Madam Speaker, I welcome the opportunity to respond to the motion put before the House by the hon. member of the opposition.
Let me say that I appreciate the member's sincerity. But while his intent may be positive it seems that his view of the government budget plan, the range of economic challenges we had to address has been blinkered by deficit myopia. I say myopia because the real solution to Canada's debt and deficit situation will not come from short term and shortsighted hatchet work. Amputation is no way to restore Canada's fiscal health. We need a co-operative, consistent and comprehensive plan of action and that is what our February budget delivers.
The motion before us states baldly that "the budget plan of this government is not a solution to Canada's debt and deficit problem". It follows this up by urging four steps including a moratorium on spending such as the $6 billion national infrastructure program. I want to comment briefly on each of the unnecessary nostrums the motion advances. First let me step back and remind the House of the concrete plan for deficit reduction we have put in place.
There need be no question about our objective. Our goal is to eliminate the deficit. Our interim target is to reduce it to 3 per cent of GDP by 1996-97. The budget puts us on a course to meet that target. We will reduce the deficit to $39.7 billion in 1994-95, to $32.7 billion in 1995-96 and, with only moderate growth, to about $25 billion in 1996-97.
The motion before us intimates that these targets do not represent fast enough progress, but that view simply and dangerously chooses to ignore the destructive consequences that more drastic spending cuts would impose. Canada's economy is still in recovery. Unemployment remains unconscionably high. Consumer and business confidence, although improving since the government was elected, cannot be called buoyant. Industrial restructuring from the fisheries of the maritimes to the manufacturing heartland of Ontario to the farms and ranches of the prairies to the forests of B.C. remains a painful reality.
These are all part of the context within which our budget decisions were framed. These challenges demand that the government play its part in helping restore economic vigour, in restoring national confidence and job creation. They also demand that government continue to assist those in real need.
That is why our budget refused to take a slash and burn approach to government spending. That is why we are reallocating funding to the infrastructure program and to residential rehabilitation, activities that do not merely create jobs on their own but act as a catalyst to further job creation and renewed optimism.
The budget recognizes that sustained deficit improvement can only be achieved in a growing and healthy economy, an economy that is equipped with the skills and technology to meet and beat the challenges of global competition in today's information age. That is why the budget funds programs such as the youth services corps, the technology network and the engineers and scientists program that will help small business.
While the budget invests in jobs and renewed competitiveness it also applies, and I would like to underline this, the most significant net spending cuts of any budget in over a decade. We are reducing departmental operating budgets and extending the salary freeze for Parliament and the public service. The total savings from cuts in government operations will rise from $468 million in the coming fiscal year to $1.6 billion in 1996-97.
We are closing military bases and reducing other elements of defence infrastructure. Combined with the cancellation of the EH-101 helicopter program, savings over the next three years will total some $3.6 billion.
We are renewing our unemployment insurance system in order to make it more effective, more fair and more affordable. Savings here will reach $2.4 billion a year in 1995-96. We are also looking to change other aspects of Canada's social security system to produce savings of $1.5 billion annually in provincial transfers.
Yes, these actions will take time to achieve their full weight, but we make no apologies for refusing to rush helter-skelter into cutting simply for the sake of cutting. If that approach actually worked then the previous government's record would have been one of sustained deficit reduction instead of exactly the opposite.
It is the need for consistent, considered and co-operative action that explains why we have set future targets for savings in provincial transfers rather than imposing them overnight. Again this is a lesson that the previous government failed to understand. There is nothing to be gained by offloading the federal deficit on to Canada's provinces by unilaterally changing the structure of transfer payments the federal government makes to those provinces. That simply shifts the debt from the federal ledger to a provincial one.
Instead we firmly believe the two levels of government must approach their respective challenges through co-operation. That means consultation and deliberations before we act. This is the strategy the budget embraces.
I should also say that we are encouraged by the fact there is an unprecedented consensus today both nationally and provincially on the need to bring deficits down. Strong action is being taken across the country, and this will have a significant impact not simply on the federal deficit itself but on the national deficit overall. That in the end must be the ultimate goal.
Some people have said that we should simply cut spending by 5 per cent across the board. In a number of areas we went well beyond that and the results will be evident. There are other reasons why simplistic across the board approaches do not work. This ties right back to a fundamental principle of the budget's approach to deficit reduction. We do not believe that sustained success lies in treating symptoms that Canada needs to change.
That is why we have given notice of the need to modernize unemployment insurance and the federal-provincial social security system. We believe that a new design can be more effective and less costly. We have given ourselves and the provinces two years to succeed and have set out the minimum savings that must be achieved.
This needed change is not an option. It must happen and it will happen. There are due dates. There are deadlines. There are firm fiscal targets. This plan offers a real solution to Canada's fiscal challenges.
Let me emphasize this by drawing on some recent remarks by the Minister of Finance. He said: "We are not doing this simply to cut spending. We are doing it because Canada needs a new architecture for a new economy on the verge of a new century. But in the end the result is also going to be to get the financial monkey off our back. That is going to be one of the legacies of this Canadian government to its people".
To further explain our approach, I ask all hon. members to consider this. In difficult times would any sensible company manager simply cut operations across the board or would cuts be deeper in some facets of an enterprise and less in other areas of strategic importance for further growth? That requires prudent planning. It requires strategic analysis and sensible commitment, and that is exactly what the government has done in the budget.
I believe my remarks offer real reasons why the motion before the House is unnecessary and ill-considered. Let me just tie off some of the particular suggestions that the motion offers. It urges a moratorium on all new spending, such as the youth service corps and the infrastructure program. First, the motion fails to realize that virtually none of this is new spending. These actions are being funded by savings elsewhere or reallocation of existing funds.
That is not the real flaw in the suggestion. As I stated earlier in my remarks, such spending is a bottom line investment in job creation, restored confidence and long term competitiveness of our economy. Eliminating this investment would be a classic example of penny wise and pound foolish. It would hold back the economic recovery that will be essential to long term deficit elimination and debt reduction.
Incidentally those who would be hurt by such spending cuts would be Canada's young people and small businesses, communities that government and all Canadians should be doing all they can to nurture. I can hardly believe that punitive action here is what the hon. member really means by this motion.
The member's motion also proposes that the government establish effective spending caps. The budget by definition sets spending targets that represent the caps the government intends to apply to spending.
The previous government legislated a more formal cap process. This did not prevent it from falling substantially off its deficit track by tens of billions of dollars. Again the real answer to spending control is a consistent, comprehensive plan based on credible economic assumptions. That is what the budget delivers.
The member's motion also proposes that the government produce quarterly reports on the progress being made on deficit reduction. I am not sure if I understand or the member understands exactly what he is looking for. The Department of Finance already produces monthly and quarterly fiscal reports covering the most recent data available on revenues and spending. Perhaps he is not aware of that publication.
I should also point out that the Minister of Finance has committed to producing this fall a comprehensive statement laying out changes in Canada's economic and fiscal outlay. This is a major departure from the past and will help ensure that all Canadians have a clear understanding of our fiscal process and whether further action is needed.
Finally, the motion before us refers to committing to "corrective action using a spending contingency plan". I can see no reason why we need corrective action when there are no grounds to assume our plan will not deliver the objectives we have set out. The member may not be aware that we did build into our fiscal projections increased contingencies to ensure that our fiscal targets would be met.
If the member had been attentive, he would have realized that our revenue assumptions are very prudent indeed and that our interest rate assumptions are very prudent as well. The hon. member stated just a minute ago that political uncertainty is caused by elections. Surely the hon. member believes in elections. If we did not have elections none of us would be here today. However political uncertainty is certainly part of our democratic process.
In conclusion, all members concerned with regard to Canada's deficit and debt situation deserve an adequate response. It is a concern all of us in government share. That is why the government in its first budget took action that was both balanced and courageous, action that is delivering results now but also looks to the future, action that takes aim at spending where appropriate but also works to strengthen the economy and job creation.
More people working and paying taxes and a more efficient government are needed to reduce the fiscal deficit and that is exactly what the government delivered in its first budget. To me and to the government the bottom line is clear. We have put in place a budget plan that is credible, realistic and responsible, a plan that meets the needs of Canadians today and for our national future.
There is no reason for the motion with its pessimism, scare tactics and myopia to pass.