Mr. Speaker, it is a privilege to be here to speak on the equalization agreements and what the federal government is putting in, and that is the $2 billion for health care to the provinces, which have been delayed for some time. Now that these are finally reaching the provinces, they are very happy.
Section 36.2 of the Canadian Constitution commits this Parliament and the Government of Canada to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonable comparative levels of public services at reasonable comparative levels of taxation.
The current structure of the equalization program does not fulfil the constitutional commitment. Premiers and provincial finance ministers have called on the federal government over the past number of years to strengthen this program to ensure it adequately fulfills the commitment. Provinces have asked the federal government to move from the current five province standard to a ten province standard to ensure the program comprehensively includes all revenue sources, particularly user fees and to remove the ceiling.
To date, the only thing that the federal government has done is to remove the ceiling, but provinces have seen no financial benefit. Presently provinces are in discussion with the federal Department of Finance regarding the renewal of the equalization program for a five year period commencing April 1.
While the province of Newfoundland and Labrador has had high expectations regarding the outcome of the renewed discussions, it appears now that the renewal will not result in strengthening the program, and the province of Newfoundland and Labrador firmly believes that we could have a process that would weaken the program. We, as the province of Newfoundland and Labrador, cannot have that, and I know many others provinces in the Confederation of Canada have this concern.
Equalization payments comprise a very significant portion of the revenue for Newfoundland and Labrador. We rely on this funding so we can provide such services as health care, education and infrastructure such as roads and highways. Erosions of revenue because of arbitrary federal decisions put my province at a disadvantage compared to other provinces. Not only is it unable to provide comparable service, there can be absolutely no doubt that it does not have comparable taxes, particularly in the most visible and important tax, personal income tax.
The federal decision to maintain the inadequate five province standard results in $132 million less revenue for my province of Newfoundland and Labrador for the year 2003-04 than if a ten province standard was adopted. The province of Newfoundland and Labrador will endure a shortfall every year as a result of this decision. We need to have the 10 province standard adopted by this government.
The federal decision to exclude 50% of the user fees from the equalization formula costs my province of Newfoundland and Labrador approximately $45 million annually. The small province of Newfoundland and Labrador, which is struggling beyond its means, cannot afford to have this revenue taken from it. The federal government will have to do something for our province of Newfoundland and Labrador and the others provinces within Confederation which have the same problems.
In total, the negative impact on Newfoundland and Labrador of federal decisions which limit the payout under the constitutionally enshrined equalization program could be in excess of $200 million annually. There are concerns that the federal government decision related to the 2004 renewal will further erode the program. This will have a significant impact on our ability to fund programs and offer residents of my province a fair and competitive tax regime.
We all hope that when the federal government sits down and negotiates with the provinces, it will keep in mind the concerns that Newfoundland and Labrador have so we can make the program stronger, not weaker. The $2 billion in health care is a great start, but we have a long distance to go, and I hope the finance minister and health minister are listening to the concerns of all provinces.
The Canada health and social transfer is the federal transfer program which is intended by the Government of Canada to contribute to health, post-secondary education and social services. The province of Newfoundland and Labrador has seen its share of funding under this program substantially reduced over the past number of years, primarily because of the federal government's restraints imposed on the program starting in 1996-97 and because of the province's declining population.
Due to this pressure, the federal government has recently started to put more money back into this program. However this has not been sufficient to offset the rising costs of programs it was intended to support, particularly health care.
Every time we turn on the news we hear the premiers saying that they do not have enough money for health care or for education and not enough money overall to do the required infrastructure. I hope the government will listen to the concerns of the provinces.
In 1994-95, Newfoundland and Labrador received $425 million from the Canada health and social transfer. In 2003-04, the province's cash entitlement is expected to be $367 million. Over the same period, the province's spending on health, education and social services has increased from about $2 billion in 1994-95 to almost $2.7 in 2003-04.
What people have to realize is that our population is getting older and more services are needed. The provinces have to deliver those services. We need the federal government to be more open with its books to ensure that the provinces get the money they require to provide services for the citizens they represent.
It is clear that the federal contribution has not kept pace with provincial spending requirements. It is imperative that the overall level of federal funding for social programs be increased from the current levels. Provinces have called on the federal government to increase the level of funding over time until the share of federal funding is 25% of provincial-territorial health and social expenditures.
I congratulate all the premiers who attended the 2003 first minister's health accord. It was good that they decided to come out united because it opened the doors to co-operation. They can now sit down and talk about the problems and, as a good start, they will receive $2 billion.
However if all the federal government is going to do is sit down and talk and not give the provinces what they rightly deserve, then we will have confrontation. I think we get more by sitting down and talking rather than having confrontations. It is important that the premiers are starting in the right direction. It is now time for the Prime Minister to make sure that he delivers to the provinces what they are rightly due under our Constitution.
Newfoundland and Labrador's share of the $2 billion for health care this year is estimated to be approximately $33 million. That sounds like a lot of money but when we look at the big picture of trying to provide services, it is not very much. We need more and I hope the federal government is listening.
The 2001 census: the population is a big determinant of equalization and CHST. In 2003, revised population data was released which reflected the 2001 census. Those results indicated that previous federal estimates of provincial population had been overstated for the years 2001-02 and 2003-04. This revised population data has resulted in an overpayment to provinces over that period of about $700 million. The impact for Newfoundland and Labrador of this overpayment was approximately $168 million. We need that money. We cannot afford to have the federal government take it back.
The federal government has indicated that it intends to recover this overpayment from provinces. The amount related to 2003-04, $52 million for Newfoundland and Labrador, will be recovered this fiscal year, while amounts related to the previous years, $116 million for Newfoundland and Labrador, will be recovered over the next five years.
It is very important that the federal government listen. It should forgive the money for the provinces because they need it. It is important that they ask where the money is being spent. I think the provinces will return and tell the federal government that the money was spent in the right direction.
Previous administrations over the years in Newfoundland and Labrador have not spent the money properly and as a result the hon. premier, Danny Williams, is in a difficult situation. We need the federal government to come on board, to assist Newfoundland and Labrador, like it has never assisted it before, not for political reasons but to do the right thing.
