Mr. Speaker, I am pleased to have the opportunity to rise on this second day since our return to the House to speak on this bill which will, among other things, make changes to transfer payments to the provinces.
What I propose to do in this address to the House is to attempt to set out the facts relating to federal government support for health, social assistance and education.
The Liberals have made much of the announced new CHST cash floor, as it is called, the $12.5 billion to be paid to the provinces for health, social assistance and education under the Canada Health and Social Transfer.
In a press release dated December 8, 1997, the Minister of Finance stated as follows: “Governing is about choices, priorities and values. Our choice is clear: health care is a priority for this Government”.
Mr. Martin has said nothing about the fact that, since 1993, the Liberals have reduced the amount of cash transfers for health, education and social assistance by some $6.3 billion, that is, from $18.8 billion to $12.5 billion.
He is also not mentioning the fact that the Liberals reduced cash transfers to 1984 levels. These transfers, which the Conservatives had increased by $6 billion, have dropped by almost the same amount since the arrival of the Liberals.
Furthermore, Mr. Martin also neglected to say that, for seven of the ten provinces, cash transfers will continue to decrease over the next five years. Yes, you have understood correctly. Every province, except Ontario, British Columbia and Alberta, will be receiving less money under these changes.
Finally, the announcement of a new floor simply means that all cash transfers to the provinces will not be further reduced. As payments are proportional to a province's population, all provinces, except Ontario, British Columbia and Alberta, will be getting less over the years. In other words, the seven less well off provinces will be getting $384 million less annually between now and 2002.
Let us look back for a moment at the context in which transfer payments are made. Prior to 1996, Ottawa helped the provinces pay for health care and education under the established programs financing or EPF arrangement. Payments were proportional to the population of a province less the tax point value.
The tax points were exchanged in 1977, when Ottawa agreed to reduce its tax rates to allow the provinces to increase theirs. This formula replaced part of the cash transfers.
The per capita payments under the EPF were frozen for a five-year period that was to end in 1995. Otherwise, these payments would have increased by an amount equal to the growth of the nominal gross domestic product, less 3%. Ottawa was also helping the provinces to fund social assistance programs, through the Canada Assistance Plan, or CAP. Payments made under the CAP program amounted to 50% of eligible provincial expenditures. The increase in payments made to the richest provinces, namely Ontario, British Columbia and Alberta, was capped at 5% per year, for a five-year period that was to end in 1995.
These restrictions curtailed the increase in payments, but they did not reduce their volume. Total transfers increased every year, without exception, while the Conservative Party was in office.
In 1993, the Liberals pledged to renegotiate the financial arrangements to improve funding stability. They never said anything about reducing payments by one-third before stabilizing them. In its 1994 budget, the Liberal government announced that, in 1996-97, total payments paid under the CAP and EPF programs would not exceed the 1993-94 level. This cut would replace the social reforms that were to be negotiated with the provinces.
The reforms in question never saw the light of day. The green paper was finally published after several delays and was quickly forgotten.
In the 1995 budget, the Liberal government announced that EPF and CAP would be replaced by the Canada Health and Social Transfer, or CHST, starting in 1996-97. By 1997, total payments under CHST would be cut by just under $5 billion with respect to 1995 levels. The amount to be paid each province would be announced in the 1996 budget, following discussions with the provinces.
The 1996 budget contains funding levels by province up until 2002. The calculation formula irritates the poorer provinces, because it forces them to shoulder a greater share of cuts per inhabitant.
It was also announced in the budget that the cash portion of payments would not drop below the $11 billion mark, which represents almost $8 billion less than the cash payments in effect when the government tabled its green paper.
We believe there is a better solution. We believe that health care is one of Canadians' fundamental values. It is too important a part of our way of life to be held hostage to the political and budgetary imperatives of the hour. We must adopt an approach that will ensure the future of our health care system.
First, the federal government should relinquish part of its taxation power to the provinces and territories so that they can fund their own health systems.
Second, the federal government should recognize that it is quite possible to exercise leadership with respect to health care without being paternalistic. The federal government's role should never again be linked with taxation power. We need an approach that emphasizes co-ordination and co-operation. This can be done by replacing the $12.5 billion the federal government now pays the provinces with tax points, which would be subject to equalization.
Transferring tax points simply means that the federal government will relinquish part of its taxation power to the provinces. This approach would not change the total taxes paid by Canadian taxpayers. Instead, the portion of taxes necessary to fund health care would be collected directly by the provinces and territories rather than by the federal government.
Since the value of tax points is tied to provincial economies, we would establish an equalization fund ensuring that all regions of the country are able to provide care and services of comparable quality.
We propose that there be a Canadian pact for the purpose of creating a new framework promoting health and education. As part of this pact, the federal and provincial governments would agree on common health care standards.
