Never again.
That being said, I am sure most hon. members will agree that there are actions that must be taken, investments that should be made to strengthen our economy and provide Canadians with the prospect of better incomes, a higher quality of life and increased security and opportunity.
The committee's report highlights some excellent suggestions, but let me note that two of the commitments that this government has already acted upon, debt relief and tax relief, are a critical part of a context for the upcoming budget and for today's debate. First, we will continue to reduce the debt load on the economy and its taxpayers. Second, we will continue to reduce taxes.
It is a fact that we have already made some headway on our national debt.
The last two years, with the debt decreasing by some $6.4 billion, we were able to save more than $300 million in interest every year.
And there is more good news. We have actually paid down debt previously borrowed in financial markets by almost $16.4 billion. These achievements in combination with sustained economic growth also contributed to the reduction of the debt to GDP ratio. This ratio assesses our debt according to the size of our economy.
In 1995-96 that ratio peaked at 71.2%. In other words, our debt was equal to nearly three-quarters of our entire yearly economic output. For 1998-99 that ratio was down to 64.4%. This marks the third consecutive annual decline in the debt to GDP ratio.
By the way, there is another important comparison that should be highlighted. If one uses comparable accounting standards, our federal fiscal turnaround, combined with the positive fiscal performance of most Canadian provinces, means that on a total government basis Canada has achieved the largest improvement in its fiscal balance of all the G-7 nations since 1992.
Let me emphasize to all hon. members and all Canadians that such fiscal improvements are not abstract accounting achievements. Combined with our commitment to low inflation, they have contributed directly to keeping interest rates down. Gone are the days when Canadian rates were axiomatically higher than U.S. rates. In fact our rates are generally equal to, if not lower than, American rates.
But Canada's financial challenges are not over. We have to stay on track and that includes getting our debt burden down further. Five years ago 36 cents out of each federal revenue dollar went to pay interest on the debt. However because of our financial progress the portion of each revenue dollar eaten up by interest charges is down to 27 cents. That is progress, but it is still too high.
This is money that could otherwise be used to cut taxes, or for health care, or for investing in knowledge and innovation. For this reason we are continuing with our debt repayment plan.
We will continue to include every year in the budget a $3 billion contingency reserve. This will ensure that the government will be in a position to fulfil its obligations toward Canadians without ending with a deficit because of some unforeseen economic hardship. If the contingency reserve is not needed it will be applied to the debt.
Paying down absolute debt is only part of our strategy. We will continue to make important investments in strengthening our economy, such as boosting our national research capability and boosting knowledge, skills and training. The dynamic at work here is clear and concrete. The combination of a shrinking debt and a growing economy work together to make the burden of debt fall faster. Just like a family with a mortgage, the more one earns and the more one pays down, the lighter the load.
It is this consistent strategy of falling debt and a growing economy that will help Canada and Canadians build a foundation for success in the 21st century.
This takes me to the second firm commitment I want to highlight. That is continued tax reduction. With the end of the era of deficits and growing debt, our government has moved to cut taxes for all Canadians. Quite simply, people have the right to expect that each year we will bring down taxes. It is not a matter of debate. Tax reduction is essential to secure strong and sustained economic growth. We may debate the means and the pace, but from the point of view of our government, reducing taxes is not a debatable item.
What is more, we have taken some actions already. The actions taken in the 1998 and 1999 federal budgets have removed 600,000 low income Canadians from the federal tax rolls. The combined actions taken in the last three budgets mean that the personal income tax relief for Canadians will total $7.5 billion in 1999-2000. That is about 10% of all personal income taxes. For families with children, total personal income tax relief provided in the last three budgets represents an average of 16% reduction in their tax burden. That is families with children.
We are going to do much more. This process continued the day of the minister's update presentation itself when we announced that for the sixth year in a row, employment insurance premiums will be reduced from $2.55 to $2.40 for each $100 of insurable earnings starting this January 1. This means that employees and employers will save a further $1.2 billion next year, bringing total savings, compared to the rate that prevailed in 1994, to $5.2 billion.
Looking beyond that, as the Speech from the Throne and the fall update both emphasized, in the 2000 budget we will spell out a multi-year plan to cut taxes further and we will explain how we intend to carry it out. This plan will be based on a number of key principles.
Our approach must be fair which means starting with those who need it most: middle and low income earners, especially families with children. We will focus initially on personal income taxes, since that is where we are most out of line. We will also have to ensure that Canada has an internationally competitive business tax system. Finally, we will not finance tax relief with borrowed money because that just means an inevitable return to higher taxes in the future.
Suggestions on how best to implement further tax reduction and by how much are important elements of the finance committee's report.
I know that the minister and his team are studying the report very closely. I congratulate the chairman and all members of the Standing Committee on Finance for such a comprehensive and detailed report.
I know the minister will be very interested in the ideas and criticisms that each and every hon. member can add in the House today. I encourage my hon. colleagues from all parties to provide their own positive, concrete suggestions.
I hope my few remarks have put some of these issues in some context, but I am sure we will not agree on everything that should go into the year 2000 budget. However, it is a process that is respected and it is very worthwhile having the debate in the House of Commons because budget 2000 will likely set the tone and thrust for Canada's continuing growth and security in the new millennium.