Mr. Speaker, it is my pleasure today to speak in favour of the Liberal government's 1997 budget.
This budget, the fourth of the Liberal government, is likely the one that defines the true nature of the Liberal government, balancing the needs of fiscal health with the concerns about key social issues.
Over the past three and a half years it is clear that the economic priority of the government is deficit reduction. We are the first government in history to have seriously attacked the deficit and wrestled this country's finances under control.
Previous governments talked about deficits while continuing to overspend. We acted. In 1993 our finances rivalled those of third world countries. We spent fully $42 billion more than we took in, 6 per cent of gross domestic product. In fact, throughout its stay in office the previous Tory government was overspending its budget by approximately 30 per cent every year.
This year the deficit will be no higher than $19 billion and by 1998-99 it is projected to stand at $9 billion or about 1 per cent of gross domestic product. In four short years a balanced budget is finally within our grasp.
How did we work this magic, a magic that eluded the best Tory minds? We have stopped spending more than we earned. We cut government spending and began to live within our means. Canada is now on a clear path toward fiscal health and is the envy of most of the world's industrialized nations.
Renewed confidence in the Canadian economy has also helped to keep interest rates down, 19 reductions over the last 20 months. In the last year alone short term interest rates fell 5 percentage points. The prime rate is at its lowest since 1956. For the first time in more than decade interest rates are lower in Canada than they are in the United States.
Our current deficit reduction course has increased investor confidence, allowing interest rates to decline. Lower interest rates make it easier for consumers to buy homes and durable goods and
for businesses to invest in new facilities, equipment and employees.
The economy as a whole is benefiting. Exports are at record highs, successive Team Canada missions have attracted $22 billion in deals for Canadian business. Exports account for 37 per cent of our GDP. The importance of trade to this country's economy is more than obvious. It is estimated that for every $1 billion in exports we have 11,000 to 12,000 quality jobs in Canada. In 1997 Canada's economy will grow faster and have a higher job creation rate than any other G-7 country, including the U.S. A sustained and successive attack on the deficit inspires world confidence, world trade and world envy.
Many have urged the government over the recent months to ease the purse strings and to announce major increases in expenditure. Some see the light at the end of the tunnel and want to start spending. I do not agree with these people. I believe that major spending increases at this time would send the wrong message to the international community and to the Canadian public. It would tell Canadians that the hard work we have invested into reducing the size of government can all be negated, that past efforts should be undone. It also threatens to undermine our deficit reduction strategy prematurely, quitting in the last hours of a long and tiresome job, a job that is not quite done. It would also cause many old Tory wags to nod sagely: "There goes those tax and spend Liberals again buying the next election".
The deficit battle has inevitably affected some more than others. It is our responsibility as good government and as good Liberals to respond to those affected. To this end, the government has targeted key areas for investment. It is this type of targeted funding that leads to real impact, real changes and real solutions to social problems.
Among the announced initiatives are increased tax assistance to students, the creation of a foundation to support research infrastructure, investment to aid in the reform of Canadian health care, an increase in the child tax benefit and an increase in incentives for charitable giving.
The time has ended for throwing money at problems. This fourth in a series of responsible budgets shows us government spending must be clear, concise, planned and focused.
From 1985 to 1991, I served as a trustee on the appeal board of education, several years as chair. At that time, budgetary pressures were beginning to set in and it was clear that new strategies would have to be adopted. During my stay, along with some other colleagues, I suggested the administration implement rolling budget targets, setting spending goals at least two years in advance, not only as a constraint on board spending but as a realistic monitor of financial progress. We were unsuccessful at that time.
We have only to look at the current difficulties of school boards in Ontario to see where the lack of long term planning and preventive action have taken them. They have learned painfully that one can no longer live for today. One must continually plan for tomorrow, as the Minister of Finance has done.
Our current level of unemployment is still unacceptable. We should be doing better. But if there is anything we have learned in the last decade it is that throwing money into random job creation programs is not a long term solution. Governments cannot create jobs. They can create, foster and maintain the conditions necessary for a healthy economy in which the private sector can create jobs. In fact, our successful fiscal management has done just that.
Economists are predicting the economy will grow over 3 per cent in 1997 and 1998 creating between 600,000 and 700,000 new jobs over that period. In fact, since the government took office and put this country's finances back on track, the Canadian economy has created 715,000 new, primarily full time jobs.
Earlier I spoke of Canada as a model of modern economic change. Canada is making the most headway in deficit reduction and, at the same time, realizing the best job creation record in the G7 this year. Government overspending leads to economic ruin. Fiscal management leads to economic growth.
There are other alternatives in this budget that I would like to talk about a bit more specifically. I have been supporting for some time now the idea of targeted tax reductions to benefit children. I was an active supporter of the recent private member's bills initiated by the member for Mississauga South both on increasing the child care expense deduction and creating a tax credit for stay at home caregivers.
Children need proper resources and proper care in order to flourish in this society. Any level of child poverty is intolerable. We must do all we can to improve assistance to children of low income families. This budget has proposed a spending increase in the child tax benefit of $600 million annually in addition to the $250 million announced in the 1996 budget. The budget will also enrich the working income supplement by $195 million.
These measures are all specifically targeted to low income families to improve living conditions for Canadian children and give low income families the support they need to stay in the workforce rather than rely on continued public assistance.
The second area of particular interest is the voluntary and charitable sector in Canada. In 1995, I chaired a caucus subcommittee looking at government grants and contributions, primarily to
the volunteer sector. Our committee met with many charitable groups, including the National Volunteer Organization and the Canadian Centre for Philanthropy. They realized that reductions in government grants and contributions were both necessary and inevitable as governments scale down across the board.
The committee agreed that scarce government funds should also be more specifically targeted and that reform of granting process was needed. The government should consider ways to stimulate private charitable giving while it continues to reduce direct funding.
This budget recognizes that the charitable and voluntary sectors in Canada are extremely valuable to our social well-being. While we cannot continue to provide increased direct funding to these organizations, we must make every effort to ensure this sector does not die.
The 1997 budget increases the amount of donations for which a person can claim a tax credit from 50 per cent to 75 per cent of income. Further, this budget has facilitated larger charitable donations, putting the Canadian system on par with the U.S.
We have also reduced the rate at which capital gains on charitable donations are calculated from 75 per cent to 37.5 per cent. These measures will encourage private charitable giving and ensure that the charitable and voluntary sectors in Canada have access to the funds they need to remain in operation.
Additional measures announced in the budget will address the question of accountability in Canada's third sector by giving Revenue Canada additional resources to ensure charities comply with the Income Tax Act and by increasing the availability of information filed by charities. These are measures which many of us have been calling for for some time.
For the benefit of my constituents, I would like to address the GST question. Over the past year I have proposed that the government should use the savings generated by its beating successive deficit targets-about $5 billion-to reduce the GST by two points or 30 per cent. In fact, I have been saying that the government should make this reduction since the summer of 1995. I believe reducing the GST by one-third would stimulate retail spending and provide some relief to Canadians without undoing all of the hard work we have accomplished since we took office. However, the Minister of Finance took the time to personally explain to me why this will not work.
While we may be able to afford to do it in year one and year two, by year three we would not have the money to continue. In short, we cannot absorb the revenue loss. I accept his explanation.
I have always maintained that we should remain on our present course of deficit reduction. In fact, we have not saved $5 billion. We are still paying off horrendous national debts.
As my responsibility to the constituents of Mississauga West I brought this proposal to caucus, I fought for it and I learned about its deficiencies. That is the essence of dialogue.
In conclusion, I would like to congratulate the Minister of Finance on yet another outstanding budget. I am pleased to have the opportunity to speak on its merits.