moved that Bill C-31, an act to implement certain provisions of the budget tabled in Parliament on March 6, 1996, be read the second time and referred to committee.
Mr. Speaker, as my hon. colleague, the Minister of Finance, stated when he delivered the 1996 budget, Canadians do not want rhetoric from their government. They want action. They want progress. And that is what this government intends to deliver in introducing the budget implementation bill.
The 1996 budget is the third milepost on this Liberal government's journey to securing fiscal stability, and a vibrant, dynamic and competitive economy. The legislation we are proposing today is in the spirit and tradition of any Liberal government. It is in keeping with our ongoing commitment to ensure that the most
vulnerable and those in the greatest need will continue to benefit from fair, sustainable and secure social programs in the next century.
Our programs which were built by previous Liberal governments have established us as one of the most envied nations in the world. Clearly, one of our highest priorities must be to preserve Canada's network of social programs.
Over the last two and a half years, Canadians have turned to governments to provide and economic and social environment that encourages the economic growth needed to create new jobs. The legislation we are introducing points to this government's commitment to meet this demand.
Through this bill, we will double our youth programs, expand our international trade and boost Canada's innovative capacity by in investing in new technologies.
We are determined to restore fiscal health to this country to balance the books. This year's budget consolidates and extends the actions resulting from the 1994 and 1995 budgets. Once this legislation is passed, these budgets will work together to help Canadians secure their future in a number of key areas.
To secure our financial future, we will meet or exceed our fiscal goals year by year by sustaining reductions in program spending. The 1996 budget reaffirms the government's fiscal responsibility to Canadians. To get government right, we are taking further action to define a more appropriate and effective role for the federal government.
To secure social programs for the next century, we are acting to restore confidence in providing a secure, stable and growing system for medicare, post-secondary education and social assistance. To invest in the future, we are reallocating money to new investments in priority initiatives to support youth, technology and international trade, areas critical to future jobs and growth.
I do not intend to speak today about all the amendments we are proposing. Rather I would like to give the House a general sense of what we are setting out to accomplish in the budget legislation.
I will begin by outlining how our plans will secure a solid financial future for all Canadians.
Our two previous budgets set in motion actions to ensure that the deficit targets for 1995-96 and 1996-97-down to three per cent of the GDP-will be achieved. The 1996 budget secures the government's deficit target of two per cent of the GDP in 1997-98. This means the deficit will have fallen from $42 billion, or 5,9 per cent of the GDP, in 1993-94 to $17 billion in 1997-98.
To achieve this, the government is continuing to place priority on expenditure reductions. There are no tax rate increases in this budget, not personal, not corporate, not excise. In fact, there have been no personal tax rate increases in any of our three budgets.
Through the continuing program review, the 1996 budget contains $1.9 billion in additional spending cuts for 1998-99. This will help sustain the reduction in program spending-that is, all budgetary spending except interest on the public debt. Program spending will decline, from $120 billion in 1993-94 to $105.5 billion in 1998-99.
With this proposed legislation, we are also encouraging young Canadians to continue their education and develop their skills by reallocating from within the tax system an additional $165 million over three years. We will create new employment opportunities for youth by reallocating $315 million of budget savings over three years. We are doubling funds for the 1996-97 student summer employment placements to $120 million.
The budget also increases the investment in technology and innovation through a number of actions over the next three years funded by reallocations of $270 million from budget savings. For example, the SchoolNet program will expand, connecting every school and library in the country to the information highway by 1998. With the help of 2,000 computer students, 50,000 small businesses will be connected to the Internet and their owners trained for full access to the information highway.
Finally, a technical committee will carry out a comprehensive business taxation review with three goals: promoting jobs and growth; simplifying the system; and enhancing fairness.
That brings me to the tax system and our proposals to ensure that it is not only as fair and effective as possible, but also supports jobs and growth. We are reallocating revenues to priority economic and social intiatives such as improved tax assistance for students, charitable donations and care of the handicapped.
To encourage renewable energy investments, we will change the tax rules to create a level playing field. Proposed changes will improve tax rules to finance some renewable energy and conservation projects, including extending flow-through share provisions.
The budget also includes more measures to get government right, to help shape a focused more affordable government that effectively advances the key priorities of a productive job creating economy in a modern Canadian federation.
Under program review, departments were asked to examine their programs and services to determine how best to provide Canadians with smaller, more effective and affordable government. Canadians have sent us a clear message. We must meet the challenges of globalization, financial pressures, new information technologies and demographic shifts. Canadians seek affordable services and programs delivered in the most effective and efficient manner possible.
We are also acting to ensure that social programs are affordable and will be there for Canadians in the future. We will restore stability and subsequent growth to transfers to the provinces with a sustainable system of long term funding under the Canada health and social transfer.
The federal government will legislate a new five year Canada health and social transfer funding arrangement beginning in 1998-99. For the first two years federal support, that is tax transfers plus cash, will be maintained at $25.1 billion. Over the following three years transfers of both cash and tax points will grow at an increasing pace related to the economy to approximately $27.4 billion. Also, to increase protection to provinces, a new legislated cash floor will guarantee that the cash portion of the transfer will not fall below $11 billion in all years.
When I tabled the main estimates on March 7, I announced measures we would take to "get government right." These are rooted in four objectives; to redefine the government's roles and responsibilities; to redirect its resources to the highest national priorities; to provide Canadians with more modern, accessible and responsive service delivery; and finally to achieve affordable government.
To support these objectives, we carried out a fundamental review of all our programs and services. I might add that, not since the second world war has a government engaged in such a far-reaching review.
During this program review, we have examined all major federal programs and activities to reassess what we do, how we do it and, how we can to it better. Our aims is to deliver services that are relevant, responsive, accessible and affordable. We are now putting into place the results of this review.
Based on these results, most departments will have their budgets cut by at least an additional 3.5 per cent in 1998-99; some will be cut much more. Changes are occuring not just in direct service delivery areas but also in our internal processes and systems.
Together, these and other measures will reshape and redirect the structure of government to bring quality services to Canadians in a fiscally responsible manner.
As we continue on this path of reform and change we must pay equal attention to the federal public service which, as the administrative arm of government, delivers in large measure our programs and services to Canadians. The public service supports us and helps us deliver our commitments to the people of Canada. We recognize that changes are also required to transform the public service into a modern and dynamic institution. The changes we are proposing in this bill will put in place some of the building blocks to do just this.
The legislative measures we are proposing to get government right are based on three key themes: alternative service delivery; compensation and collective bargaining; and pension reform.
I will begin with the alternate delivery of services and programs. By this I mean creating service entities, special operating agencies and other organizational mechanisms to deliver services. One example is NavCan which delivers the air traffic control system.
In the budget the Minister of Finance announced our intention to move in similar directions by creating a single food inspection service, a parks agency and a national revenue commission. We will undertake other such arrangements case by case as we continue to examine the best ways to deliver services to Canadians.
When we create these organizations, public service employees working in these areas will of course be affected. We must ensure that these employees are treated fairly and reasonably. That is why we met with the public service unions earlier this year to discuss the subject. I am pleased to say that we reached an agreement with most of the unions on the transfer arrangements for employees who move to alternative service delivery organizations.
The amendments we are introducing today will allow us to put in place fair arrangements for all employees affected by such transfers. They will also allow us to implement enhanced arrangements that some unions successfully negotiated on behalf of their members. This government is committed to working with public service unions and believes that the negotiated agreement is always the preferred option.
We are also proposing other legislative amendments to various statutes that will allow us to put in place these arrangements. For example, we are proposing changes to both the Canada Labour Code and the Public Service Staff Relations Act to introduce successor rights. These rights continue to cover union representa-
tion and the collective agreement until the term of the agreement expires, when employees move from public service employment to other federal employers.
Also we are introducing changes that will ease the transition to and the operation of alternative service delivery organizations. We want to make sure that these organizations have the tools they need to operate effectively from the outset.
An example is our proposal to amend the Financial Administration Act to allow us to use multiyear appropriations. If approved, we could use this authority with the three new agencies where flexibility is warranted and appropriate. Implementing this flexibility would need parliamentary approval through either an appropriation act or specific legislation.
I should add that this is an enabling clause only and Parliament will retain the right to determine when and if multiyear appropriations are suitable to these or any other future organizations.
Let us now turn to compensation and collective bargaining in the public service. The Public Sector Compensation Act , which was first introduced in 1991, restrained collective bargaining. Public service wages have been frozen for five of the six years that this legislation has been in effect.
I was pleased to announce that the Public Sector Compensation Act will expire as planned in February 1997. Public service employees have contributed significantly to fiscal restraint, and now, we can return to collective bargaining for public service employees.
Salaries for MPs and senators will remain frozen at the 1992 levels until at least January 1998 when the law will be ressessed as prescribed by Parliament.
However, we are also proposing to suspend the binding arbitration process to resolve collective bargaining disputes for three years. We cannot run the risk of allowing independent arbitrators-who are not accountable to Parliament-to award compensation increases that the fiscal framework could not accommodate.
Binding arbitration will continue for employees of the House of Commons, the Senate, Library of Parliament and the Canadian Security Intelligence Service. This is because their respective legislation prohibits strikes and requires the use of binding arbitration. In these case, however, arbitrators will be required to take into account wage settlements that have been reached for comparable occupational groups within the public service, where Treasury Board is the employer.
We are also seeking authority to amend the Public Sector Compensation Act to reinstate increments and performance pay which were suspended when the government introduced the wage freeze.
This bill would also provide authority for a 2.2 per cent wage increase for non-commissioned members of the Canadians Forces. This measure will correct the disparity in wages, that existed before the wage freeze between members of the armed forces and public service employees.
Our final theme centres on pension reforms. These reforms are intended to provide individuals and groups of employees with greater pension portability that meet the standards of the Pension Benefits Standards Act. Specifically we propose to revise the Public Service Superannuation Act to protect employee pension accruals and make them portable. This portability will be enhanced by the two year vesting and lock-in provisions.
I indicated that I would not discuss every legislative proposal but for the most part they are all related to one of the three themes I have described. I would just like to draw the attention of the House to other measures.
We intend to modify the Financial Administration Act to make changes to public service group insurance plans, for example, the health care plan. Another proposal will deal with the needs of our student employment programs by amending the Public Service Staff Relations Act.
Together these changes, particularly in the areas of alternative service delivery, compensation and collective bargaining and pension reforms, will let the government do its business using a modernized legislative and policy framework.
In conclusion, we believe that the measures we are introducing today are fair and reasonable to Canadians. They will help us secure the financial future, get government right, secure social programs for the next century and promote jobs and growth for Canadians.