House of Commons Hansard #7 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was budget.
Jack Ramsay Reform Crowfoot, AB
Madam Speaker, on behalf of the Reform Party caucus and its justice critic, I too see no opposition whatsoever to this minor amendment to the Judges Act. To expedite the process of the House, I have nothing further to add.
(Motion agreed to, bill read the second time and referred to a committee.)
Don Boudria Liberal Glengarry—Prescott—Russell, ON
Madam Speaker, the indication from the Chair was that the bill was referred to the standing committee. I had been led to believe that there was some agreement to doing all stages of the bill in the House by unanimous consent this afternoon as opposed to the reference to the committee. Perhaps the Chair could clarify the matter for us.
Judges ActGovernment Orders
The Acting Speaker (Mrs. Ringuette-Maltais)
Is there unanimous consent for the bill to go to committee of the whole?
Judges ActGovernment Orders
Some hon. members
Agreed.
(House in committee of the whole on Bill C-2, an act to amend the Judges Act-Madam Ringuette-Maltais in the chair.)
Judges ActGovernment Orders
The Assistant Deputy Chairman
Order. House in committee of the whole on Bill C-2, an Act to amend the Judges Act.
Shall clause 1 carry?
On clause 1
Pierrette Venne Bloc Saint-Hubert, QC
Madam Chairman, can the parliamentary secretary tell us if this extension from six to twelve months would increase the expenditures and emoluments of the members of the triennial commission. And if so, by how much?
Gordon Kirkby LiberalParliamentary Secretary to Minister of Justice and Attorney General of Canada
Madam Speaker, it is my understanding that there will be no increase in costs in regard to this extension.
Judges ActGovernment Orders
The Assistant Deputy Chairman
Are there any other questions on clause 1?
Shall clause 1 carry?
Judges ActGovernment Orders
Some hon. members
Agreed.
(Clause 1 agreed to.)
(Clause 2 agreed to.)
(Title agreed to.)
(Bill reported, concurred in, and by unanimous consent, read the third time and passed.)
Don Boudria Liberal Glengarry—Prescott—Russell, ON
Madam Speaker, I ask for unanimous consent to suspend the sitting of the House until 4.20 p.m., at which time hon. members will be called in for the budget speech. We will not proceed to the consideration of the next bill on the orders of the day.
Judges ActGovernment Orders
The Acting Speaker (Mrs. Ringuette-Maltais)
Is it agreed to suspend the sitting until 4.20 p.m.?
Judges ActGovernment Orders
Some hon. members
Agreed.
(The sitting of the House was suspended at 3.51 p.m.)
The House resumed at 4.30 p.m.
Paul Martin LiberalMinister of Finance
moved:
That this House approves in general the budgetary policy of the government.
Mr. Speaker, I am tabling the budget documents, including notices of ways and means motions. The details of the measures are contained in the documents.
Pursuant to an order of this House, I will introduce today a bill seeking borrowing authority for the 1996-97 fiscal year. I am asking that an order of the day be designated for consideration of these motions.
It is as clear today as it ever has been that Canadians do not want rhetoric from their government. What they want is action, real progress. These are the standards that Canadians have set, and these are the standards by which this government wants to be judged.
Seldom in our history have so many experienced such anxiety. Canadians feel our very way of life is at risk. They look at medicare and feel it is threatened. They look at the pension system and wonder if it will be there for them in the years to come. They consider the economy and they worry that the gale force winds of competition and change will carry away their jobs. Canadians think about their children, our youth, and ask what kind of opportunities will be left for them.
If there is one obligation before government today, it is to do its part to address these deep concerns. It is to do what we must so that confidence can overcome anxiety and hope can replace despair. In short, we must act now to help Canadians secure their future.
In short, we must act now to help Canadians secure their future. We all have our part to play in this undertaking.
It will require the concerted efforts of individual citizens, their governments, business and others for our country to tackle these challenges effectively.
What Canadians want from their government is for it to set the goals, to have a plan and then to work as hard as it can and as long as it must to help get the job done.
This budget is our third in a comprehensive and determined drive to restore fiscal health to this country. In this budget we are keeping on course. We are maintaining our pace. We are not letting up. Indeed, this government will never let up. The attack on the deficit is irrevocable and irreversible. Let there be no doubt about that. We will balance the books. Furthermore, we will put the debt to GDP ratio, what we owe as a percentage of what we produce, on a constant downward track year after year after year. Nothing, I repeat nothing, will cause this government's conviction to change.
We announced in November that we had bettered our deficit target for 1994-95. It is now clear that our target for 1995-96 will be achieved or bettered and that we are on track for our 3 per cent target for 1996-97. This is proof of the profound impact of the actions set in motion in our first two budgets.
Moreover, today, we will make it clear that our deficit target for 1997-98, $17 billion or 2 per cent of GDP, is also secure.
We will hit the 3 per cent deficit target. We will hit the 2 per cent target announced last November. Indeed, we are announcing the actions today which will enable us to go beyond these targets to keep us moving toward budget balance.
To that end, we are cutting our own departmental spending by almost $2 billion to take effect in 1988-89, I mean 1998-99. I am going backward; I sound like the Reform Party.
Paul Martin Liberal LaSalle—Émard, QC
This is over and above the substantial savings secured in our first two budgets. Most departments will have their budgets cut by at least a further 3.5 per cent in 1998-99; some are cut much more.
Spending on defence and international assistance will be further reduced. The growth of spending on Inuit and Indian programming will be restrained. The dairy subsidy will be phased out over five years and the postal subsidy program reduced.
This budget, together with our last two, will contribute $26.1 billion in savings to secure our 2 per cent target for 1997-98 and a further $28.9 billion of savings for the following year 1998-99 to continue the downward deficit track and to give the debt to GDP ratio the downward thrust it needs.
In 1993-94 government spending on programs, that is to say spending on everything but interest on the debt, stood at $120 billion. By 1998-99 we will have reduced that to $105.5 billion. This will mean six consecutive years of absolute decline in program spending.
Measured relative to the size of the economy, the decline is even more dramatic. By 1998-99 program spending will have been reduced to 12 per cent of GDP. This is down from close to 20 per cent just over a decade ago. In fact, it will be at its lowest level in over 50 years.
Because we are focusing on spending cuts, not tax increases, over the three budgets taken together, we will have cut seven dollars in spending for every one dollar in new revenues. Let me say that in this budget we are not raising excise taxes. We are not
raising corporate taxes. We are not raising personal taxes. In fact, we are not raising taxes.
We are pleased to announce that, in this budget, we are not raising taxes. In fact, this government has never relied on tax increases to hit its deficit targets. Nor has it relied on rosy forecasts. We are maintaining the prudent approach we have adopted from the very beginning.
Our economic assumptions are once again deliberately more cautious than those of most private sector forecasters. As in both previous budgets, we are backing up our economic assumptions with substantial contingency reserves. These reserves do not exist to be spent on new initiatives, or new programs. They are there to handle unforeseen changes in the economy. If we do not need them, they will not be spent. They will go to reducing the deficit even further.
As we have always said and as we have now proven, meeting our targets is the least we can do. It is not the best we will do.
One of the payoffs in hitting our deficit targets is the dramatic decline in the amount of new money the government must borrow on financial markets each year. This indicator, financial requirements, is the way most other major economies, the United States, the United Kingdom, Italy, France and Germany, calculate their deficits.
In the year 1993-94, the year we came to office, Canada's financial requirement stood at 4.2 per cent of gross domestic product, or $30 billion. By 1997-98 our financial requirements will drop to only 0.7 per cent of GDP, or $6 billion. Relative to the size of the economy, our new borrowing requirements will be at their lowest level in almost 30 years. Measured on this basis, Canada will have the lowest fiscal shortfall projected of any G-7 central government.
Today's fiscal progresses do not result from a federal effort only, they are due to a national effort supported by Canadians from across the country and from all political affiliations.
One of the primary goals of all provinces and territories is to return to fiscal health. In fact, eight provinces are expected to report a balanced budget, or even a surplus, for the fiscal year ending this month.
The results are striking. For instance, in 1993, Canadian businesses and governments borrowed $29 billion abroad. That was reduced to $13 billion in 1995, and it will be reduced again next year and the year after that. In short, Canadian economic sovereignty is being restored.
In comparison with most other countries and in the arcane world of statistics, we are doing quite well. However, that being said, in the real world where we all live we know that despite gains being made, Canadians continue to worry very deeply. The reason is not hard to identify.
Whatever the numbers might say, many do not see evidence of improvement in their own lives. They see sacrifice. They want to know whether their sacrifice will bring positive results and when it will end. Therefore the job before us is clear. It is to build on the progress we have made, to see it translated into good jobs, into sustained growth and social programs suited to the millennium that lies ahead.
This budget is about consolidating the gains we have made. It is about addressing problems before they arise. It is about managing ahead, continuing to put in place new building blocks for security and prosperity. It will show how we will sustain the federal government's commitment to health care and our social programs into the 21st century. It will put forward a plan to restore confidence in the public pension system. It will enhance the protection of the most vulnerable in our society and it will reallocate spending to invest in the economic future of the country. In short, as all budgets must be, this is a budget about the present; however, it is also a budget for the future.
Canadians want to know that the principles guiding government are the ones they share. Here are our principles. First, governments created the deficit burden and so governments must resolve it first by focusing in their own backyards by getting spending down, not by getting taxes up.
Second, our fiscal strategy will be worth nothing if at the end of the day we have not provided hope for jobs. We must focus on getting growth up at the same time as we strive to get spending down.
Third, we must be frugal in everything we do. Waste in government is simply not tolerable.
Fourth, we must forever put aside the old notion that new government programs require additional spending. They do not. What they do require is the will to shutdown what does not work and focus on what can. That is why a central thrust of our effort is reallocation. Whether on the spending side or on the revenue side, every initiative in this budget reflects a shift from lower to higher priority areas.
Finally, we must always be fair and compassionate. It is the most vulnerable whose voices are often the least strong. We must never let the need to be frugal become an excuse to stop being fair.
Let me now address the issue of the pace of our efforts. This pace has been constant from the outset. It was established deliberately. We will not alter it. It is our view that chronic deficits constitute a clear and present danger to this country, to our way of life, to our future. Chronic deficits put the disadvantaged at risk. It is they who suffer when the financial strength of government is so weak it can no longer reach out to those in need.
However, this does not mean we share the view of those who think we should be going to a zero deficit overnight. Draconian budgets are not difficult to write; the arithmetic is painless but the human consequences are not.
In our view, durable progress requires adaptation, adjustment and understanding. A measured strategy lets that happen. A measured pace ensures that short term savings will become long term savings -à a downpayment towards restored fiscal health. Indiscriminate cutting, on the other hand, raises the real risk that short term savings will become long term costs.
Our goal is clear and firm: to get the deficit down permanently -à not temporarily. We want to solve the problem once and for all. This requires considered and careful reform.
We will balance the books and we will do so in a way that is measured, deliberate and responsible. That is our plan, that is our course. This is a question of costs, it is a question of consequences; but so too it is a question of values. We simply do not believe it is necessary to toss aside fairness in the quest for fiscal success. That has not been the hallmark of this country and it will not be the legacy of this government.
We have always made it clear that while fiscal progress is crucial, equally important is the redesign of government itself. What we need is a government that not only spends less money -à but spends more wisely. If there is one area where we must never let up, it is the effort to root out waste and inefficiency.
Government should be focused on the needs of citizens -à not the needs of bureaucracy. Canadians want their governments to co-operate, not compete. And they want better service delivered at lower cost. Duplication wastes businesses' time and government resources. We want to put an end to such waste.
Therefore, legislation will be introduced that will allow for the creation of fewer, more effective government agencies.
One of the best ways to reduce costs is to reduce overlap and duplication. This was one of the goals inherent in our program review exercise led by the current President of the Treasury Board. Surely we can all agree in the House that it is simply silly for a food processing company to have a federal meat inspector, a federal health inspector, a federal fish inspector, not to mention a provincial health inspector and a provincial food inspector, tripping over themselves on the same day in the same plant doing essentially the same things.
What small business has not had the experience of a federal income tax auditor, followed by a federal sales tax auditor, followed by a provincial corporate tax auditor, followed by a provincial retail tax auditor, all asking for the same material organized in a slightly different way? This is why we are proposing, for instance, a single food inspection agency that will consolidate the activities currently spread around several federal departments. This in turn will allow us to offer a new partnership with the provinces which would lead to a more efficient joint food inspection system.
For the same reason, the Minister of National Revenue will also create a national revenue agency, the Canada revenue commission. The creation of this commission will facilitate the development of a closer partnership with the provinces in revenue administration. Canadians know full well that there is only one taxpayer. A number of provinces have asked us with justification why should there not be only one tax collector as well.
In the same vein we are working very hard to replace the federal sales tax. We believe this is crucial to increase fairness for consumers and respond to the concerns of small business while saving taxpayers money through more efficient administration. We are working with a number of provinces to achieve this end. If successful in getting provincial agreement, the government will take such steps as are necessary to implement harmonization. In addition, a significant package of measures is being readied to streamline and simplify the federal sales tax.
Fiscal health is not an end. It is a means to an end. It gives us the strength to move forward on everything else. As we continue to address the anxiety of Canadians over the fiscal health of their country, we must also look ahead to address other problems before they arise.
Clearly, one of these priorities must be to preserve and strengthen our social programs for the next century.
These programs -à support for health care, for post-secondary education, for assistance to the poor speak to the spirit of our country.
In last year's budget the Canadian health and social transfer was created. It was designed to put federal transfers for these important areas on a sound footing to allow the provinces more flexibility to better deliver these programs. In 1997-98 the CHST will be a $25 billion transfer composed roughly equally of tax points and cash.
Since transfers to the provinces and territories represent an important part of our total spending, we could not put federal finances on a sustainable basis without addressing them. That is why in last year's budget we announced funding arrangements for the new Canada health and social transfer covering the fiscal years 1996-97 and 1997-98. Those arrangements will remain unchanged.
With the framework of the CHST in place, our challenge and commitment is clear. It is to provide, as the Prime Minister promised, a long term funding arrangement with a CHST transfer that is stable, predictable and sustainable.
To this end, we are announcing today a firm funding commitment for the CHST to cover the five-year period from fiscal year 1998-99 through to 2002-03. For the first two years of that period we will maintain the overall CHST entitlement, that is the value of the tax points and cash combined, constant at its 1997-98 level of $25.1 billion. For the remaining three years of the framework, total transfer entitlements will grow each and every year at an increasing pace.
In addition, we will provide a legislated guarantee that the cash component of the transfer will never be lower than $11 billion at any time during this period. This will put an end to the decline of cash that occurs automatically as the value of the tax component grows. The provinces will benefit, not only from the growing value of the tax component, but from the cash guarantee as well.
Based on an evolving formula tied to economic growth, overall CHST entitlements will increase over this period from $25.1 billion in 1999-2000 to approximately $27.4 billion in 2002-03.
As a result of these assurances, Canadians can have confidence that as we enter the next century the commitment of their national government in support of health care, post-secondary education and assistance to the poor will be intact and will be strong. As part of that, we will remain opposed to the imposition of residency requirements on social assistance recipients who move from one province to another, and we will be steadfast in upholding the principles of medicare.
This budget also addresses our commitment to provide a new approach to allocating the CHST among provinces, one that addresses the funding disparities resulting from the limits on Canada assistance plan transfers imposed on certain provinces by the previous government.
The new allocation will be phased in during the course of the new five-year transfer arrangement. As a result, current disparities and per capita funding levels among provinces will be reduced by half. We are willing to examine with the provinces further refinements to the allocation that may be appropriate beyond this framework.
Finally, on the issue of health care, this budget takes additional action. The Minister of Health will be announcing the establishment of a health services research fund under the auspices of the Medical Research Council of Canada. The federal government will provide an unconditional $65 million over five years. The goal is to bring together governments, health institutions and the private sector to fund research identifying what works best in our medical system, what does not and what possibilities might exist to improve the efficiency and the effectiveness of our health care system.
One of the greatest pride and achievements of this country is to have provided a decent level of retirement support for our seniors. As a result of our public pension system, millions of seniors today enjoy a standard of living that is substantially higher than was the case for their parents. Our obligation today is to take the action necessary to safeguard that achievement for our children.
There is widespread anxiety, particularly among the young, that the public pension system will not be there for them when they retire. Confidence in the pension system must be restored. The party that put pensions in place for this country must now act to preserve them. The challenge is clear: It is one of sustainability.
First, the Canada pension plan must be put on a sound financial footing and done so in a way that is sustainable, affordable and fair. This government does not share the view of those who believe the CPP cannot be fixed, that it should be abandoned. We believe that the right to a secure retirement should be available to all and not become the preserve of only those who are well off.
However, the findings of the chief actuary make it clear that changes are needed to restore the CPP to health. Clearly, governments should have acted some time ago to address this problem. We believe the role of government that is responsible is to act to
prevent problems rather than letting them become crises. And so, together with the provinces and the territories, we are acting.
The second pillar of the pension system à- old age security and the GIS -à is funded out of general government revenues. Here too, rising costs have led to concerns that these public pensions are at risk. Our obligation is to put those concerns to rest.
In our last budget, we set out the principles of reform. Today, we are proposing a new seniors benefit to take effect in the year 2001. This benefit will be a central element of fulfilling our commitment to Canadians to ensure they have a secure and sustainable pension system now and into the future. Such was our commitment to Canadians.
As the Prime Minister said many times, today's seniors have the right to know that their retirement is secure. They have the right to know that they will always get at a minimum what they receive in pension payments today. Our proposal guarantees that. In fact, many seniors will get more.
Furthermore, younger Canadians have the right to know that, in the future, government pensions will be there for them. Our reform guarantees that as well.
This reform will make the pension system sustainable. We will do so by targeting help to those who need it most. By slowing the rate of growth of public pensions, the danger of crowding out other essential programs and services is being addressed.
The new seniors benefit will be fully tax free. It will be completely separated from the tax system. It will incorporate the OAS, GIS, pension income credit and age credit.
Furthermore, under the new system, the benefit and the threshold levels will be fully indexed to inflation. This is an important improvement for all seniors who worry about eroding benefits. Thus, the partial indexing of the clawback threshold will cease to be an issue.
The new seniors benefit will be paid monthly. In the case of couples it will be divided equally between each spouse. Each will receive a separate cheque.
This will be a fairer system. It will be based on total income, as the GIS always has been. We believe that since the incomes of low income couples are currently combined to determine eligibility for additional help, it is also appropriate to combine the incomes of higher income couples to determine their level of government support.
The new benefit will be designed to fully protect low and modest income Canadians. Almost all of them will receive slightly more. In fact, all those who currently receive the GIS will receive $120 more per year.
Overall, our reform will ensure that 75 per cent of seniors will be at least as well, if not better off than they are today.
Under the new seniors benefit, 75 per cent of seniors will be as well or better off; in fact most will be better off. For instance, nearly nine out of ten single senior women will be better off under the new system. High income seniors will receive somewhat less. The more income they have from other sources, the less they will receive. The very highest income seniors will no longer receive government benefits.
In this House the Prime Minister has promised Canadians that no current seniors will have their OAS and GIS payments reduced as a result of this reform. In fact, our proposal goes one step further. Not only will the pension benefits of every senior over age 65 today be protected, but so too will the pension benefits of every Canadian who reached age 60 before January 1 of this year and their spouses no matter what their age. The government will give these Canadians a choice of whichever system is more advantageous to them: moving to the new seniors benefit five years from now, or maintaining their existing OAS-GIS pensions.
The purpose of this reform is to assure Canadians that the pension system will be there for them in the future as it has been in the past. Fairness, sustainability and security: that is what Canadians seek and that is the hallmark of this new public pension system.
The next issue concerns children. There are many more single parent households today than ever before. Canadians know that too often the needs and the rights of children following family breakdown are not being protected. The fact is there is too much hardship, tension and distress resulting from the current child support system. It has added to the uncertainty and anxiety that many Canadians feel.
Our view is that children should be first in line. Child support is the first obligation of parents. It is not discretionary.
The government promised to improve the child support system. Today, that action is being taken. The Minister of Justice will be elaborating on these measures in the days ahead. The first change we are making in this regard concerns the tax treatment of child support payments.
Currently, child support payments are taxable for the recipient and tax deductible for the person paying. In our view, this is
wrong. We believe these payments are there to provide support for children. They are not income for parents.
Therefore, for all new child support awards and all existing awards that are varied on or after May 1, 1997, support payments will not be included in the income of the custodial parent for tax purposes nor be tax deductible for the payer. This approach will ensure that the children who need support the most get it, and eliminate the need for complex tax calculation and planning by parents.
Second, the method used for determining levels of child support is being improved. This will result in settlements that are fairer and more consistent. It will reduce conflict between parents and keep money now spent on lawyers and courts in the hands of the parents for the benefit of the child.
Third, a wide range of measures is being introduced to help ensure that child support orders are enforced -à that support is paid in full and on time.
We are targeting chronic, wilful defaulters. Because enforcement is primarily a provincial-territorial responsibility, these measures are designed to complement and bolster their efforts.
We believe more should be done to support children. Therefore we are increasing the working income tax supplement under the child tax benefit. This supplement assists low income parents to meet some of the expenses resulting from work such as child care, transportation and clothing. It also helps to make up for the benefits lost by parents who leave social assistance and re-enter the workforce. Therefore I am pleased to announce that the maximum annual benefit is being doubled in two steps. It will increase from $500 to $750 in July of next year, and to $1,000 in July of 1998.
When fully phased in this will result in an additional $250 million in support annually to some 700,000 low income working families, one third of which are headed by single parents.
Finally, we believe the current age limit of 14 on the child care expense deduction should be raised to 16 to provide more support to parents, in particular to single parents whose jobs require them to be away from home at night.
Increasingly large numbers of Canadians are providing in-home care for adult children and other relatives with disabilities. This work is both invaluable and difficult. Therefore this budget proposes to increase the value of the infirm dependent credit from $270 to $400 and to raise the income threshold for the reduction of this benefit from $2,690 to $4,103.
A number of groups including the Standing Committee on Human Rights and the Status of Disabled Persons have asked that we examine measures over the course of the next years, including those in the tax system, that have an impact on people with disabilities. I am announcing that we will do so because we believe it is important to constantly assess the mechanisms through which we provide assistance to persons with disabilities.
Every day in every community Canadians give freely of their time and money to support the work of non-profit voluntary and charitable organizations. These countless acts of individual commitment are a powerful collective response to meeting pressing human needs, especially in this time of fiscal restraint.
Governments must support Canadians in their effort. Therefore we are adopting the recommendation of the Standing Committee on Finance and the Canada Council that the annual limit on charitable donations be raised from 20 per cent to 50 per cent of net income. That limit will be increased to 100 per cent for gifts willed to charities in order to encourage charitable bequests. In addition, to encourage donations in forms other than cash, the same limit will be raised to 100 per cent on the portion of a donation of appreciated property that must be included in a donor's taxable income.
Clearly the case has been made that more can be done. Therefore over the next year and in consultation with the charitable sector we will examine ways to further encourage charitable giving and charitable activities. We will focus on ways to ensure that increased government support leads to activities of direct benefit to Canadian society.
One of the greatest challenges facing Canadians and their governments is the changing nature of work. Around the world on every continent we are facing a revolution whose scope and depth rival that of the industrial revolution itself. The contours of that revolution are clear. Distance is losing its meaning as barriers to trade and investment collapse and communications become instantaneous. The pace of change is accelerating as technology makes possible daily what once was only the substance of dreams.
Some see this as a revolution about new opportunities. Others fear it is a revolution about opportunity lost. We must ensure Canada is on the vanguard of this revolution, not one of its victims. We must now work together to make sure the new economy is also an economy with new jobs.
Canadians understand that the jobs of today and tomorrow will come from the thousands of Canadian businesses created every year, and we agree. Therefore the question is what is the role of government? We believe it is to provide the private sector and all Canadians with a framework for growth, the kind of growth on which job creation depends.
Clearly, despite our problems the economic climate in this country is getting better. The nation's balance sheets are improving. As a result interest rates have come down by 3 percentage points in the last year. Inflation is the lowest it has been in 30 years, and Canada's economy is more competitive than ever.
The point is in this world of globalization, of competition, of rapid change, focusing on getting the fundamentals right is absolutely necessary but by itself not sufficient. It is in this context that one must view the numbers on job creation. This is the most important statistic of all. In the last 13 months 263,000 private sector jobs have been created. Since November alone 123,000 such jobs were created, the majority of which were full time. These are good numbers but they are not nearly good enough.
The proof lies not simply in the numbers of unemployed but in the increasing length of time it takes the unemployed to find new work. The effect of change is being felt by every segment of society in every part of the country from our biggest cities to our smallest communities.
For instance, it is clear that rural Canada faces a particularly acute challenge of adaptation. While major metropolitan areas are often the focus of attention, it is absolutely essential that we continue to pursue policies to address rural anxiety as well, that we develop policies designed to meet the diverse needs of both urban and rural Canada, needs which remain essential to our economic well-being, our way of life and our future.
In other words, if our future is to be brighter, we must invest in it. And so, in addition to consolidating our fiscal gains and securing the future of our social programs, we are strengthening three areas of government emphasis that will help Canadians manage toward the future.
Following the recommendations of the cabinet committee on jobs and growth headed by the minister of agriculture, we are making strategic investments in our youth, in technology and in trade.
Let me emphasize that while we are announcing new initiatives, none of the funding required represents new money. All of it is sourced from a reallocation of existing resources.
The economy of the future will belong-
Mr. Speaker, this is the third budget in a row in which the Solicitor General has been drinking my water.
Paul Martin Liberal LaSalle—Émard, QC
Mr. Speaker, the success of our economy will very clearly depend on our young people, just as their success will depend on their ability to participate fully in all the economy has to offer. There is a clear role for government in helping our young people to prepare for a rapidly changing economy through the acquisition of the right skills and the provision of opportunities to gain work experience.
And so in this budget we are providing an additional $165 million over three years to be funded through reallocation within the tax system so that students and their families will be better able to deal with the increased costs of education.
First, to recognize the non-tuition costs of schooling we are increasing the education credit from $80 to $100 per month. Second, in order to support parents or spouses who help underwrite the education costs for students we are raising the limit on the transfer of tuition and education credits from $680 to $850 per year.
Third, to encourage parents to save for their children's education over the long term we are proposing to increase the annual limits on contributions to registered education savings plans from $1,500 to $2,000, and the lifetime limit from $31,500 to $42,000.
Fourth, as we have said, we are broadening eligibility for the child care expense deduction. This measure will assist parents to undertake education or retraining. Single parents will be allowed the same deductions that today are only available to couples. And for the first time, the child care expense deduction will apply to those completing high school, not only post-secondary education.
For our youth, learning is the first step. But increasingly, education alone is not enough. What is required is the opportunity for them to gain experience on the job. To help reach this goal, the government is reallocating $315 million over the next three years from other spending in order to help create youth employment opportunities. This is in addition to our existing funding provided through such programs as youth internship Canada and youth service Canada.
Some of these additional funds will go to substantially increasing our support for student summer employment. Summer employment not only provides young people with the opportunity to earn the money they need to complete their education, it can also supply critical job experience.
Therefore, we are doubling our assistance for summer employment for 1996-97, from $60 million to $120 million.
Another part of the $315 million will be used to assist young Canadians who have left school to find work. The details of all of these youth initiatives will be provided in the near future by the Minister of Human Resources Development.
In summary, we are eager to enter into a new partnership between the public and private sector to create entry level jobs for the young. Government and business have worked well together on trade as Team Canada abroad. Let us now, business, labour, educators and government work together even harder at home for jobs for our youth.
Our ultimate challenge is to change the very economic culture of the nation, to make Canada one of the most innovative countries in the world. Some may think that innovation applies to only one small sector of the economy, to those who write software, who surf the net. Nothing could be further from the truth. This is not about part of our economy. It is about all of our economy. From small business to large business, from coast to coast to coast, from mining and oil and gas, from agriculture and forestry the application of technology has become essential.
Clearly it is the job of the private sector to innovate because it is its survival and growth that are at stake. But government too has an important role, in levelling the playing field against foreign competition, in forming partnerships to invest in areas of basic research of high risk, and where the scale of investment is simply too large for the private sector itself to carry alone.
To that end, the Minister of Industry will be announcing the creation of technology partnerships Canada. This program will encourage the development of environmental technologies, advanced manufacturing and materials as well as biotechnology. It will also help maintain jobs in the aerospace sector, which is subject to very heavily subsidized foreign competition.
This marks an important departure from past practice. Both the risks and the rewards will be shared with the private sector. The government's investment should not exceed one-third of the total. The emphasis is on partnership, not unilateral federal action. The reallocated resources provided in this budget, together with the existing Industry Canada funding, will enable Technology Partnerships Canada to grow to about $250 million by 1998-99. This will lever substantial additional investment by the private sector.
In addition, the government is injecting $50 million into the Business Development Bank. This equity will in turn allow the bank to provide an additional $350 million in loans to knowledge-based, exporting and growth businesses that would not otherwise have access to the commercial banks.
The Minister of Industry will also accelerate efforts to bring the benefits of information technology to the whole country. By 1998 through school net we will have connected every school and library in the country to the information highway. By the same year 1,000 rural communities will also be connected through the community access program.
In order to bring to small business the advantages of access to the information highway, we are instituting a program in which 2,000 computer students will connect some 50,000 small businesses to the Internet, not only installing those systems but advising their owners on how best to use them.
Our 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. More needs to be done.
To ensure our financial institutions provide the best possible financing for growing export and knowledge based businesses, the government will work with business and all financial institutions, including the banks and the insurance companies, to ensure that further progress continues.
Finally, we are currently reviewing the legislation governing financial institutions. We are doing so with a view to improving the framework that was established in 1992. We have concluded 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. The white paper covering this and all other aspects still under review will be released in the coming weeks.
Let me conclude this section by discussing trade. Canada's trade performance has been extraordinarily good. No one can deny that. The export sector has been the fastest growing sector of our economy, expanding at an average 8 per cent per year over the past decade. Our merchandise trade balance has soared, reaching a record surplus of $28.3 billion. And as a share of the economy, our current account deficit is at its lowest level in ten years.
Trade will continue to be a major thrust of the government's economic policy. The Team Canada approach established by the Prime Minister has proven to be a major success and will remain a centrepiece of our strategy.
The Minister for International Trade will continue our determined drive to secure new agreements for more open markets around the world, building on the exemplary work of his predecessor, the Hon. Roy MacLaren.
Export financing is critical to ensure that Canadian companies can fully realize the opportunities before it. And so in this budget we are providing $50 million of new equity to the Export Development Corporation in order to support new export sales financing vehicles and new partnerships with exporters in the commercial banks.
In addition, we are reallocating resources from subsidized loans for foreign borrowers to non-subsidized loans under an improved system to manage risk. This measure will increase the amount of financing available for Canadian exporters by as much as $500 million per year.
I would now like to deal with the question of government revenues.
No one is ever happy with the tax system. That is why we must do everything we can to ensure that it is fair and that the system as a whole is as effective as possible.
Taxes are clearly higher than any of us would like, but the issue is not simply one of rates. Il is also important to ensure that the system is supportive of the nation's goals. To this end, the budget announces the following additional revenue measures.
This is to announce the following revenue measures. The revenue we realize from many of these has been reallocated to provide tax incentives that will assist students, help the infirm and support charities.
Let me begin with the provision of tax assistance to encourage Canadians to save for their own retirements through RRSPs and RPPs. We are proposing a number of changes that will better target this assistance to modest and middle income Canadians while limiting the cost to taxpayers.
First, we know that many younger Canadians have a difficult time finding the money to make full RRSP contributions. This is often due to other pressing obligations, including education or raising a family. We want to give them the maximum opportunity later in life to help make up for that lost time.
Therefore, we will allow Canadians unlimited time to make up for any years when they were unable to make their full contribution. Thus the current seven year limit on carrying forward any unused contribution room is eliminated.
Second, the contribution limit for RRSPs is being frozen at its current level-$13,500-until the year 2003. The limit will then increase to $15,500 by 2005.
Third, we are reducing the age limit for contributing to RPPs and RRSPs from age 71 to 69.
In order to improve the effectiveness and the fairness of the tax system, a number of additional measures are being announced. In order to see them established, the government put in place incentives for investment in labour sponsored venture capital corporations. These incentives have worked. These funds are now very well established. Therefore, we are proposing several measures to reduce the unique incentives in place for these funds.
Next, the budget provides a variety of measures related to the resource sector. In relation to oil, gas and the mining industries, we are clarifying and tightening rules related to the resource allowance following the review announced in our last budget. While revenue neutral, this will result in a more consistent and stable tax structure.
We are announcing as well changes to the accelerated cost allowance rules for new mines, including oil sands, so that all types of oil sands recovery projects are treated more consistently.
For mining flow-through shares, the current 60-day rule is being extended to one year while the eligibility rules for these shares are being tightened for the mining and oil and gas sectors.
We believe that environmental health and economic development should be complimentary not contradictory concepts.
To that end, this budget announces income tax changes that will provide an essentially level playing field between certain renewable and non-renewable energy investments. This is part of the base line study of possible barriers and disincentives to sound environmental practices initiated earlier.
One measure is to create a new Canadian renewable energy and conservation expenses category in the tax system. A second measure is to extend the use of flow-through share financing, currently available for non-renewable energy, to similar costs for certain renewable energy and energy conservation projects.
A temporary tax on large deposit taking institutions, including the banks, was included in last year's budget. It will be extended for a further year.
Finally, and of import, an effective business tax system should not only raise revenue, it should be designed to help create jobs. We believe that it is time for a comprehensive look at this issue.
In order to identify any obstacles to job creation currently contained in the tax act and to suggest needed reforms, we are announcing today the establishment of a technical committee of outside experts who will report to me later this year to be followed by public consultations. If the creation of secured jobs is our objective, then every effort of government, including the tax system, must be directed toward that end.
That concludes our description of the measures contained in this budget. They reflect our desire to put in place the strongest economic framework possible for sustained growth and jobs.
We spoke at the outset about the anxieties that grip our country. This budget is about doing what we can to help Canadians put those anxieties to rest. But let us be clear. A budget is only a small part of the answer. The full response lies in recognizing where we are in the evolution of a country and where we are in the evolution of the world beyond our borders.
It is time to turn the page. Because the fact is that success for countries is no different from success for families or communities or individual citizens. It is based, above all, on one thing: the constant setting of goals and the meeting of new challenges. Successful countries do more than occupy a place on the map. They live in the souls of their people because they are relevant to the betterment of their lives.
And so for Canada it is time to set goals anchored in our shared values and our shared aspirations. We have done that throughout our history, in the days when we dared speak of a national dream and then built it; in the days when we aspired to a kinder society and then created it.
Now it is time to move forward once again, to arrive not simply at a common understanding of what we are, but a common vision of what we can be. Our challenge today is to make Canada a place of great expectations, a country once again where our children believe that they have the opportunity to do better than their parents.
We must set great national challenges, not small ones, because it is only by reaching as high as we are able that we will discover how far we can go.
The issue is, why can we not decide together in the House and in this country that 10 years hence, Canada will be regarded as the world leader in the new industries of the new economy, in biotechnology, in environmental technology, in the cultural industries of the multichannel universe? Why not decide together that 10 years hence, increasing child poverty rates will be a thing of the past, that illiteracy will be erased from our communities, and that when it comes to international tests, our students will not simply do fine work but in fact will be the very finest.
Why can we not decide together that medicare, ten years hence, will not simply survive, but be the most successful system in the world, a system that is second to none? Why not decide together that ten years hence our streets will be the safest they can be -à not because we have the largest number of prisons or police, but rather because we have faced squarely the sources of crime?
If we want to open new doors for our children, there is literally nothing standing in our way. We are a society that mirrors the diversity of an entire planet. We are already building on a great foundation. Now it is time to draw on that foundation, to write a new history ourselves.
And so I would ask, let us act, not as special interests, but as stewards of the national interest. Let us follow in the footsteps of those who came before, who saw challenge as a rallying cry to move forward, never as an excuse to give up.
Let it be said by those who come after us that we set the goals, that we met them together, that we propelled Canada forward into the new millennium, still and always among the front ranks of the nations of the world.
Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC
Mr. Speaker, the Minister of Finance's 1996-97 budget tells us nothing except that last year's bad news will apply this year as planned, and that all of the negative measures will continue, and will be even worse.
The government will continue along the same path. As far as dumping the deficit on the provinces is concerned, the government will continue its drastic cuts to social programs, to the tune of $7 billion over the next two years.
The government will continue to make use of the surplus from the unemployment insurance fund, $5 billion yearly, when it has not contributed to that fund for a number of years.
The government will keep on going without any significant measures for job creation. That is what it has told us today.
The worst part of all this is that the Minister of Finance is patting himself on the back for having restored healthy public finances. He is patting himself on the back for having applied the precepts of sound public financial management when, during his time at the helm of the Department of Finance, he has managed in two years to add over $113 billion to the cumulative debt of the federal government.
Not everything in this budget is bad, however, and I would like to start by pointing out one positive element, the measure concerning child support payments. I would like to take this opportunity to express my personal appreciation and that of my colleagues to Mrs. Thibodeau for her monumental battle to gain equality for women.
Since this measure will bring in tens of millions of dollars in new taxes, I cordially ask the Minister of Finance and the government to consider the following proposal: he could use these funds for transfers to the provinces, transfer part of it to the Government of Quebec, which has family policy levers to help the most disadvantaged families and children in Quebec and Canadian society.
My congratulations, however, stop here, because a closer look at the budget reveals that the minister deserves no congratulations.
It reveals first and foremost that the minister has given up in the fight against waste, duplication and overlap, because this budget contains no new measure to trim government machinery. We have been looking at this government for two and a half years, and God knows there is an enormous amount of wastage. On the basis of the report by the Liberal majority on the finance committee the government is abandoning its fight against waste.
Our second criticism is that the Minister of Finance did not speak the whole truth about the old age security system. The minister's proposals run headlong into 50 years of women's struggles for equality and financial independence, since the family income will now be the basis for determining old age security benefits and all the credits for seniors. It is disgraceful.
As regards taxation, we are pleased to some extent that the minister gave in to arguments about the unfairness of the tax system, particularly corporate taxation. After two and a half years it was high time he did. It took him two years and a half to realize that the tax system was giving undue preference to big business, which makes good use of outrageous loopholes, and to accept a forceful argument from the official opposition for an in-depth review of our tax system.
But, as I said, the minister only went part of the way, because he is now calling for a closed review of the corporate tax system, a process which is open only to great tax experts, great corporate tax lawyers who, at this very moment, are advising big corporations on the means to avoid paying their fair share of taxes to Revenue Canada.
But there is more. Some of the members on this new technical committee represent companies which also have affiliates in countries considered as tax havens. That takes some nerve. Among the members of this committee will be representatives of companies that have affiliates in countries considered as tax havens, companies that benefit from special tax rates and avoid paying what they would normally have to give Revenue Canada.
That is not what we were asking the government to do. We asked for a more open process. We asked for a special parliamentary committee made up of government members, members of the official opposition and members of the second opposition party who would have to be accountable to elected representatives, to the public, to all those who expect us to be responsible and to disclose the inequities in our tax system. Instead, the Minister of Finance opted for a process behind closed doors.
We are also deploring the fact that, after announcing in the throne speech that a Canadian Securities Commission would be set up, a commission that would interfere in an area of exclusive provincial jurisdiction, the Minister of Finance now wonders "Why should there not be only one tax collector in Canada? Why not set up a national revenue agency?"
Is it not a way of isolating Quebec once again? Is it not a way of forcing Quebec to fall back into the line? Is it not a way of telling Quebec that it must let go of all the financial and tax leverage that it has been fighting for for 35 years to make way for a national entity? Is it not a way of establishing an institution to manage the proposal made by the government regarding a single, Canada-wide, sales tax to replace the GST? That proposal is unacceptable.
When we are talking about eliminating duplication and overlap, it is funny to see how the government is always willing to take away some of Quebec's powers and keep them for itself. That is easy to do.
It is also easy for the government to go after small investors, those in Quebec in particular, with the kind of measures proposed in this budget that will weaken one of the instruments we are proud of, namely the Fonds de solidarité of the FTQ.
The government prefers to go after small investors, to go after tools which primarily serve to create jobs, rather than taking on big business taxation.
Here is another measure against Quebec: the government speaks of eliminating the milk subsidy even if it knows full well that 40 per cent of the subsidy goes to Quebec. Attacking Quebec is easy.
In conclusion, the 1996-97 budget of the Minister of Finance is only cosmetic, it is rather election-minded. It glosses over the negative effects of the last budget. It glosses over the government's inability to reduce its rate of expenditure. It glosses over the government's true intentions as regards taxation reform. It glosses over the government's inability to give a boost to the job market. It glosses over this government's desire to make Quebec toe the line. For these reasons, I will advise my colleagues to vote against the budget.
I move, seconded by the hon. member for Laurier-Sainte-Marie:
That the debate be now adjourned.
Herb Gray Liberal Windsor West, ON
Mr. Speaker, on a point of order. When the Minister of Finance tabled a pile of documents, among those documents was a set of borrowing bills which it had been the intention of the Minister of Finance to seek leave to introduce for first reading.
I am asking the unanimous consent of the House, which I believe is there since there were consultations, for me to move the appropriate motions on behalf of the Minister of Finance for first reading of the customary borrowing bill.
Copies of the bill have already been submitted to the table along with the other material the Minister of Finance tabled at the beginning of his budget address.
