Mr. Speaker, I would like to take a few moments to speak on behalf of the government in support of Bill C-36.
The proposed legislation contains some very important provisions that will help build a strong economy and a strong society, goals which this government has pursued since coming to office in 1993.
We have pursued these goals first and foremost by getting our fiscal house in order. The federal books will be balanced this year for the first time since 1970 and we will balance the budget next year and the year after that for the first time in almost 50 years. It will be the first time in almost 50 years that Canadians will see three consecutive balanced budgets.
Our commitment to fiscal responsibility, to putting an end to credit card government, does not end there. We will reduce Canada's debt burden through a two-front strategy of stronger economic growth and a concrete debt repayment plan.
What we will do is take the same approach to the debt that we have successfully used against the deficit since 1993. We took the deficit down step by step. The same incremental approach will, year by year, steadily reduce the debt burden.
We intend to keep the debt to GDP ratio on a permanent downward slide using a two-track strategy, a strategy of supporting economic growth and reducing the actual level of the debt.
This means that we will continue to present fiscal plans based on prudent economic planning assumptions. Let me say that most budgets fail because they are based on overly optimistic assumptions. The consequence is severe. It is lost credibility.
In addition to prudent planning assumptions we will continue to build our plans on a substantial contingency reserve of $3 billion a year. This is designed to handle unexpected events and to provide greater certainty that we will meet our balanced budget targets.
However, if the contingency reserve is not needed, and in fact it has not been needed in each of the past three years, it will go directly to paying down the overall stock of debt.
Where do we expect this prudent approach to budget planning to take us?
We project that by 1999-2000 the debt to GDP ratio, by our comprehensive Canadian measurements, will have fallen almost 10 percentage points from its peak of almost 72% of GDP in 1995-96. If we use the measurement which most other countries use, that being the debt held by the public, Canadians' market debt to GDP ratio will fall from a peak of almost 59% in 1995-96 to 48.5% by the year 1999-2000.
In fact the Organization for Economic Co-operation and Development is forecasting that between 1997 and 1999 Canada will have the largest decline in debt burden among the G-7 countries.
While we must ensure the continuing decline of the debt, we also recognize that the tax burden on Canadians is too high and has to be reduced. That is why we have introduced targeted tax relief measures in each of our previous budgets. For now these measures are modest because the so-called fiscal dividend that makes them possible is still modest. But even so, 90% of all taxpayers will get some degree of personal income tax relief from our recent budget.
Some 400,000 low income Canadians will be taken off the tax rolls entirely. As our financial resources permit we will broaden tax relief in future budgets.
Of course, some would argue that the dividends should go only to reducing debt and cutting taxes. In my view this would be shortsighted and, quite frankly, bad economics. We recognize that the private sector is the engine of job creation, but government too has a responsibility to provide leadership in the economy.
To meet that responsibility we are putting the fiscal dividend to work by increasing our investments in access to education, in skills development, in low income families with children and in health care.
For example, in last month's budget we unveiled the Canadian opportunities strategy. It is a co-ordinated set of measures to provide Canadians with enhanced access to knowledge, knowledge and skills for jobs that can deliver a better standard of living for the 21st century.
In fact, Bill C-36 implements some very important elements of this strategy. For example, it establishes the Canadian millennium scholarship foundation. This arm's length foundation with an initial endowment of $2.5 billion will award more than 100,000 scholarships each year over 10 years to full and part time students across Canada.
Scholarships will increase access to post-secondary education for low and middle income Canadians to prepare them for the jobs and knowledge based economy of the 21st century.
As the minister of finance said in the 1998 budget speech, “This investment in the future of our country is the result of our successful battle against the deficit. It is an investment that will pay for itself over and over again in the years ahead”.
The Canada millennium scholarships are, in effect, the largest single investment ever made by a federal government to support access to post-secondary education for all Canadians. They will be awarded to individuals who need help financing their studies and who demonstrate merit. For full time student scholarships will average $3,000 a year. Individuals will be able to receive up to $15,000 over a maximum of four academic years of undergraduate study.
What this means is that a student receiving a $3,000 scholarship for four years will in fact see his or her student debt load cut by $12,000, about half of what it otherwise could have been.
These scholarships are not just for young Canadians at university. Canadians of all ages studying full or part time in publicly funded universities, community colleges, vocational and technical institutes, and cégeps will be eligible. Awards will help recipients to study away from home, particularly outside their home province. They will also support limited terms of studies in other countries.
Student debt has become a heavy burden for many Canadians. In 1990 a graduate completing four years of post-secondary education faced an average student debt load of about $13,000. By next year the same graduate's average debt will almost double to $25,000. At the beginning of this decade less than 8% of student borrowers had debts larger than $15,000; now almost 40% do.
Last December federal and provincial first ministers agreed that something must be done to reduce the financial burden on students. They asked the federal government to take action in the 1998 budget and we have. Bill C-36 will put in place a number of provisions that will help individuals manage their student debt loads.
First, we are increasing the income threshold used to qualify for interest relief on Canada student loans by 9%. What that means is that more graduates will be eligible for interest relief.
Second, we are introducing graduated interest relief which will extend assistance to more graduates further up the income scale.
Third, for individuals who have used 30 months of interest relief, we will ask the lending institutions to extend the loan repayment period to 15 years.
Fourth, if after extending the repayment period to 15 years a borrower remains in financial difficulty, there will be an extended interest relief period.
Finally, for the minority of graduates who still remain in financial difficulties after taking advantage of these relief measures, we will reduce their student loan principal by as much as half.
Together these new interest relief measures will help up to 100,000 more borrowers. Over 12,000 borrowers a year will benefit from the debt reduction when this measure is fully phased in.
Any long range plan to acquire knowledge and skills for the 21st century must look ahead to the students of tomorrow. The best way to help to ensure children's futures is to save for education today. We want to establish a new partnership to help parents save for their children's future.
Bill C-36 introduces the Canada education savings grant. What it does is it makes registered education savings plans even more attractive.
Beginning January 1, 1998 we will provide a grant of 20% on the first $2,000 in annual RESP contributions for children up to age 18. That is $400 of grant money per child that would go directly into an RESP program. With the introduction of this new grant, RESPs will now be among the most attractive savings vehicles available to Canadians for their children's education.
Bill C-36 also contains measures for the Canadian opportunities strategy to help address the urgent problem of youth unemployment. In this bill we propose to provide employers with an employment insurance premium holiday for hiring additional young Canadians. Canadian employers who hire young Canadians between the ages of 18 and 24 in 1999 and 2000 will be allowed to take advantage of a premium holiday in employment insurance. This will increase employment opportunities for youth and reduce payroll costs for employers by about $100 million over the next two years.
While the role of education is very important in ensuring equality of opportunity, the capacity to learn does not begin in school. It begins at home and depends on the nurturing and caring provided to the smallest infant.
That is why over the past year federal, provincial and territorial governments have begun to build a national child benefit system that will help fight child poverty so as to provide a good start in life for all Canadians. To build the system the 1997 federal budget allocated $850 million to create an enriched and simplified Canada child tax benefit. Bill C-36 implements this commitment.
The new benefit commences in July and provides $1,625 for the first child and $1,425 for all other children to all families with incomes up to $21,000. In the future legislation will be brought forward to implement the commitment in the 1998 budget to further enrich the child tax benefit by an additional $850 million. The federal government will announce details of this enrichment after discussions with provincial and territorial partners and Canadians.
The Canadian opportunities strategy and the child tax benefit provide diverse and comprehensive assistance to Canadians. These initiatives will help Canadians acquire the knowledge and skills they need for better jobs and a better life in the 21st century. By expanding access to opportunity we are building a stronger economy and a more secure society. I urge all members in this House to support Bill C-36 in moving us forward to implement key elements of our strategy.