Mr. Speaker, I am pleased to join my hon. colleagues, in particular the member for St. Boniface, a colleague of mine on the finance committee, in discussing and debating Bill C-36 which implements the 1995 budget measures.
The details of this legislation should not be overlooked but the big picture is also very important. In that regard I draw to the attention of the House an article in today's Globe and Mail . The headline is: ``Bond buyers give Canada new respect''. Let me cite the opening paragraphs:
Something remarkable has happened in the Canadian bond market in recent weeks-and Canada's finance ministers can take most of the credit.
When interest rates on U.S. bonds charged upwards, Canadian rates followed, but at a lesser clip. When U.S. rates levelled off two weeks ago, Canadian rates fell sharply.
The result? The spread between Canadian and U.S. rates-a key measure of how the world's investors feel about Canada-has plummeted, indicating that bond buyers believe Canada is a lovely spot to put their money these days.
There is another paragraph I wish to set on the record:
Bond buyers who shunned Canada as a high debt, high deficit, fiscally irresponsible country for most of the 1990s have done an about-face. And it takes only a quick look at what Canada's federal and provincial finance ministers have done to understand why.
The article makes clear that fiscal restraint has become an embedded aspect of the Canadian political landscape. It is this government and this government's finance minister who have played a key role in this transformation. The legislation before us helps demonstrate a central aspect of that national sea change. It does so in a most interesting way, not only by what is in the legislation, but by what is not.
It will be noted that the 1995 budget did not include any increases in personal income tax rates, nor did the 1994 budget before it. That was again the case in the 1996 budget which contained no tax increases of any kind.
The point here is that deficit reduction and debt control are made in government problems and it is government that must be the source of the solution. I am convinced that in the years to come Canadians will look back at the 1995 budget, the source of Bill C-36, as the turning point in our fiscal history.
The actions that budget introduced totalled $29 billion over three years, more than in any budget since post-war demobilization. It set a course so that by the end of the current fiscal year, program spending will be $10.4 billion lower than when we started.
Just as important, this budget also changed the very structure of how government operates. Through focusing on structural change, not tax and revenue measures, this government made sure that spending will be restrained beyond the two-year target period. The deficit will continue to fall, reflecting our commitment to eliminating it completely.
To achieve these results, the 1995 budget took fundamental action across government programs and operations. It implemented the results of program review, a comprehensive examination of departmental spending. The budget also acted on a new vision of the federal government's role in the economy, one that includes substantial reductions in business subsidies. Subsidies will drop from $3.8 billion to $1.5 billion per year by 1997-98. The 1995 budget reformed major transfers to the provinces, modernizing the federal-provincial fiscal regime, making it more effective, flexible and affordable.
Today's Globe and Mail article shows that the commitments we have made and the fiscal actions we have taken are being recognized in real bottom line terms. They have brought lower interest rates and greater confidence in Canada. That is being translated into growing employment.
The inflation rate remains at a very nice low level in Canada. What has added resonance to our commitments, what has helped win over the world markets is the way we have approached our fiscal dilemma. Our action has been dramatically weighted toward the spending side, not added to the high tax burden of Canadians. That is why the 1995 budget did not increase personal income tax rates. However, it did propose measures to improve tax system fairness, many of which we see in Bill C-36 today.
The budget proposed eliminating the deferral of taxes on the investment income earned by private holding companies. We are also eliminating tax advantages for family trusts. We are temporarily reducing the upper limit on RRSP contributions to $13,500
per year so that extra benefits do not go to people who earn more than two and one-half times the average wage in Canada.
Even with these measures we would fall short of our deficit targets. That is why the 1995 budget moved to increase the large corporations tax and the corporate surtax. The budget also introduced a temporary tax on the capital of large deposit taking corporations, including banks.
Clearly, the 1995 budget was still a budget that placed an absolute priority on expenditure reduction. It delivered nearly $7 in spending cuts for each dollar of new tax revenue.
Again let me underscore our fiscal philosophy and the philosophy that guides our tax measures, such as those found in Bill C-36. We are tackling Canada's fiscal problem not as a narrow goal in and of itself, but rather because it is a fundamental component for national growth, new jobs, economic security and sovereignty. As the Globe and Mail article highlights, our fiscal progress and other actions are paying off. Canada's economic fundamentals are strong.
With our first two budgets we established rock hard foundations. With these measures our 1995-96 and 1996-97 deficit targets which will bring the deficit down to 3 per cent of GDP are secure.
The steps in this year's budget consolidate and extend our first two budgets and further contribute to our economic and financial objectives. We have maintained our focus on reducing program spending. Because the debt is a problem created by government, the solution should focus on cutting in our own backyard. The government has shown great leadership in handling public service cuts. That is why of the cumulative fiscal actions we will have taken from 1994-95 to 1998-99, a full 87 per cent have been expenditure savings, not tax measures.
Together the three budgets will contribute $26.1 billion in savings by 1997-98. This action, together with the reform of the employment insurance program, will ensure that we hit our new deficit target of 2 per cent of GDP by 1997-98. Our combined budget plans will deliver a further $28.9 billion in savings in fiscal year 1998-99. This means the deficit will continue to drop and the debt to GDP ratio will continue to fall.
I have had numerous town hall meetings in my riding of Algoma over the last number of weeks and I plan to hold several more. I have already had meetings in towns like Espanola, Thessalon, Hilton Beach, Little Current and Gore Bay. I plan to hold others in Elliot Lake and Goulais River.
When people attend the meetings, while they have concerns about one issue or another as is appropriate in this day when governments are under close scrutiny, they also express confidence in the way in which the country's fiscal affairs are being managed by the government. There is evidence of it every day. The Canadian dollar is remaining stable relative to the U.S. dollar. Interest rates are remaining at a very credible level. Inflation is well in hand. The economy is producing jobs.
We all agree that when unemployment reaches 9.5 per cent it is too high. However, our economy is producing jobs. In the months and years ahead we will see the unemployment rate decrease by many more percentage points because the fundamentals are very strong.
Bill C-36 expresses the philosophy of the government. It focuses on the credibility this government has been able to achieve compared to the past government. This legislation will help to sustain the successes we have experienced. It will only add to our credibility. It will add to the confidence investors have in our country, both domestically and abroad. It will improve the equity of our tax system and ensure that affluent Canadians and corporations do not escape paying their fair share of the Canadian tax burden.
For these reasons, I hope we have the co-operation of the majority of members in the House in supporting Bill C-36. The government is securing the financial future of the country. We are trying to get government right and in so doing we are preserving the social programs that are a hallmark of our society. These are social programs that Canadians have come to count on, health care, social services and pension plans. These are elements of our society which make us very special and unique.
Those of my colleagues who have had a chance to do any travelling outside this country will know we look quite wonderful from outside. Sometimes we tend to take it for granted what we have here. However, we are the envy of the world. As the Prime Minister has often reminded us, the UN has for a number of years in a row declared Canada to be the number one nation in the world in which to live. We know that in our hearts but we forget it sometimes.
I urge members to look carefully at how much we have and at what the government is doing to make the country an even better place not only for our children but for our grandchildren.
With that I call on the House, in a majority way, to place its trust again in the government.