Mr. Speaker, I rise to speak on second reading of Bill C-10, the borrowing authority bill.
The government is asking this honourable House for $18.7 billion of borrowing authority for the 1996-97 fiscal year. This amount is comprised of the financial requirements stated in the budget for 1996-97 of $13.7 billion, exchange fund account earnings of $1 billion and a $4 billion non-lapsing amount.
As in previous years, the amount of borrowing authority requested in the bill is directly connected to the financial requirements set out in the 1996 federal budget. The financial aspect of the
bill is also contained in the budget plan tabled in the House of Commons by the Minister of Finance.
I urge the House to give unanimous approval of this legislation without delay. The Minister of Finance in the budget speech states: "Let us act not as special interests but as stewards of the national interest, knowing that the destiny of our children is in our hands".
I remind the House that the word economics derives from the Greek word meaning household management. The purpose of economic life is not simply to gain material satisfaction but to support families and the social institutions and identities that evolve from families as the fundamental units of human society and human actions.
Having said this, it should be noted that the 1996 budget does just that. It consolidates and extends the actions taken under the comprehensive strategy set out in the 1994-95 budget, together to help Canadians secure their future, to secure their financial future, to secure the future of the social programs, to invest in the future of our people, our families, our communities and our country.
The 1996 budget is the third mile post in the government's journey to securing fiscal stability and a vibrant, dynamic and competitive economy for Canadians who must compete in the tough global arena. Working together with the 1994-95 budget, this budget continues a comprehensive strategy for federal finances that is determined, measured and responsible; determined because we are not letting up. As the Minister of Finance emphasized, the attack on the deficit is irrevocable and irreversible. We will balance the books. Furthermore, we will put the debt to GDP ratio on a constant downward track year after year after year.
It is measured because our fiscal action plan is not indiscriminate and mindless but structured to a pace that is conducive to efficient adaptation. It is designed not as a quick fix but to achieve long term and permanent progress. It is responsible because it is a strategy that involves carefully weighing the needs of the economy and society and equally carefully designing the policy options to meet those needs.
Just as important, we are striking the balance necessary to keep Canadians onside for our deficit reduction efforts. There remains no question about the need for dramatic, disciplined action. High public sector deficits and debt have sapped confidence, soaked up domestic savings and led to a sharp increase in the country's net international indebtedness.
Canadians were paying a painful price through the punishing pressure that high deficits placed on interest rates. This drains consumer and business investment and drives down job creation. The lethal combination of high interest rates and deficit borrowing also meant that a growing share of government resources must go to interest payments on a growing debt.
This year those charges will cost the federal government $47 billion, money that cannot go to lowering taxes, aiding those in need and helping the economy create new jobs.
Tackling Canada's fiscal problem is a fundamental component for national growth, new jobs and economic security. With the first two budgets the government began the process of restoring Canada's finances and restoring credibility to the government's fiscal policy after years of missed deficit targets.
By setting credible two-year rolling deficit targets, by using prudent economic assumptions for fiscal planning purposes and by establishing substantial contingency reserves to handle the impact of unforeseen economic development on the achievement of the deficit target, credibility is being restored to the nation's finances.
The first two budgets implemented unprecedented reductions to program spending that are structural in nature and extend to the medium term planning horizon.
With these measures, the 1995-96 and 1996-97 deficit targets, bringing the deficit down to 3 per cent of GDP, are secure despite lower GDP growth than had been originally assumed. Contributing to this progress is the fact that interest rates are also significantly lower than projected. This has neutralized the adverse affects of lower growth on the deficit.
The measures in the 1996 budget consolidate and extend those in the first two budgets and further contribute to the economic and financial objectives. We have maintained our focus on reducing program spending because the debt is a problem created by government and the solution should focus on cutting in our own backyard.
There are no tax rate increases in the 1996 budget, not personal taxes, not corporate taxes, not excise taxes. Expenditure cuts in the 1996 budget amount to $1.9 billion in 1998-99 and build on the reductions of the two previous budgets to keep program spending on a downward track.
Here is a point that must be emphasized. Of the cumulative fiscal actions we will have taken from 1994-95 to 1998-99, a full 87 per cent have been expenditure savings. Together the three budgets will contribute $26.1 billion in savings for 1997-98.
This action, together with reform of the employment insurance program, will ensure we hit the new deficit target to bring the deficit down to 2 per cent of GDP. Through budget action, we have set a further $28.9 billion in savings for 1998-99. This means that the deficit will continue to fall.
There is no question that historic action has been taken. Program spending, that is everything but interest payments, will have declined six straight years through to 1998-99. Relative to the size of the economy, program spending will fall to its lowest level since 1949-50.
Over the last two and a half years, Canadians have turned to governments not to invent jobs but to provide an economic and social environment that will encourage the economic growth that makes new jobs possible.
We are proud of our record to date. Since taking office in 1993, unemployment has dropped by two full percentage points and about half a million jobs have been created, mostly in the private sector and almost exclusively by small and medium size enterprises.
We realize that there is much work ahead. Unemployment remains far too high and there is widespread national worry about the job future for young Canadians, older displaced workers and for women re-entering the workforce.
The government is intent on taking durable, meaningful steps forward. Rather than relying on short term direct spending programs, this more meaningful approach is being taken. It emphasized collaboration with partners and strategic investments to steer the forces of economic change toward greater employment.
First things first. For the sustained economic growth needed to deliver new jobs, we must start by securing Canada's economic fundamentals. That means getting the deficit down and keeping it down. High persisting deficits go hand in hand with high interest rates. High interest rates discourage investment borrowing and consumer spending and ultimately discourage jobs.
We also need to keep inflation down. Low inflation reduces pressure on interest rates and lowers business overhead. Of course, keeping the cost of doing business to a minimum will encourage investment and make us more competitive abroad.
Beyond providing a sound economic framework, the government has looked seriously at what more it can and should do. Some areas are so important to Canada's future prospects that they warrant significantly increased efforts from the federal government. Therefore the government has concentrated on youth, innovation, technology and trade, which is set out in the budget plan.
It also should be noted that financial institutions have a key role to play in facilitating the growth of Canadian business. Over the past year the banks have made progress in dealing with the concerns of small business. However, more needs to be done to ensure that financial institutions provide the best possible financing for growing export and knowledge based business, and for all small and medium size business.
Therefore the government will work with business and all financial institutions, including the banks and insurance companies, to ensure that this progress continues.
A temporary tax on large deposit taking institutions, including the banks, was introduced in last year's budget and it will be extended for a further year. Currently the legislation governing financial institutions is being reviewed with a view to improving the framework established in 1992. The conclusion is that the financial sector has yet to fully adjust to this framework. Therefore the present restriction on banks selling insurance will be maintained.
The present framework for selling insurance through agents and brokers will be preserved and the white paper covering this and all other aspects regarding financial institutions under review will be released in the coming weeks.
In conclusion, since I am sharing my time with another member, I want to emphasize that this budget is a budget that secures the future of all Canadians. It secures their financial-