The hon. member opposite says he heard it before. He is quite correct. He has heard it before because it is a program that was put in place to eliminate the deficit. That is in fact what has occurred.
Every day over the last number of years the opposition party would stand up and say that we would never accomplish the elimination of the deficit. Yesterday those members sat in their seats and listened to the Minister of Finance state unequivocally that the budget will be balanced this year, next year and the year after precisely because we put in place a strategy to eliminate the deficit in a very balanced fashion, not by the extreme programs that the opposition party is putting forward, tax cuts at any cost.
Although we do have to listen to the rhetoric, and I am attempting to lay down some facts, I hope the hon. members will stand in their places and say that the deficit strategy the government put in place was a successful one which has accomplished that objective one year ahead of schedule of what the Reform Party had actually indicated in its election platform.
In a very important way, the reduction of the debt has actually begun. In 1996-97 the combination of economic growth and fiscal restraint meant that the debt to GDP ratio, what we owe in relation to what we produce, fell significantly for the first time in more than 20 years.
We all agree in this House that level is still too high but everyone must admit in this House that the trend is going in the right direction. We will continue to bring down the debt to GDP ratio. This year it will drop even further. Over the next two years the improvement will continue, falling to about 63%.
I will return to the topic of debt but for the moment I want to step back to our current deficit success.
I think it is worth comparing our federal financial performance with how other major industrial countries are handling their fiscal challenges. In Canada we use the public accounts method of measuring public finances. It is one of the most rigorous in the world. It is rigorous because it includes all the liabilities which government incurs over the course of a year. Many other countries such as the U.S. and Japan use the financial requirements measure. This includes only the borrowings that the government makes in financial markets. According to this measure Canada is in the best fiscal health of the G-7.
It is worth repeating that when we use the financial requirements measure Canada is in the best fiscal health of the G-7. This means that by the time the federal government of the United States sees its first balanced budget we will be on our third. Meanwhile, all the other major industrial economies will still be running deficits.
This is a reflection of the sacrifices Canadians have made to support and ensure that we were able to get the deficit under control.
There is an even more important way in which our fiscal progress has real meaning and real benefit for Canadians. The improved position of governments, combined with the federal government's commitment to low inflation, has played a key role in allowing interest rates to drop to a near 30 year low. While international pressures have squeezed rates up somewhat, today they are still more than 3 percentage points below the level of early 1995.
This is a bottom line win for Canadians. It means that someone who is renewing a five year $100,000 mortgage today will save $3,000 a year compared to just three years ago.
There is one final area of strong performance I want to touch on. As I said earlier, an important element of our fiscal renewal has been our government's action to control program spending. Over the last three years it has dropped in absolute dollar terms, a discipline unprecedented in at least 30 years.
But the growth of Canada's economy, combined with the fiscal turnaround we have put in place, means that we can now afford to begin to make strategic investments such as the Canada millennium scholarship and to increase provincial transfers to the Canada health and social transfer.
Our commitment to restraint is strong and secure. The fact is program spending will continue to fall in relation to the size of the economy. It will continue to reflect the priorities of Canadians, continuing the process we started some five years ago.
At that time total program spending stood at almost 17% of Canada's GDP. This year we estimate that it will be down to 12.4% of economic activity. By the year 1999-2000 it should drop to 11.5% of the economic activity, the lowest level in 50 years.
We must remember that is the year when, based on our fiscal targets and prudent planning, Canadians will see their third balanced budget in a row. That has not happened in almost 50 years.
Four years ago we established a plan which is working. For the first time in 30 years the budget is balanced. For the first time in 50 years we will balance the budget for three consecutive years. This budget is simply the next stage in that plan and it continues the same balanced approach for the future which has worked over the past four budgets.
We will pay down the debt as we have paid down the deficit. We will invest in critical priority areas like education and health care. We will cut taxes, beginning with middle and low income Canadians.
There is no doubt about it, with this budget we have made choices. They are choices that reflect Canadian priorities and that reflect the same balanced approach that we have taken all along. This is a budget for the Canadian people. The days of overspending and overreaching are gone. We have brought the deficit down from $42 billion to zero and we will continue to live within our means.
The only reason we can realistically talk about tax cuts is we have managed to get the books balanced. The measures announced in the budget will affect 90% of Canadian taxpayers. Four hundred thousand low income Canadians will be removed from the tax rolls altogether and an additional thirteen million Canadians will see their federal taxes drop. All along, this government has not once raised personal income tax rates. Where we have raised taxes, we have been sure to do so in the interests of fairness as with the special surtax on the banks.
The Canadian opportunity strategy is a comprehensive strategy that focuses on expanding access to opportunities, to knowledge and skills that Canadians require to meet the challenges of the 21st century. For a student today hoping to enter post-secondary education, it is about the 100,000 millennium scholarships that will be awarded each year.
For more than one million Canadians paying off a student debt, it is about tax relief for the first time ever on the interest portion of their student loans. For adults who are hoping to return to school or acquire new skills, it is about tax free access to their RRSPs. For parents or grandparents, it is about the Canada education savings grant to help them save for the education of their children and their grandchildren.
The millennium scholarship fund will provide 100,000 scholarships a year to students in every province and every community, with up to $3,000 per year for full time and part time students, young Canadians and adults at universities, at community colleges, at technical schools and vocational institutes. It is all about increasing access to knowledge and skills. It is about preparing for the next millennium. It is about reflecting Canadian priorities.
The way we set up the millennium scholarship fund is a reflection of what we believe. It is something we felt was so important that it should be taken out of the hands of politics and put into the hands of experts. That is why we are setting up a private foundation to administer the scholarships. Over time we may attract private sector endowments so it can grow and help even more young people.
All governments have an obligation to provide better access to skills and knowledge. We are not about to stand aside and ignore that obligation. It is not about jurisdiction or turf. It is about our future.
What we have been able to achieve over the last four budgets is a result of the hard work of Canadians. Members in this House often make reference to the fact that this government boasts about its success. Government members on this side of House state unequivocally that our success in our war with the deficit is a result of the sacrifices Canadians have made, of the partnership Canadians have struck with this government, of the support Canadians have given this government over the last two elections to deal with the fiscal questions and challenges we have had to deal with.
This budget marks an historic moment. It makes possible what many thought was not possible. Most important, it is a budget that shows Canadians that their support for our deficit fight and their willingness to endorse and accept the tough decisions we had to make was not misplaced. This is their success and the rewards it produces will be theirs and their children's.