Mr. Speaker, I will be sharing my time with the hon. member for Durham.
Today, I wish to address the motion tabled by the NDP. I listened to several speakers from the Bloc Quebecois who raised the issues of federal transfers, employment, health, inflation and monetary policy.
For three and a half years the Bloc Quebecois has been urging the federal government to amend its monetary policy to take into account its impact on employment, saying “We believe that the Bank of Canada's strategy condemns the Canadian economy to operate below its potential. To keep inflation at a very low level adversely affects the economy, and the benefits of such a policy have not been demonstrated”.
According to the Bloc Quebecois, the Bank of Canada's monetary policy is based on an excessive desire to throttle inflation by maintaining high real interest rates. It is a policy which impacts negatively on employment and on the economy as a whole.
To stimulate employment and to promote economic recovery and development, the Bloc Quebecois proposes an in-depth review of the Canadian monetary policy, and primarily a change in the monetary policy, so that the inflation target of the Bank of Canada, through its interest rate policy and the expansion of the monetary supply, would be set at 3%, with a variation of plus or minus 1%.
During these months and years, Bloc members proposed an inflation rate target of 3%, rather than 2%, as is currently the case, with the same 2% variation. This, they claimed, would result in the creation of 460,000 jobs, while also bringing the unemployment rate down to under 7%. As we know, the idea was put forward by Pierre Fortin, a professor of economics from Montreal, before the finance committee, when it was doing preliminary work for the budget. It seems that the Bloc members bought Mr. Fortin's arguments, since they adopted this idea in their report.
When we came to power, the Minister of Finance and the Governor of the Bank of Canada agreed to aim at a lower inflation rate. Thanks to a moderate monetary policy and the effectiveness of the new deficit reduction measures, interest rates have not been this low for 35 years.
When we came to power, Canadian interest rates were two points higher than U.S. rates. Today, the opposite is true.
I would like to paint you a picture. We have heard the Bloc members speaking numerous times today about federal transfer payments. What exactly are federal transfer payments in Canada?
Whether the topic is offloading the deficit, health care or welfare cuts, or whether there is a more sophisticated debate on the advantages and disadvantages of the federal system, the question of transfer payments to the provinces keeps coming up in the House of Commons, in the Quebec National Assembly, in ridings throughout the great province of Quebec.
Let us make an important distinction right away. There are two sorts of transfer payments: equalization payments and social program funding. Equalization payments are calculated in a complex way, based on the fiscal capacity of each province. The idea is to ensure all Canadians, whether they live in rich provinces or poor, of access to public services that are more or less equivalent in quality. Equalization payments have no strings attached, in other words the provinces may use them however they see fit. That is important: the provinces may use them however they see fit.
Equalization payments have not, however, always been affected by federal transfer payment reductions.
When we speak of offloading the deficit, we are referring essentially to the other transfers. That is the truth. Up to last year, these transfers were made under two programs, that is established programs funding, such as for education and health, and the Canada assistance plan, social assistance.
The Minister of Finance regrouped all that in a single program, the Canada social transfer, much less generous, to be sure. But if we look at the significance of the federal tables for each province for the 1996-97 fiscal period, the figures are expressed in a per capita basis. It goes without saying—