Mr. Speaker, I would like to develop a little on the topic that was raised by my colleague from New Westminster-Burnaby.
Here we are 12 months downstream from the election with our total debt around about $45 billion higher than it was a year ago and with our entire social safety net in danger of collapse. In the time that it takes me to give this short speech our debt will have gone up by about $1 million. By the time this government actually gets around to doing anything we probably will have added another $10 billion to the debt. We will be that much closer to a total economic collapse.
Governments always seem to take too long to take care of fiscal problems. This House knows that I am originally from New Zealand and that I am very familiar with the fiscal crisis that hit New Zealand in 1984. Dependence on social programs in New Zealand was in the end reduced not by consultation and not by long delays and green books. Instead it ended up being slashed to the bone because the country went bankrupt.
A New Zealand style debt crisis is not the most pleasant way to reform social services.
I think perhaps it is worth reviewing some of the things that happened in New Zealand. This may help some of our government members understand the seriousness of our debt and deficit situation and the threat that the debt holds for the very survival of our social programs.
Getting control of government spending is a tough job and we know that. New Zealand's debt doubled from $22 billion in 1984 to $46 billion in 1994 by the time the first surplus occurred. These numbers are small compared to the numbers for Canada, but the fact is that the total debt doubled before expenditures came under control in the New Zealand situation.
When New Zealand hit the wall, the annual deficit could not be reduced to zero overnight. Emergency IMF funding permitted continued deficits while the economy restructured. It was these deficits over the 10 year period that caused the debt to double.
Think about what would happen to Canada in a similar crisis. We all know that the only way to balance the budget overnight would be to virtually eliminate every existing social program-welfare, UI, pensions, you name it-in order to save the necessary $40 billion.
In practice this could not be done because of the social consequences. The IMF would allow Canada to continue to incur decreasing deficits as social programs were abandoned and the population adapted to the changes. Just as in the case of New Zealand, this could easily result in the doubling of Canada's debt by the year 2004.
In other words, if we hit the wall tomorrow it is quite likely that our debt would balloon to a trillion dollars or more before we began showing surpluses.
By then, even if we have stable interest rates, the interest payments on the debt will be over $100 billion a year. Growth in the economy would help reduce the relative size of that interest payment but it is virtually equal to 100 per cent of today's tax receipts.
This is a very serious situation and just like New Zealand, it will not be solved with green books and discussion papers. Every single month that we delay the decision to make significant cuts, we add another $3.5 billion to our debt load and we simply cannot go on this way.
New Zealand was forced to take drastic action but a phoenix has risen from the ashes. New Zealand had a $600 million surplus this year and is forecasting $2 billion for next year. The government has promised tax reductions beginning in 1996 but a key to this is that New Zealanders must refrain from demanding any expansion of government programs or services.
This is very important. Canadians too must learn to refrain from demanding any expansion of government services and programs. In fact they must demand less. In 1984 immediately after the debt crisis the New Zealand dollar dropped about 20 per cent to be worth 62 cents Canadian. It held there until about 1992 by which time the reorganization of the economy had taken place.
Since August 1993, it has gained 17 per cent against the Canadian dollar and now stands at 84 cents. In the same time, it gained 8 per cent against the U.S. dollar, a significant measure of the strength of the New Zealand economy.
New Zealand introduced business style performance standards for public servants. The equivalents of deputy ministers were renamed chief executives, hired on fixed term contracts and made personally responsible for delivering measurable results.
Like business executives, they had the power to hire and fire and to buy any equipment they needed but they had to perform. I wonder how long some of the government's deputy ministers would last if they had to deliver measurable results.
Along with requiring results of its civil service, the New Zealand government passed a law requiring any surpluses to be used to pay down the debt and thankfully it is now into that cycle.
New Zealand's youth now have a future of reducing debt burden to look forward to while Canada's youth still have a future of increasing debt burden. The enforced social program reform in New Zealand extended to farming and corporate welfare as well.
Almost overnight came the complete removal of subsidies for farmers. Bankruptcy for farmers and the loss of food production was widely predicted but in fact there are more farmers farming today in New Zealand and making more money per farmer than they did before the government subsidies were taken away. They now grow what the world needs instead of what the government was paying them to grow.
There is a lesson there. When one pays people so much that it is more attractive to sit at home than to work, when one subsidizes farmers to grow crops that the world does not need, when one gives out grants to business and special interest groups one produces a dependency that kills jobs, kills initiative and kills individual responsibility.
When I left New Zealand in 1979 to emigrate to Canada, I left a socialist country very close to bankruptcy. The writing was on the wall there just as it is here in Canada today. However New Zealand today is a free enterprise country, very different to the one I left.
I am absolutely convinced that by studying the New Zealand experience we will be far better equipped to handle our own debt and deficit situation. If there was one MP travel junket that would actually be in the interests of Canadian taxpayers, it would be an all expenses paid trip to New Zealand for the Minister of Human Resources Development. He needs to see what is coming and he needs to see it soon.
There is no doubt that we need social service reform but it is highly unlikely that the 89 pages of fluff in the minister's green book will make any significant contribution.