Madam Speaker, I thank the member for Durham for splitting his time with me.
It is with courage and a commitment to do what is right that the government has been successful on the economic front. The Prime Minister and the Minister of Finance realized we could not continue to burden our children with constant deficits and an ever increasing mountain of debt.
The national debt of more than $600 billion hangs like a millstone around our necks. It takes 35ยข of every tax dollar collected just to pay the interest.
When the Liberal government was first elected in October 1993 we inherited a deficit of $42 billion. This past fiscal year the deficit came in at $8.9 billion, almost $20 billion lower than the deficit in 1995-96. It also represented the largest year over year reduction in the deficit in Canadian history. At 1.1% of GDP as compared to 6% per cent of GDP when the government took office it is the smallest federal government deficit in over two decades.
This represents economic success that we are well on the road to surpassing. There are indications that the federal government will be at or very near a balanced budget this year. With a balanced budget Canadian taxpayers can begin to look forward to annual surpluses rather than annual deficits.
This fiscal dividend will force the government and by extension the Canadian people to make choices about the kind of Canada we want to build for our children and grandchildren.
The Liberal Party pledged during the last federal election that any surplus would be invested in social spending, for example health care, youth employment initiatives and education, as well as debt reduction and tax relief. It was a platform that I endeavoured to ensure my constituents understood so that they knew what to expect from a Liberal government.
It is clear that we need to make certain strategic investments. Some quick examples of this type of investment are the increases in the Canadian health and social transfer allocation to $12.5 billion a year and the prime minister's millennium scholarship fund which will help Canadian students compete in the global economy. These investments strengthen Canadian society for today and tomorrow.
We must remember, though, that the battle against the deficit is not finished. As we enter the era of surplus we must remember that we continue to have an immense debt hanging over our heads. We ignore it at our peril. I am convinced, and I believe the people of Oxford agree with me, that we should invest as much of the surplus as possible in debt reduction.
While it is tempting to prescribe a short term tax reduction fix, it will have been for naught if economic circumstances change and we have not reduced the national debt. The fiscal dividend cannot be used to benefit this generation alone. We must look forward and realize that Canadians decades from now will judge us for what we do about the debt now.
I do not want to tell my grandchildren that when I had the chance to influence government policy, as I do now, I did nothing to relieve them of the tremendous burden of paying interest year after year after year on a $600 billion national debt.
We hear a lot in the House and in the provincial capitals of the country about tax cuts. For the past few years the leader of the Reform Party has stood and asked the Minister of Finance when Canadians could expect an across the board tax cut. As a member of Parliament from Ontario I have been able to see firsthand the effects of the Mike Harris inspired tax cut.
Since Mike Harris is some type of super hero to Reformers, we can assume a Reform administration would operate much like the Ontario Tories. Mike Harris and the Ontario Tories have made a crucial mistake in making a tax cut. By reducing taxes before the budget is balanced, Mike Harris has been forced to make draconian cuts to some essential services in Ontario.
Members of the official opposition may have a problem with my use of the word draconian. To me an additional $700 million cut in education spending, following the $700 million loss in provincial revenues due to the latest round of the tax cut, is draconian. Speaking personally, the small amount of money I save from the Harris tax cut is not worth the effect it is having on the education system in Ontario.
If the Reform Party were governing the country it would follow the lead of Mike Harris. Could the Reform Party tell us how much will have to be cut from education, health care and the environment to pay for the tax cuts? Furthermore, it would add $600 million to our debt through its super RRSP to replace the CPP. How could we possibly trust a party that refuses to even acknowledge that the CPP has an unfunded liability of $600 million that must be paid out whether or not people are paying into the plan?
We all want tax cuts, but those of us on this side of the House feel they should not come before they are sustainable. We cannot afford to cut taxes one year, only to raise them the next, or, worse, cut an essential program because we provided an across the board tax cut before it could be sustained.
In the short term tax cuts should be targeted at those who need it the most. These are students, persons with disabilities and children of working parents with low incomes. To be honest these tax cuts have already been made by the government in the last federal budget.
Now we need to broaden the group to include, possibly, environmental initiatives, agricultural and agri-food development, technological and biological research, and an end to the luxury tax on jewellery. These selective tax cuts could provide a needed shot of adrenalin to the economy while assisting certain sectors to remain competitive.
In the aftermath of Kyoto it would be appropriate for a firm specializing in environmental technologies to receive some tax assistance for undertaking research and development in this area. This can assist Canada and the global community in reaching their goals. Canada is already a leader in environmental technologies. Let us take it one step further to underscore Canada's commitment to the environment and sustainable development.
As well, we need to reward research and development in new agricultural products. Tax measures taken by the Minister of Finance have already assisted in helping a growing domestic ethanol industry. Programs like the tobacco diversification program are successful in assisting farmers in developing new crops. Southwestern Ontario is playing a large role in the development of an industrial hemp crop for export as fibre to the United States. This industry will create jobs in rural Canada and government assistance will allow it to get off to a fast and successful start.
I would also like to discuss briefly the excise tax on jewellery. The finance committee report which we are debating now suggested that the Minister of Finance consider removing this luxury tax. This is a 10% excise tax which is unfair when other items of luxury, such as fur coats, speed boats and sports cars, are not similarly taxed. While there is some debate concerning the correlation between the luxury tax on jewellery and the underground economy, I ask the Minister of Finance to do what is just and remove this unfair tax.
Before I conclude I would like to refer to cost recovery in the agricultural sector. This is an issue that I dealt with extensively with corn producers in my riding in the debate over the creation of the Pest Management Review Agency, the PMRA.
While farmers are prepared to bear a portion of the costs for these programs and for the most part do not have a problem with cost recovery, we have to ensure the system is fair. We cannot ask farmers to pay for a system that is top heavy in bureaucracy and benefits other groups. For farmers to pay the entire cost of this program when consumers and industry also benefit from it is unfair.
I sincerely hope the government has learned a lesson from the PMRA debate which took place last winter and spring. I congratulate the committee for studying the issue during its deliberations.
Five years ago we would never have seen a debate like the one taking place in the House today. The standing committee and members of the House could not have offered their feelings about the budget in a debate like this one today. Consultations took place in bank board rooms with the country's elite in attendance. The average citizen on the street did not have a choice.
I thank the Minister of Finance for giving Canadians a voice in this process. His previous budgets have shown that he listens to the debate in the House, to committees and to average Canadians.
I thank you, Mr. Speaker, and the Minister of Finance for giving me the opportunity to share my perspectives in this important debate.