Madam Speaker, I will be sharing my time with the member for Ottawa—Vanier. It is a pleasure to respond to this motion. The motion contains a rather confusing reference to a reckless commitment by our government to dramatically increase spending. That is not unusual to hear from the opposite side which makes statements like that with no basis at all.
This is a highly speculative statement but at the risk of jumping to conclusions I assume it relates to the fact that our government is on the verge of delivering the first balanced federal budget in nearly 30 years and Reformers just cannot take hearing the facts. That is what it is.
We have our fiscal house in order, interest rates are low and our rate of inflation is among the lowest in the industrialized world. From a trade standpoint we have one of the most open economies in the world. We have an opportunity to build on this economic foundation to create a knowledge economy for the 21st century. We have the people, we have the institutions and we have the research excellence.
However, having such assets is not enough. We have to mobilize our resources toward the clear objective of being the best in a knowledge based economy. I will address this point shortly but first I will devote some time to a discussion of our achievements over the past four years which I am sure the opposition will want to hear.
After more than a decade of high deficits a balanced fiscal situation is in sight in Canada. We have achieved this by sticking to a rigorous deficit reduction plan that relies on the help and support of all Canadians from coast to coast, having budgets set and two years of planning to make sure we stay on target.
We all recognize that our fiscal progress is more than a federal effort. The Minister of Finance and the Prime Minister have repeatedly said this. It is a national effort supported by Canadians across this country. It relies on the efforts of every province and territory from coast to coast which has set a goal of returning us to full fiscal health.
The results are striking. With the provinces' plans in place the total government deficit is expected to be eliminated by 1998-99, right on target. We have consistently hit all our deficit targets. In 1996-97 our deficit was $8.9 billion, about $20 billion lower than in 1995-96. Canada was the only G-7 country to be in a surplus on a federal financial requirement basis in 1996-97.
Our fiscal progress is so great that we are on the verge of a national debate, a debate that is happening here in the House. We often talk about what will be done with the surplus. We are on the brink of a post deficit era which was unimaginable four years ago.
Our government has not relied on across the board tax increases to hit its deficit targets. We have not relied on rosy forecasts. We are maintaining the same prudent approach we adopted from the beginning and it is starting to bear fruit.
Canada's inflation rate has gone from one of the highest among the G-7 economies to one of the lowest in the world with 1.5% annual inflation over the last four years. We outperformed the U.S. during this same period. Our interest rates are three points lower than they were in 1995 and Canada is poised to experience sustained economic growth. The OECD predicts that Canada will grow by 3.5% in 1998 and 3.3% in 1999, the best two year performance of any G-7 country.
But it is not enough to say that we are meeting our financial targets. Canada must also rise to the challenge and become a leader in the global knowledge based economy. Our government is investing in innovation and knowledge itself. We are targeting the knowledge based sectors where we are already strong and where the opportunity for growth is the highest.
This will spur job creation and sustain growth in our standard of living in the 21st century. We are helping to build a leading edge national system of innovation with programs like the Canada Foundation for Innovation. Our $800 million investment will draw up to $1.2 billion in additional public and private sector investments to create a total R and D investment of some $2 billion over the next five years.
This fund will renew and expand research infrastructure at Canadian hospitals, colleges and universities. This will create better research infrastructure and facilities for researchers and students. It also ensures that our best and brightest stay in Canada to pursue their studies and careers. We are helping to bring new innovation to market with the Technology Partnerships Canada. We are making repayable investments at the commercial end of the R and D spectrum.
These are real investments where the government and the private sector share both the risks and the rewards. Investments to date have ranged from aerospace to environmental technologies. We are building on the success of the National Research Council's IRAP program to help small and medium size businesses develop and commercialize new technologies.
The Business Development Bank has been refocused to better meet the financial needs of innovation in small and medium size businesses. In a knowledge economy, the only true competition advantage lies in developing the brains and skills of our people.
The Canadian millennium scholarship fund will invest in economic excellence and provide thousands of scholarships to give young Canadians access to colleges and universities.
These are part of our efforts to prepare our society to meet the challenges of a knowledge based economy head on.
In closing, let me repeat that we have invested our money wisely. We have reined in the deficit and we will continue to wage our battle against the debt. We have made a firm commitment to ensure that all Canadians can benefit from the new economy.
For the hon. member to suggest that we are on the verge of reckless commitment to dramatically increase spending is utterly ridiculous. As far as I am concerned, the motion by the opposition today is political hogwash. The same party said just a few years ago that Canada was going bankrupt. The same party said that Canada was part of a third world nation.
The Reform Party needs to recognize the reality of the last four years. It needs to understand the challenges of tomorrow. Like this Liberal government, it needs to see the limitless potential we have before us as we move Canada into the 21st century.