Madam Speaker, I am very pleased to have this opportunity to address today's opposition motion concerning the Canada health and social transfer.
There is no doubt that health care is a matter of very high priority for Canadians. It is an essential thread in our national fabric, a source of pride and security for Canadians from coast to coast, in every region, province and municipality. It is truly a unifying force, one that highlights the Canadian commitment to mutual support and the one that distinguishes us dramatically from our huge neighbour to the south. As such, it is always an issue that deserves the full attention of the House and I thank the hon. member of the Bloc for proposing an immediate $2 billion increase in provincial transfers provided under the CHST.
There is no doubt that the long term security of Canada's health care system is a timely and relevant subject for debate. However, I must caution the hon. member that the motion he has brought before us today may actually do more to obscure or misdirect this important debate than to advance it. How does this motion obscure the debate? The answer to this question lies in the assumptions on which this motion and the opposition rhetoric around it are based.
First of all, we must remember that the fact that health care is a major priority of Canadians, even the major priority, does not mean it is their only priority.
I am sure that most of my hon. colleagues have received the same volume of public input as I have on the issue of lowering taxes. This, too, is of importance and the finance minister has made clear our commitment to ongoing tax reduction.
What about employment insurance premiums? Across Canada labour and employer groups have targeted EI reductions as a critical step in encouraging business growth and new jobs. In other words, they see employment insurance premium reduction as a priority.
There is another fundamental priority that Canadians have made clear in two federal elections. That is the continuing necessity to good financial management of and by the government itself. I see few if any voices saying that increased spending is more important than maintaining a balanced budget. Most Canadians remember too well the price we pay for relying on deficit spending, higher interest rates, lower economic growth and jobs lost. To them a key priority will be to avoid getting back into that vicious cycle.
The issue of priorities is neither simple nor self-evident and any debate that attempts to focus on a single need in isolation risks becoming simplistic and self-serving.
Let me again emphasize something said by all my government colleagues. We are committed to boosting support for health care but we will not do so through knee-jerk decisions that ignore the fiscal reality, the world environment and the proper role of government.
This was something the finance minister addressed in his October economic update before the House finance committee. He pointed out that our work as a government reflects a basic recognition of a vital fact, that the days of governments trying to be everything to everyone at any cost were over and that the need to have clear priorities to realize where government could make a difference and where it could not was essential. These are principles that must govern all policy making and debates such as this one today in the House.
Again let me remind my colleagues of what the finance minister said in his update. Given the volatile condition of many parts of the world economy, we are in a situation that calls for great care and caution and we must be realistic about the resources at our disposal. Today some seem to believe we have mountains of money to spend. We do not. They seem to feel we are now in a position where we do not have to continue to make careful choices. We do.
The minister pointed out what has happened to the average forecast of economic growth by private sector experts since only the beginning of this year. In January they were estimating nominal income growth of 4.7% for 1998. That has now been revised downward to 3%. For 1999 they were projecting 4.9% growth. That too is down to 3.5%.
What do these revisions mean for the size of the dividend as projected by the private sector? The answer is those projections would knock over $5 billion out of government revenues in 1999-2000.
Only a few months ago these forecasters were estimating a 1999-2000 surplus before any new budget actions of around $10 billion. The recent downward revisions would lower their estimates to around $5 billion, or $2 billion once the $3 billion contingency reserve we are committed to is subtracted.
At the time of our last budget many criticized us for being too prudent, too cautious, and we are receiving the same criticism in today's debate when we are attacked for not moving to immediately to increase CHST transfers. But the dramatic downward revision in private sector forecasts illustrates more clearly than anything why this government must stick to its careful approach to budget planning and why we simply cannot afford the risks associated with changing planning assumptions so drastically month by month.
This is not academic, some arcane point from economic theory. Consider the result if we had followed the advice of some not so long ago to take $9 billion to $10 billion worth of tax action, action they claimed we could afford.
We would now be heading for a substantial deficit.
Further, while we have noted that the downward revision to economic forecasts could lower the private sector estimate of the dividend to $2 billion once the contingency reserve is taken out, with all the uncertainty that exists worldwide it may well be that further downward revisions will occur.
In any event, it is clear the dividend in the next two years will be modest, much less than would be required to provide sufficient funding for the size of initiatives, on taxes and spending, that many are calling for. Clearly, careful choice in allocating that dividend will be required.
In his appearance before the finance committee, the minister said some would throw caution to the wind, saying maybe we will have the money. Maybe the dividend will be larger than we think, that it is worth the risk to cross our fingers and pray that things will turn out that way. In other words, it is time now, acceptable now, to set aside the careful and cautious approach we have been following.
He said “In my opinion that is the financial equivalent of reckless driving. You may not have an accident, but if you do you not only hurt yourself but you can sideswipe a lot of innocent people. The very reason we have met our targets, the very reason we are now able to say that despite the global economic crisis we are still on track not only to balance the books but to have a dividend, all of this is anchored in the caution we have applied from the very beginning”.
Clearly the finance minister was anticipating challenges such as today's opposition motion on the CHST. I think his explanation of why we must be cautious was right on.
The update also provided Canadians with a telling example of the type of spending dilemma we could develop if we only looked at single issues, health or taxes or debt, in isolation.
For example, some are saying we should implement a major personal income tax cut of an average of $600 annually per taxpayer. That would cost about $9 billion per year, not just this year but every year.
Some are demanding employment insurance premiums be reduced to the so-called break even level. That could cost more than $6 billion per year.
The provinces are asking that cash transfers be increased. Their proposal would cost another $6 billion per year, not just next year but every year.
Still others are saying we should mount a larger attack on the debt. That could cost, for example, another $3 billion per year.
If all that is added up, the total bill is $24 billion each and every year, and that is a long way from a complete inventory of the demands being made.
Adding up all the proposals would very clearly put the country back into a situation of serious chronic deficits, and I for one am not willing to go back to that country full of deficit and pain for Canadians.