Mr. Speaker, I rise in the House today in support of the budget tabled by the Minister of Finance.
The fundamental objective of the 1995 budget is sustained growth and job creation. The budget takes far reaching actions to reduce spending and to reshape the role of the federal government in building a stronger, more dynamic Canadian economy.
The budget is aimed at restoring fiscal health and refocusing government on key priorities and needs. It is about getting government right so that Canadians can get the economy right.
It is the biggest Canadian budget since post-war demobilization. It delivers on the commitment to meet our fiscal targets using prudent economic assumptions. It cuts the deficit largely through expenditure reductions. It restructures spending to keep the deficit on a downward track. It puts the government's own house in order to make it smaller, more frugal, better managed and innovative.
It defines a new role for government in the economy. It reforms federal transfers to provinces. It points the way to reform of unemployment insurance and the public pension system. It distributes the burden of restraint fairly among Canadians and the regions of Canada.
The deficit and debt are national problems. The budget distributes the burden of restraint fairly across all regions. Canadians in every region have strongly urged us to bring spending under control. Some individual measures obviously affect certain regions more than others, but looked at as a whole no region is being hit disproportionately.
The budget shows that federalism is flexible and dynamic. Although we are cutting the level of transfer payments, we have given the provinces ample notice as promised and the cuts are less than those we are imposing upon ourselves. The government remains committed to the equalization program, a pillar of Canadian federalism.
The new Canada social transfer will give all provinces greater flexibility in designing social programs while the principles of the Canada Health Act are maintained. The introduction of the Canada social transfer in 1996-97 will deliver funding to the provinces, cash and tax points of $26.9 billion. That is a drop of about $2.5 billion from what provinces could expect under the current system.
That is tough action but let us put it in context. It means that the total of all major transfers, including equalization which is not affected by the budget, will be 4.4 per cent lower than today. By comparison, the cuts in federal spending everywhere else will be 7.3 per cent, a much deeper reduction.
The Canada social transfer will represent a new approach to federal-provincial fiscal relations marked by greater flexibility and accountability for provincial governments and more sustainable financial arrangements for the federal government. By doing so it continues our national evolution toward more mature fiscal relations.
The government is meeting its fiscal target. In the 1994 budget we pledged that the deficit would be reduced to 3 per cent of GDP or $24.3 billion for 1996-97. In the budget we are taking strong measures to ensure that those targets are met even with higher than expected interest rates.
The budget also looks beyond the two-year target because our fiscal reforms will continue to pay off in the years after sustaining our progress toward the government's ultimate goal, a balanced budget.
Our cautious fiscal and economic assumptions make clear the need for tough measures. To hit our targets we are implementing cumulative savings over the next three years of $29 billion. These actions mean changing the size and shape of government. By 1996-97 program spending will fall from $120 billion last year to just under $108 billion. The structural changes we are making will ensure that significant deficit reduction continues in 1997-98 and beyond. The bottom line benefit will be dramatic.
The budget concerns itself with increasing tax fairness. The 1995 budget takes far reaching action to restore the fiscal health that supports a strong and growing economy. The plan also reflects the government's determination to puts its own financial house in order instead of placing the burden on taxpayers.
Over the next three years spending reductions will total $25.3 billion against $3.7 billion in revenue action. That is almost $7 in spending cuts for each $1 in new tax revenue.
Most important, there is no increase in personal income tax rates in the budget. Where tax action is taken it centres on improving the fairness of the tax system. As the finance minister said, the issue of taxes is more than a matter of rates; it is a question of equity.
The budget reflects the results of the program review that was launched a year ago. The budget agenda is not just a plan for smaller government. It is a plan for smarter government and for reforming the structure of the government and how it spends. The size of government will be reduced substantially over the next three years. Departmental spending will be cut by almost 19 per cent from 1994-95 levels. For some departments spending will be halved and in total these actions will deliver a three-year savings of almost $17 billion.
As a result of the sweeping reform of federal programs, the public service will be reduced by 20,000 people this year and by some 45,000 positions over the next three years. For the first time departments will have to prepare three-year business plans and submit the plans to the scrutiny of Parliament and the public.
The impact of the program review budgetary measures has been fairly distributed across all provinces. Some programs have been eliminated or significantly reduced. Other programs have been redesigned or consolidated. There are some particular measures that tend to be concentrated in specific regions.
Of concern to the Atlantic region, and more particular to my riding of Central Nova, is the Atlantic freight subsidy that is being eliminated. However to offset this a five-year, $326 million transition program is being provided. Dairy subsidies will be reduced by 30 per cent over the next two years. Forest resource development agreements with the province will be discontinued. The public utilities income tax transfer payment of $30.4 million to Nova Scotia will be terminated. Regional agency funding will decline by $562 million over the next three fiscal years. ACOA's share of the reduction is $173.5 million or a 31 per cent reduction.
The government remains committed to supporting economic incentives in Atlantic Canada. ACOA has proven to be the most efficient and effective vehicle for delivering on the commitment. In terms of the government's commitment to job creation as promised in the red book, ACOA has shown itself to be part of the solution, having helped to create some 42,000 jobs in Atlantic Canada. ACOA will continue to fulfil a vital role as a source of capital for the region for growing small and medium size business and as a leader for economic development in the region.
In conclusion, the budget marks the beginning of a new era. It underlines the need for an evolving, dynamic, co-operative federalism to meet the challenges facing Canada's economy and its people in a tough, competitive world. It is a challenging budget but also an equitable budget that deserves the support of all members of the House.