Mr. Speaker, in less than a single full term in office this government has managed to cut the national deficit by $20 billion and at the same time cut the unemployment rate by a full two percentage points.
Canadians can have more confidence in how they are governed now that they have a Minister of Finance who sets and reaches ambitious fiscal goals without the destructive consequences of public service walkouts or wholesale elimination of service. Successes come from abandoning the failed policies of governments past.
A sixty per cent cut in subsidies to business was born from the realization that little can be gained by collecting taxes from business with the sole purpose of redirecting the same dollars to the same businesses through subsidies and grants. We have learned that the value of targeting funds is small and more than offset by the consequences of increased taxation, administrative overhead and the cost to business of hiring consultants and lobbyists to apply for grants.
It was a typical case in the previous regime that $100 would be taxed away from an industry with $1 or $2 spent in the collection process, as much as $20 more spent on grant administration and the remaining $78 dollars would be handed out to business as a great gift. However, $15 had already been spent by business trying to get its tax money back by hiring consultants and applying for grants.
At the end of the rinse cycle industry would be about 35 per cent better off had the government just stayed away. We have done away with tax and grant government. We no longer believe that the role of government is to seize and reinvest the earnings of private corporations.
Rarely has economic success ever been built on temporary grants and subsidies. It is true the odd business may be lured to set up a factory by the promise of grants, tax credits or some other concession paid for by the local businesses. It is also true that often these factories vanish as soon as the locks get changed at the house of the free money.
Government grants impose a psychology on business that slows sustainable job creation as entrepreneurs wait for handouts rather than accept private sector funding under market conditions. It is not rare to hear of a small business owner planning an expansion which might create 100 jobs. Typically the entrepreneur could find the money needed from private resources or a bank or venture capitalist, but then the prospect of the government grant would get in the way.
The entrepreneur would start spending his time visiting bureaucrats, filling out forms, preparing his case. Pretty soon he would get frustrated and hire a consultant who specialized in positioning companies for grants. The process would drag on for months. A hundred people were still out of work but our entrepreneur would sense the competition. If he did not get a grant his competitor might then be able to undercut his price. He would have to press on. More months would pass with still no word, still more consulting fees, still no jobs created.
Finally there would be a sigh of relief with rejection letters from all granting agencies. Now our entrepreneur could actually carry on his business, creating jobs by using private sector resources for private sector results.
Many forms of subsidy will remain in selected fields and to support exports. Generally business is being freed of having to apply to government for funds to stay competitive. Overwhelmingly the government is being reduced to a level that can actually be understood by citizens who are too busy working and paying taxes to study every branch or tentacle funded by their tax dollars.
The confidence the public has shown in the government and the Minister of Finance arises from our efforts to limit government to its original and irreproachable aims. In 1997-98 total program spending will fall to about $106 billion. Fifty-four per cent of this spending will go to seniors, the unemployed and to the provinces to support education, health and other social programs. Business subsidies by contrast will account for barely one and one-half per cent of program spending.
By the conclusion of our first term in office, the taxpayer will be comforted to know that fewer and fewer hard earned tax dollars are leaking away from the core of government's role. Government will soon be able to say it is doing only what it does best which no one else will do.
Our role is largely to redistribute cash to help seniors, the unemployed, low income earners, provinces with smaller per capita tax bases as well as support our national medicare system and affordable post-secondary education.
Some have criticized these programs, saying their home province is spending more than it receives, say from the employment insurance plan. This plan is about people, not about provinces. It is intended to treat individuals fairly according to the unemployment levels they face where they live.
Politicians in wealthier provinces who protest relief going to people in need in other provinces represent a view of the country shared by Lucien Bouchard, always calculating their share, discounting what they receive, focusing on any area where they pay more than they get back and never viewing Canadians as equal members of a single nature who have a long history of helping each other through hard times.
This 1996 budget does not give in to regional parochialism or selfishness. It preserves the Canadian sense of community by sustaining our social fabric while finding necessary savings in subsidies, administration and by closing tax loopholes.
In short, we have reduced Canada's deficit without reducing Canada.