Mr. Speaker, it gives me great pleasure to speak on this prebudget debate and provide some input on what I believe we should see in the minister's budget come next February. May I start by indicating there are four principles that the government and the minister should follow in formulating this budget.
First, there is a recognition by most members of this House and by most Canadians that the deficit is too large, that it is not sustainable in the long run and it must be reduced and eventually eliminated as quickly as possible. That is the first principle.
Second, the fiscal actions undertaken by the government should concentrate on the expenditure side and should not entail general tax increases.
Third, in the formulation of the budget the government has to remember that it has a dual responsibility. Yes, it has a fiscal responsibility, but also it has a social responsibility to individual Canadians and to society at large.
The fourth principle that should be followed is that the actions undertaken in the budget, as are many of the actions taken by this government overall, must have as their primary focus economic growth and job creation.
Our government clearly recognizes the need to act on the deficit. Looking at the record, it is very clear. When we took over government the deficit was almost 6 per cent of our gross domestic product. The following year it went down to 5 per cent; the following year it is going down to 4.2 per cent; the year after that it is going to 3 per cent. As the minister announced in his testimony to the finance committee, he has set the target for 2 per cent in the fiscal year after that.
That is a 66 per cent reduction in the short period that we have had an opportunity to control this government. It is not the slash and burn the Reform Party would want to see us undertake. It is responsible economic management and the emphasis is on the word responsible.
An important point is the minister pointed out in his budget presentation that in fiscal year 1997-98 our borrowing needs as a government will have been reduced to $7 billion. That is the lowest borrowing needs of any government since 1969. We are going to be accomplishing something that has not been accomplished in almost 30 years.
As far as reducing the deficit, as I mentioned earlier, there are two tracks to take. There is the expenditure side and we want to reduce expenditures. But we also want to see increased revenue, not by increasing the tax rate, but by bringing growth to the economy so that no individual taxpayer is paying more but that there are more taxpayers. That is the key to eventually controlling our deficit, economic growth and ensuring that there are more Canadians working and more taxpayers.
Obviously our goal is to bring the deficit to zero. As I said earlier we are going to do it in a responsible way and not in a slash and burn scenario that members of the third party would like to see us undertake.
Our actions in the last two years have certainly indicated our commitment to this. The minister in his February budget last year announced a 19 per cent decrease in government operating expenditures. He announced a 14 per cent reduction in the civil service. These are real fiscal measures that are leading to a reduced deficit.
To arbitrarily slash and burn when we are dealing with our budget is not appropriate. There are things that we spend money on that are important, that are investments in the future and things that we have to continue. For instance, there is the expenditure on the research and development tax deduction. Sure, the government can save money by totally eliminating that but those savings are false savings. It might save us something for the first year or the second year. If we stop research and development it is going to have a very negative impact on our ability to compete and a negative impact on our ability to generate jobs and income in the future. We have to be careful that we do not simply slash and burn but that we remember there are important things that government undertakes that we need to continue to spend money on.
There is something this government will not do and something I know the minister will not do. That is to follow the advice of the Reform Party or to follow the advice or the actions of the Conservative government in Ontario to substantially reduce expen-
ditures on social programs, not so that the deficit can be controlled, but rather so that tax decreases can be passed on to the most wealthy in society. That is something we will not do as a government. That is not responsible control of our deficit. It is not responsible fiscal management.
As I said at the beginning of my speech, the government has a fiscal responsibility. We do have an obligation to bring the deficit under control. However, we have to remember that we also have a social responsibility to individual Canadians. It is important to remember that behind every line on the federal budget there are real Canadians, real people who are impacted by those changes.
To simply do as the third party has suggested, to slash and burn without any consideration for what the impact on those people is going to be is not acceptable. It is not responsible fiscal management. It is quite easy to go down the list of expenditures and look at an arbitrary number and simply strike it out. We cannot do that.
We spend money on medicare. We spend money on our old age security system. We spend money on an employment insurance system. We do it because it is right. We do it because it is important. The suggestion that we should just simply slash and burn is not acceptable.
Another principle is that we have to work toward job creation. As the minister has said on many occasions, it is not a contradictory concept. Bringing the deficit under control, bringing fiscal management to the country will help in job creation. A lower deficit will lead to lower interest rates. Lower interest rates will lead to more business investment. It will lead to more consumer confidence. It will lead to more consumer spending. It will lead to more jobs. It will create a climate in which small business men and women can create jobs. It is important for job creation that we control the deficit.
Our policies for job creation work. Since the government came into power it has created 450,000 new full time jobs. The unemployment rate has dropped by 1.7 per cent. We are making progress. There is much to be done, but it is important for Canadians to realize we are making progress.
If we compare that progress with the previous government, which said during the election campaign that there would be absolutely no opportunity to increase employment until some time in the next century, we realize how well this government is doing. However, as I said, we still have much to do.
I will repeat the four principles which I believe the minister must take into account when formulating the budget. First, the deficit must be reduced as quickly as possible. Second, the actions he undertakes should emphasize growth strategies, expense reductions, and he should stay away from across the board tax increases. Third, we must act in a manner which fulfils our fiscal responsibility but also fulfils our social responsibility. Fourth, our actions must encourage economic growth and job creation.
We have a long term vision of economic prosperity. We do not have a vision which simply slashes and burns without any kind of responsibility for expenditures. We will ensure the deficit is brought under control. We will also ensure we invest in Canada, in our children and in our children's children.