Mr. Speaker, I am grateful for the opportunity to address this motion. Today I will be sharing my time with the hon. member for Timiskaming-French River.
I am proud to be a part of this government which has reined in the deficit while at the same time contributing to ensuring the collective necessity in this country of sound social policies. We have managed to do this in three years. This budget is an important
contribution to that and to ensuring that the collective financial future and deficit reduction plan remain intact.
Last November the government announced that it had surpassed its deficit target for 1994-95. It now looks like the target for 1995-96 will also be achieved or even surpassed. The deficit will be reduced to 3 per cent of GDP as announced and to 2 per cent of GDP in 1997-98.
The growth rate of the debt will be lower than the rate of economic growth. This is the first significant improvement in the debt to GDP ratio in over 20 years. As a result of this, there is a dramatic decline in the amount of new money the government has to borrow from financial markets.
In 1993-94 Canada's financial requirements stood at 4.2 per cent of GDP or $30 billion. By 1997-98 the financial requirements will have dropped to 0.7 per cent of GDP or $6 billion.
As the Minister of Finance pointed out, relative to the size of the economy, Canada's borrowing requirements will be at the lowest level in almost 30 years. Measured on this basis, Canada will have the lowest fiscal shortfall projected among central governments of all G-7 countries.
As a result of this, international markets are responding favourably to the progress in deficit reduction. In fact, short term interest rates have fallen below those in the United States. For the first time the Government of Canada can actually borrow money for a short term at rates lower than those prevailing for United States securities which are the bellwether for all government securities in the world.
When the government was first elected there was a spread between Canadian and American interest rates of approximately 3 per cent. That spread represented the international market's view of the risk of investing in this country as opposed to that of the United States. I think we can take it from the fact that our securities are presently quoted at lower rates of interest than those in the United States that the international marketplace is putting on our securities a lower risk than that which would prevail on similar American securities.
Canadians know and accept that restoring public fiscal health is essential for job creation and economic prosperity. The government's job is to help create the appropriate economic climate, one in which private sector activity will flourish. Economic indicators support the claim that the government's approach is well advised.
As I pointed out, short term interest rates are down 3 per cent since March 1995. Inflation is at its lowest point in 30 years. Two hundred and sixty-three thousand private sector jobs have been created since 1995. The merchandise trade surplus has reached record levels and the current account deficit as a share of GDP is at its lowest level in 10 years.
In my view that demonstrates the wisdom of the government having rejected the slash and burn approach to deficit reduction urged by some of the parties in this House.
Our approach is a sensible, balanced, fair and compassionate approach, and the 1996 budget continues on that track. It recognizes there are sacrifices Canadians are willing collectively to make to reach the point we now have. There are sacrifices that are being made today by constituents of mine in downtown Toronto who recognize this is the track we must be on if we are to achieve greater prosperity in the years ahead.
While saying this, we recognize as well that fairness and compassion are deeply held Canadian values. The Canadian commitment to helping the most vulnerable in society is an important factor in the government's philosophy. As a result, there will be no further cuts in transfer payments to the provinces.
Provincial entitlements will eventually increase. The Canada health and social transfer will provide secure and stable federal support for medicare, post-secondary education and social assistance. For the first time there will be a cash floor for transfers. The CHST is designed to give provinces more flexibility in program delivery.
Of course we would like to see more, particularly for post-secondary education. The government recognizes the importance of these issues, but the point is we must get our house in order after eight years of Tory mismanagement before we can build again. The beauty of this budget is that it lets us see that possibility clearly within the realizable near future.
The new seniors benefit to replace old age security and the guaranteed income supplement is designed to help those who need it most. The benefit level of 75 per cent of Canadian seniors will remain at the same level or even increase. Certainly low income seniors will receive more under the new system and the income tested approach will help to ensure the sustainability of the pension system for our children and grandchildren.
I take this opportunity to address an issue which is very much a concern to many people in my riding, social housing. Rosedale has a considerable amount of assisted social housing. It takes the form of straightforward government assisted housing and co-operatives.
This social housing contributes a great deal to the social stability of our inner cities. It recognizes there are many people living in our cities, particularly in inner cities, with a high cost of living, who do require some form of government support.
There have been misconceptions as a result of the budget. There were some suggestions in the province of Ontario that because of the approach of the present Conservative government social housing is under serious attack. The federal government has indicated
in this budget that it will continue its support for social housing and as a result for social stability in the inner cities. It will continue with $2 billion in support to provincial governments, $600 million of which will go to the province of Ontario.
The minister has made it clear that while there will be changes in the way in which this service is delivered, national standards will be required. I urge the minister that when she is dealing with the provinces no federal money should go to private housing schemes. Social housing should be recognized as public housing and the administration of housing should not be turned over to provinces that indicate they do not have a commitment to publicly owned social housing. There are alternative competent partners the federal government could choose such as the Co-operative Housing Federation of Canada.
This is an extraordinarily important issue which the government has indicated it intends to approach with sensitivity to the need for appropriate social policy while recognizing the need for deficit reduction. I am confident it will realize this goal in the way it has managed in other areas.
When we look at the core of this budget we see the notion of the economy, of jobs and of growth. There are three priority areas in the budget: youth, technology and trade.
The importance of investing in the country's future lies in investing in young people. We must give them the tools with which to recognize their aspirations. The creation of new youth employment opportunities, for example the Department of Human Resources Development summer student job action program, will help tens of thousands of young people to get summer jobs this year.
Also, we will be helping students and their families deal with the higher cost of education by increasing education tax credits, raising the limit on transfer of tuition education credits and increasing limits on the contributions to registered education plans.
My riding of Rosedale is home to three post-secondary institutions, the University of Toronto, Ryerson and George Brown College, and numerous high schools and youth groups.
I have fairly frequent contact with young people in my riding who relate to me the special challenges they face in trying to find suitable employment in the new economy.
Often suitable job experience is what they require but lack. This initiative in this regard should go some way to providing opportunities in my riding and across the country for youth who deserve an opportunity to participate in the challenges the new economy offers us.
In addressing the issue of the new economy, this budget addresses the issue of technology. Existing moneys will be reallocated in order to encourage technological developments in key fields such as the aerospace sector, environment technologies and biotechnology.
The Business Development Bank will be given the resources to provide more loans to knowledge based, exporting and growth businesses. Equity injection of $50 million will allow banks to provide an additional $350 million in loans.
We will accelerate our efforts to increase access to information technology for all Canadians, especially for small and medium size businesses. This is a true recognition by government that technology is the way of the future and that we as a country cannot afford to be left behind in this important contribution to the global economy.
Similarly, in terms of international trade, the budget has indicated that the Team Canada approach which has been so extraordinarily successful in international marketing of this country will remain a centrepiece of our strategy.
Canada's trade performance has recently been excellent. The export sector has been expanding at 8 per cent per annum on average over the past decade.
Our merchandise trade balance has reached a record surplus of $28.3 billion. To encourage the continuation of this success, government will provide $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. This and other measures will increase the amount of financing available for Canadian exports by as much as $500 million a year.
As the foreign affairs and international trade committee has realized, international trade is at the core of what this country is about. Small and medium size businesses are dependent more and more on international trade.
This budget will contribute to enabling our country to prosper in its international trade and achieves a balance in respect of our social programs.