Madam Speaker, I rise in the House today to express my support for an innovative budget that sets the Canadian economy and Canadian federalism on a new course, a budget that at the same time remains faithful to the most fundamental Liberal principles. I commend the Minister of Finance on presenting a budget that strikes a balance between the need for a quick return to fiscal responsibility at the federal level and the need to maintain what identifies us as a people, the compassion of our social programs.
Since the pre-budgetary consultations began, the message from my constituents has been clear: we must tackle the deficit, but at the same time, we must be fair and equitable.
My constituents have told me unequivocally that, like each household, the government must learn to live within its means. It must concentrate on reducing the deficit by significant cuts in government spending, not by increasing the burden on the middle class.
They have also told me that they wish to see increased fairness in the taxation system and a continued protection for our most vulnerable by way of efficient and modern social programs. Those same constituents conveyed to me their belief that our social programs are in need of reform to modernize them and make them more efficient and pertinent to the realities of the 1990s.
I am pleased to state that I believe this budget to be a significant first step in achieving the delicate balance requested by my constituents. However, I must say that balance is only achievable because Canadians want and are ready to support real change, a new policy direction and a new approach to governing in Canada.
Getting government to live within its means is our first challenge. Not unlike a household, a government that lives above its means eventually faces hardship.
There can be no doubt that the accomplishments of Canada and Canadians, a nation with a small population base, are unprecedented. Canadians have banded together to build the best nation in the world. Our resource base is abundant. Our population is well educated and hard working. Our private sector is dynamic and entrepreneurial spirit abounds.
Last year we led the G-7 in growth. Our inflation is low, exports are booming and jobs are being created. Our economy is on track. The fundamentals and basic ingredients for guaranteed economic success are in place.
However, our interest rates and the currency are at the mercy of the international financial markets that speculate on our ability to control public debt and deficits. Those markets have us living under a microscope and any rumour can send our interest rates upward and our dollar plummeting. Under those conditions, Canadians live under a perpetual cloud of economic uncertainty which affects personal financial decisions as well as business decisions.
Year after year governments have spent more than they have taken in. We have borrowed to the point where our ability to repay is in doubt. We are now at the mercy of lenders that monitor our every move. It can be said that public policy is now judged by its impact on Canadians and on our creditors, who are more concerned with our ability to repay than our aspirations as a people. In a true sense, because of the rising debt and persistent deficit we are losing control of the public policy agenda.
The budget is unprecedented in scope and comprehensiveness. It builds on last year's initiatives and sets the stage for regaining control of public finances and the public policy agenda, signalling the eventual return to our traditional focus of building a fair and just society.
The budget significantly reduces the deficit. In three years the government will have saved $29 billion. We will have reached the target of 3 per cent of GDP by 1996-97 and if private sector forecasts are correct, we will even surpass it. As the Minister of Finance has repeatedly stated, we must meet the deficit reduction target or risk remaining vulnerable to the speculation of the international financial markets.
The budget does more than set out a deficit reduction plan. It also defines a new approach to government, a new approach more in tune with the needs and challenges of the nineties.
When the government accepted the challenge of deficit reduction it rejected the slash and burn approach or the notion of across the board cuts. Across the board cuts of 20 to 30 per cent are not the key to deficit reduction for the simple reason that a 30 per cent cut in a bad program still leaves 70 per cent waste, whereas a 30 per cent cut in a good program just does not make sense.
A slash and burn approach to deficit reduction may achieve results, but more often than not at the expense of those most vulnerable. That is not our way. We believe in fiscal responsibility. We also believe in fairness. The government knows that in addition to deficit reduction, the machinery of government has to be renewed to better serve Canadians in a new economy.
The budget makes the federal government smaller while it lays the foundation for a government that is smarter, more efficient, more responsive and more focused on renewed priorities. That is the essence of a program review. Under program review the departments started with a simple question: In the nineties, what should a federal government do for the people? Those things a federal government should do are being analysed to determine the best way to deliver them.
The things a federal government should not do were either discarded as something that no government at any level should do or were determined to be best achieved by a level of government closer to the people. The end results are smaller departments, $16.9 billion in cuts from program review alone, but smarter departments with renewed mandates, a tighter focus and new priorities that will better serve the taxpayers and better support an innovative economy.
The process of reinventing the role and the machinery of government clearly demonstrates that Canadian federalism is flexible and continues to evolve to meet the changing needs of Canadians and of the new economy. We all know that well-publicized constitutional conferences at which little is produced but disagreement and divisiveness are not a viable source of change.
Change in our federation occurs incrementally, through discussion, through dialogue and through negotiation on practical issues of concern to everyday Canadians. It is at this level that Canadian federalism is flexible and responsive to the needs of all their citizens.
As a francophone from northern Ontario, I have witnessed this change. It is because of Canadian federalism, flexible federalism, that I am able to stand in this House today and speak in my mother tongue to talk of my heritage, which I have kept and enriched, and of my pride in being a French Canadian.
The road has not always been easy, and there have been struggles on a number of occasions. However, without Canada, without federalism, the battle would have been lost from the start.
A critical component of program review has always been that the level of government best positioned to deliver a service should do so. Such a bold statement clearly demonstrates that the federal government wishes to actively promote the evolution of federalism because it is in the best interest of Canadians. Federalism in Canada is not about the status quo.
That federal wish is inherent in the new transfer system to the provinces. The block funding system discards the cost sharing roles to give the provinces more flexibility in delivering programs funded in part by the federal government. This measure acknowledges the need to tailor social programs to meet the specific needs of Canadians living in different parts of the country. The 4.4 per cent reduction in transfers to the provinces is a necessary measure to help the federal government meet its deficit reduction target.
However, it must be emphasized that in 1996-97 the federal government will be transferring to the provinces $35.3 billion. I know that the majority of Canadians will agree that transfers in the order of $35.3 billion per year confirms the government commitment to equalization payments and the support of provincially run social programs. In addition, the government is always prepared to meet with the provinces to establish prin-
ciples which govern the distribution and the use of those transfers.
My experience at the local level has clearly demonstrated to me that much of the funds targeted for social programs are consumed by administration. The money directed to the poor is not reaching them because of the high cost of administration. With flexibility I am hopeful that the provinces will be in a position to lower administrative costs and get more money out of the hands of administrators and down to the people who need it. If properly managed, savings could even reach the 4.4 per cent of reductions in transfers.
Some provinces or provincial governments may try to characterize the cuts and transfers as a personal attack or downloading. I would remind those people that we have three levels of government, including the municipalities, but we only have one taxpayer. In the end, that one taxpayer does not draw any benefit from a provincial budget that is balanced by way of transfers from a debt ridden federal government.
Deficits and accumulated debts are common problems throughout the federation at all levels of government. We must learn to work together to solve them in the best interest of that one taxpayer.
As many of my colleagues have already mentioned, the budget is unprecedented in scope and comprehensiveness. It puts us on the right track for deficit reduction. For every $1 of new revenues the budget will generate, there will be $7 in cuts.
No government likes to cut but we were left with limited choices. We proceeded in what we believed to be a rational and fair way. We did not cut blindly. As I mentioned earlier, we began with non-priority areas and also sought to renew the role of the machinery of government to bring about significant savings of $16.9 billion. We applied the principle of shared responsibility to the concept of deficit reduction. To protect the more vulnerable, we asked those who could afford it to shoulder a larger part of the burden.
For example, the budget sets out massive cuts to industrial programs, business subsidies, regional development agencies, transportation subsidies. There are also significant cuts to defence, natural resources and Canadian heritage. All in all, there were significant cuts in varying degrees in the vast majority of departments.
On the revenue side we have moved decisively to introduce new fairness into the tax system. We have sent a clear message to those able to pay that they will have to shoulder an increased responsibility for deficit reduction. For example, we have set temporary limits on RRSPs at $13,500, affecting only those who earn in excess of $75,000. There will be a new tax on investment income of private corporations. We will eliminate deferral of tax on business income. We will limit some incentives. We will tax family trusts. We have increased tax on large corporations. There is a new corporation surtax. We have a new capital tax on banks. Finally, there is the gasoline tax.
Looking at the overall picture of the revenue side I am sure the majority of Canadians will agree that we have met the criteria of fairness. I am sure that in the future we will move again to close more loopholes.
I would like to take a few seconds to tell the House what the budget is not about. The government has demonstrated the courage to open the budget process to let Canadians in. Throughout the process we emphasized that we would use a balanced and fair approach.
The opposition has used this consultation process to falsely suggest that the government would impose additional taxes on the middle class. Members said we would overburden the middle class with the budget. We have not. They said that there would be a health tax. There is none. They said that there would be a dental benefit tax. There is none. They said there would be a tax on RRSPs. There is none. They said there would be a tax on lotteries. There is none. Finally, they said there would be income tax increases. There are none. I would also add that there are no increases in UI premiums.
In the end, I believe we have achieved a fair distribution of restraint among all Canadians in all regions of the country.
Madam Speaker, some individuals and groups tell us we have gone too far, while others say we have not gone far enough. I answer them by saying that we have done what we said we would: we have formulated a budget that will meet our objectives and targets for deficit reduction.
We have chosen the best route. Our budget is carefully balanced. It balances the need to control government expenditures with the need to provide the protection of social programs to our most vulnerable. Cutting too much in order to satisfy the financial circles would mean too great a cost to the disadvantaged and would weaken Canadian confidence in the economy. Cutting too little, on the other hand, would threaten our ability to pay our expenditures and make us more vulnerable to control by foreign markets.
In hard times, the provinces turn to the federal government for leadership. Unfortunately, during the last nine years, the provinces turned to the federal government for leadership, and the Mulroney government failed to provide it.
I would like to repeat the quote given by the Minister of Finance in his speech: "Government must not live in the past- Every day there are new needs to be met. If inflation is to be
fought, unemployment countered and something done, and soon, to get Canadian prosperity back into its stride, the government must begin to plan ahead-not timidly, not tentatively-but boldly, imaginatively and courageously".
It is no coincidence that the person with the Prime Minister is the son of the individual who made this statement. He is the person, the son of Paul Martin, Senior, who will return stability, confidence and prosperity to Canada.
Furthermore, Canadians may be assured that their federal government will provide the leadership sought by the provinces. If we are now facing a new opposition consisting of two parties, the Reformers and the Bloc Quebecois, it is because the Mulroney government did not meet the provinces' call for leadership.
For this very reason, the Liberal team will respond to this call by the provinces and these new parties will inevitably disappear.
In conclusion, I would like to bring to the attention of the House another issue in the budget. I would like to offer the services of my riding and my region to help the Minister of Finance fulfil this commitment. Sudbury and the region of Nickel Belt have rich mines, skilled workers and all the skills and institutions in place to provide to the Government of Canada the new $2 coin that is referred to in the budget. We would be pleased to provide that service for the rest of Canada.