Mr. Speaker, besides the rhetoric I will actually speak on the bill before us. Essentially, beyond anything else the key to ensuring that the federal budget remains in balance is a strong political commitment to maintain fiscal health.
Past history and experience has shown that legislation itself is not sufficient to deliver balanced budgets. The previous government tried to follow that approach without success. The Spending Control Act, 1992, put legislated limits on total program spending with an end goal of eliminating the deficit. We all know how successful that approach was.
The government has balanced the budget as a result of the resolve of all Canadians to do so. In 1993-94 we were facing a difficult situation. The federal deficit stood at a record $42 billion. We said at that time that we would bring down the deficit steadily each and every year until it was eliminated, and we did. In 1997-98 Canada recorded a $3.5 billion surplus, the first surplus since 1969-70. It is an historic accomplishment for Canadians.
Balancing the budget required difficult decisions and many sacrifices but it is an achievement that all Canadians can be proud of and one that will have permanent benefits.
We did not need balanced budget legislation to do it. We accomplished it with a strategy that has worked. We set two year rolling fiscal targets and have consistently achieved and surpassed them. For budget making purposes we used economic assumptions that were less optimistic than the private sector and we built into our fiscal plans a $3 billion contingency reserve. It provides an extra measure of back up against adverse errors in the economic planning assumptions.
We will continue to use this approach. It worked so well in the past and it ensured that the budgets will remain in balance for the future.
Instead of debating legislation on how to ensure a balanced budget we prefer to focus the government's resources on the measures needed to strengthen Canada's economy and Canadian society.
The government has a balanced plan to address the challenges we will face in the future. Despite our fiscal success, the debt burden is still too high by historical and international standards and we need to reduce it.
We have a debt repayment plan. We are committed to ensuring that the debt to GDP ratio continues on a permanent downward track. In 1997-98 the debt to GDP ratio fell to 66.9% from 70.3% in 1996-97, a 3.4 percentage point decline.
It is the largest single year decline in the debt to GDP ratio since 1956-57.
As well, we continue to invest in the highest priorities of Canadians. Clearly health care is at the top of the list for all Canadians. The Prime Minister has said in the past that the government will invest more of our resources in the years ahead to reinforce our public health care system.
The final part of our plan involves tax reduction. Initially as it became affordable we were able to provide targeted tax relief where the need was the greatest, tax relief for students, for charities, for persons with disabilities and for children of working parents with low incomes.
In the 1998 budget we started a process of general tax relief, reducing tax rates for 90% of taxpayers and providing $7 billion in tax relief over three years.
We will build on these measures as we can afford to and we will continue to do so in a measured and responsible way.
Clearly there is no need for this bill. It would allow deficits and we know Canadians want governments to live within their means, just like they do. It is a bill that says to Canadians let's run a little deficit this year and we will make up for it later. I do not think so and Canadians do not think so.
The hon. member brought up the issue of credibility of the forecasts. Eight years ago Tory finance ministers were accused of using inflated economic predictions to mask huge deficits. Now we are being accused of being too cautious. I would rather be called too cautious rather than reckless if it meant we were protecting Canadians' victory over the deficit.
In 1998 the consensus forecast for GDP growth was 3.5% when the budget was introduced. Today the consensus as forecast has fallen to less than 3% and the outlook for next year has fallen from 2.9% to only 2%.
So while the hon. member argues about how the finance minister meets these targets and makes accusations that the finance minister is not being transparent, it is the first time in the history of Canadian governments that we have a budget building process like we have today.
On the average of Canadian economic forecasters with respect to the GDP, the average of what Canadian forecasters say the interest rates will be as we move forward, it is not government or the departments that are setting these forecasts but the private sector, and we are making use of all that expertise as we build these budgets.
For the first time we are saying governments should set a target and in setting that target it should be the very least we could do, always striving to do better.
Rather than debating an issue about legislation to balance budgets, I would submit to the hon. member that it is the political commitment that is required and that is very important. Past efforts have shown quite clearly this government is committed to balancing the budget. we are committed to no deficits. We are committed to keeping the debt to GDP ratio on a downward track. We are committed to continual investing in Canadian priorities.
The finance committee, as it travelled across the country on prebudget consultations, clearly heard that health care was at the top of the list of priorities. This government is committed to reducing income taxes for Canadians.