the way the Government of Canada works. In doing so we have turned the corner. We have stabilized the debt to GDP ratio. The next budget will bring it down. We are well on the road to fiscal sustainability".
I will never forget how we all agreed that the stabilization of this ratio during prosperity was not enough. Spending and tax measures to achieve this objective during prosperity will result in deficits once a recession hits again. We were right at that time, not as a matter of ideology, but of simple economic principle.
This budget is déjà vu all over again, except this time there are absolute spending cuts rather than Wilson's magic reductions in previously inflated plans for spending increases. These cuts represent a truly major achievement for which most of the credit must go to the Minister of Finance and some of his colleagues.
The tragedy is that these cuts are too little and too late. With a debt of $550 billion these absolute cuts achieve the same objective as did Wilson's phantom cuts when the debt was half that size.
The cuts of $10 billion in program spending just about match the $9 billion in higher debt service charges on the planned debt level over the life of this budget. The expected increases in revenue due to prosperity and tax measures amount to a staggering $12.7 billion. Yet, these revenue increases only keep constant the debt to GDP ratio.
These facts represent the key to understanding my negative views of this budget. Let me repeat them.
The cuts of $10 billion, however wrenching they may have been, just about match the required increases in debt payment of $9 billion on the planned increased debt over this period. The expected increases in revenue due to prosperity and tax measures amount to a staggering $12.7 billion. Yet, these revenue increases only keep constant the debt to GDP ratio.
The reason for this bottom line is that the biggest spending category in the budget, transfers to persons, which amounts to $37 billion is to remain unchanged. The debt to GDP ratio will never be lowered during prosperity unless this spending category is made to contribute its share to the solution of the country's crisis.
Investors who determine the fate of the dollar and the Canadian interest rate will look at the bottom lines that loom behind the rhetoric and brave actual cuts. They will ask why transfers to persons are unchanged. They will remember the traditional Liberal slogans recalled above and will connect the two. They will not be assured.
Mr. Speaker, I hope for the sake of Canada and my children and yours that my diagnosis is wrong and that Reform will never be able to say we told you so.