Mr. Speaker, I listened with great interest to the comments of my colleague, the hon. member for Capilano-Howe Sound.
Because I have such respect for him as an economist who has happened into politics for a time I am saddened he had made some of the suggestions he has with respect to the government's budgetary policy as reflected in the budget implementation act, which we are considering today, Bill C-31.
I digress from my prepared remarks for a moment to respond. It reminds me a bit of Chicken Little and the old story that the sky is falling. He is always on his feet, armed with all of his experience and knowledge, to say in somewhat typical Canadian terms things will get a whole lot worse.
It is startling that he suggests that once again he is right and everyone else is wrong. Third parties have looked at the budget and have commended the minister and the government for the achievements of it, and yet the hon. member for Capilano-Howe Sound is saying: "Everyone is wrong, the analysts the wrong. They are all wrong. Michael Walker of the Fraser Institute is wrong. I wish they would call me so I could get them to correct the error of their ways".
My biggest regret is with his suggestion that somehow the government is stealing something from the workers of Canada, failing to remind the House and anyone listening to his remarks that when that UI account was in deficit it was Canadian taxpayers through the consolidated revenue fund who stood ready with funds to deal with the deficit in the account.
The president of the treasury board's remarks provided a cogent and compelling explanation of the government's fiscal policies and the framework for this legislation, the budget implementation act before us today.
He made it particularly clear why the government is introducing certain measures in this bill. These measures will help the public service help us to meet our commitment to Canadians.
I would first like to reiterate some aspects of our financial situation.
There is a timely reason for this repetition. Our record of fiscal responsibility and progress sets the context for one of the key measures of the bill, the implementation of long term funding for the Canada health and social transfer.
As the Minister of Finance pointed out in his budget speech in March, our ongoing spending reductions, real spending reductions, combined with those in previous budgets will ensure our deficit targets are secure; that is, 3 per cent of GDP for this fiscal year and 2 per cent next. For the following year, 1998-99, the measures we have introduced in the last three budgets will deliver an addition $28.9 billion in savings. Deficit reduction will continue.
The numbers speak for themselves. In 1993-94 federal program spending stood at $120 billion, almost 17 per cent of GDP. By 1998-99 the money we spend on programs will be down to $105.5 billion, 12 per cent of GDP.
It is important to note that progress on deficit reduction is not restricted to the federal government. The financial situation of provincial governments is also undergoing a significant improvement. In 1992 the combined deficits of Canada's federal and provincial governments on a national accounts basis reached 7.4 per cent of GDP. This level was double the G-7 average, behind only Italy in that group of large industrialized countries.
However, this year Canada's total government deficit is expected to fall below the G-7 average and come in as the second lowest in the group, behind only the United States. Based on each country's current plans we should have the lowest next year.
Clearly and fortunately fiscal responsibility has now become a governing facet of our national political culture. We have stopped acting like adolescents with credit cards, and this sense of financial maturity will ensure a more secure and prosperous future for us all.
The hon. member opposite and some of his colleagues may say, as they always do, it is not good enough and it is not enough. I suggest we are simply their worse nightmare because we are doing the job and getting it done, as I have said on other occasions in the House, fairly, reasonably and without tearing apart the country in the process. The proof is in the pudding, the high marks this and previous budgets have been given by all third party commentators.
Through these three budgets we are ensuring the economic sovereignty of Canada. Foreign borrowings by Canadian business and governments have been cut from $29 billion in 1993 to $13 billion last year. Our reliance on foreign borrowings will decline dramatically as governments continue to reduce their deficits.
Obviously we are making real progress, something that drives the members opposite crazy. The 1996 budget is another instalment, another significant step in that direction.
As the Minister of Finance put it, and I will repeat it because members opposite have probably forgotten, this budget is about consolidating the gains we have made. It is about managing ahead, continuing to put in place new building blocks for security and prosperity.
Some of these building blocks are contained in Bill C-31, the legislation before us. As we move ahead, one of our highest priorities, one surely shared by the vast majority of Canadians but not necessarily by all members opposite, is the preservation of the country's network of social programs. To help achieve that end the bill before us amends the Federal-Provincial Fiscal Arrangements Act. This amendment will provide secure, stable funding for what has come to be called the CHST, the Canada health and social transfer, for an additional five years.
I remind the House, because some here have short memories, of the background of this transfer program.
In its 1995 budget, the government replaced the Canada assistance plan and established program financing with a new mechanism: the Canada health and social transfer.
This consolidated transfer represents a new, more flexible and mature approach to federal-provincial relations. It gives the provinces more manoeuvring room to design and administer their own programs while protecting social programs Canadians count on and support.
This year the budget calls for an extension of the CHST funding framework through 2002-2003 and puts in place a formula for increasing this transfer in the later years of that five year plan.
Under the bill before us total entitlements will be pegged at $25.1 billion annually for 1998-99 and 1999-2000, equal to the level already in place for next year.
We are determined to support the provinces' activities in the areas of health, education and social assistance for those in real need. Despite sustained reduction in federal program spending, the total amount paid to the provinces under the transfer will not decrease during this period.
In the three fiscal years beginning in April 2000, CHST levels are projected to rise. By 2002-2003-