Mr. Speaker, for all of us in the House of Commons, politics and government are about one thing: people. They are about helping them build better lives for themselves and their families, about helping them make their dreams work, the dreams they have for themselves and for their children: a better quality of life, a higher standard of living, a fair shot at a good job that pays well, and a society that gives them the support they need when they need it.
Making these dreams a reality has been our overriding objective since the government first took office in 1993. That is how we won the confidence of Canadians. The progress the government made in its first mandate earned it a renewed majority mandate in 1997. It is that focus on what matters most to Canadians that is how this government aims to keep the confidence and trust in the future.
A strong economy is the key to building a more secure society. For proof, all we need to do is remember the Canada of five years ago. The government faced a $42 billion deficit, the largest in Canadian history and it was growing. Unemployment was at 11.4%. High inflation and high interest rates were dragging down the economy in a big way. The debt to GDP ratio had been rising steadily for almost two decades. Taxes seemed to know only one direction: up.
Serious questions were being raised about our ability as a nation to maintain our cherished social safety net. Worst of all, we had lost our characteristic confidence in ourselves as a people and in our future.
In the past five years the government has shown what happens when we roll up our sleeves and get down to work. When we listen to Canadians as we did during our prebudget consultation hearings and when we work side by side with them, when we trust their courage and their willingness to make sacrifices, and when we reflect on values and priorities, what happens? Positive change occurs.
Five years ago the Wall Street Journal compared Canada's economy to that of a third world economy. Recently the Financial Times of London referred to Canada as the top dog of the G-7. The $42 billion deficit is now a $3.5 billion surplus. The debt to GDP ratio is on a firm and permanent downward track. In fact the Government of Canada has not borrowed new money on the markets for more than two and a half years.
Personal taxes in the last two budgets have been cut. They were cut by $7 billion in the last budget alone. Our inflation rate is at its lowest level since the 1960s. Our interest rates are also at the lowest levels in three decades.
Canada has enjoyed the strongest economic growth of the G-7. Even with the recent global turmoil, the International Monetary Fund recently forecasted that Canada would be among the G-7 leaders for economic growth in 1999.
Unemployment in Canada has fallen by almost 3.5 percentage points since we took office to its lowest level in nearly a decade. Last year our job growth was number one in the G-7.
Best of all, there has been a resurgence of optimism among Canadians and a renewal of confidence among Canadians that government can in fact make a practical difference for the better in their lives. This was evident during the prebudget consultation hearings held across the country.
A secure society is one in which people can count on their fellow citizens for help and support when they need it. If they lose their job, if they need income support in retirement, to give their kids the good start they need in life or when they are sick, compassion and sharing are deeply held Canadian values. They are reflected in some of our proudest national achievements: insurance for the unemployed, the Canada pension plan, supporting children in need and our universal medicare system.
Safeguarding these pillars of our society was a primary motivating factor behind the fight against the deficit and impressive work has been done to protect and modernize them.
To meet the needs of our new labour market, the government redesigned and refocused assistance to the unemployed, creating an employment insurance system aimed at helping people get back to work as soon as possible.
In co-operation with the provinces the federal government established a new child benefit to help low income families with children. By July 1, 2000 the federal government will be investing $1.7 billion in this initiative.
Working with the provinces, it also achieved an historic package of reforms that will guarantee the Canada pension plan remains on sound financial footing, even in the face of an aging population, increasing longevity and retiring baby boomers. The CPP will be there for future retirees. They can count of it. Securing our public pension system is something no other industrialized country has been able to do. Moreover, the success in saving the CPP combined with a balanced budget and a stronger economy have allowed the government to reaffirm its commitment to old age security and guaranteed income supplement programs.
Canadians have told us that access to quality health care is among their most urgent concerns. The government has listened. Since it was first elected in 1993 protecting our universal medicare system has been a top priority. As soon as the fight against the deficit gave the government financial room it followed the recommendations of the National Forum on Health. It increased the cash floor of the Canada health and social transfer from $11 billion to $12.5 billion. That means close to $7 billion beyond previously budgeted levels, over six years, will go to the provinces to fund health care, post-secondary education and social assistance.
Additional funding will permit the enforcement of the five principles of the Canada Health Act: universality, accessibility, comprehensiveness, portability and public administration.
The government has shown its openness to modernizing the health care system. In its first mandate the Prime Minister chaired the National Forum on Health which brought together Canada's wealth of talent and knowledge in the health care field to assess how the system could best respond to emerging health care issues.
The 1997 budget allocated over three years to implement key recommendations of the national forum: $150 million for the health transition fund to help provinces launch pilot projects to investigate new and better approaches to health care, including home care; $50 million to establish a new Canada health information system to give health care providers timely access to quality health information; and $100 million to boost funding for the community action program for children and the Canada prenatal nutrition program.
During our prebudget consultations Canadians from coast to coast stressed the importance of health care in their lives. They said that the government should continue with its strong commitment to health care. We believe that health care is a priority. In the upcoming budget we will strongly endorse measures to strengthen the health care system in Canada.
Maintaining a strong economy and a secure society in the new global, knowledge based economy requires that we invest within our means and in carefully targeted ways so that Canadians have the knowledge, the skills and the opportunities they need to prosper.
One of the key reasons the government fought so hard against the deficit was to regain our ability as a nation to make such strategic investments in our people. For example, the millennium scholarship fund will generate over 100,000 scholarships each year for low and middle income post-secondary students over the next decade.
The Canada education savings plan is another example. Our government is topping up new contributions to registered education savings plans, which are an enormous hit with parents saving for their children's future education.
Another example is the Canada foundation for innovation, whose $800 million endowment is being used to fund cutting edge research facilities in our universities and teaching hospitals.
There is the connecting Canadians strategy, the goal of which is to make Canada the most connected country in the world by the year 2000, with our own fast lane on the information highway. A key part of that strategy has been SchoolNet, which will mean that every one of our more than 16,000 public schools and libraries will be connected to the Internet by the end of the fiscal year. We will be the first major nation in the world to do this: ahead of the Americans, ahead of the British, ahead of the French.
Then there is the youth employment strategy which consolidated approximately $2 billion in new and existing funding for the programs and services that young people need to acquire skills and work experience, find jobs and build careers.
The measures that we are taking are important because we compete in a global marketplace. I am quite happy to see that as a nation we are getting ready for the challenges ahead. However, let us be clear: we are building on a solid foundation.
Canada is number one of the G-7 in home computer, cable and telephone penetration. We have the lowest telephone rates of the G-7, the lowest Internet access cost of the G-7, the lowest cost of doing information technology business of the G-7, the lowest software production cost in North America and we are ranked number one in producing knowledgeable workers.
Investing in R and D and the skills of our people, expanding educational opportunities, cutting taxes, investing in health care and reducing the public debt make perfect sense if we want to improve the standard of living of Canadians.
There is no question in my mind that Canadians want their political and business leaders to focus on improving their standard of living. They are quite tired of the turf wars that exist between levels of government. They are quite tired of the politics of finger pointing. They are not interested in that any more. They want results from their elected officials. They want results from their corporate leaders. They want a brighter future for their children. That is the focus which was quite clear when we travelled across the country listening to students and listening to people involved in R and D. We listened to our educators. In every city people told us that the standard of living is the issue on which we, as a society, must be focused.
Let us put an end to the era of confrontation. Let us build an era of co-operation, one in which people's standard of living and quality of life are key issues. This is not simply a debate that needs to be had in the halls of the House of Commons. It has to happen in the communities and in corporate board rooms because we all have a responsibility to improve the standard of living for Canadians.
One thing that is certain is that although in the past two years Canada has seen an improvement in its productivity, it has, like every other G-7 country, seen a decline in productivity. We need to improve that because productivity essentially means a better standard of living for Canadians. What can we as a government do? What is our role to enhance productivity?
I want to make sure people understand that it is in the context of increasing the standard of living for Canadians that the recommendations were made in the finance committee. Before we talk about the recommendations we made as a committee let us look at what the government has done to increase productivity in Canada. What kind of measures or channels has it used to make sure the productivity gains seen in the past two years continue?
When looking at the government policies that promote a higher standard of living, they can be broken down into fiscal and monetary policy, tax policy, support for education and skill development, support for R and D, social and labour market policies, trade policies and policy that understands there is a role for the marketplace.
When looking at fiscal and monetary policy and clearly understand that a stable macro economic environment with low inflation and lower interest rates can boost confidence in the economy, enhance productivity growth and boost employment, what has the government been able to achieve? There are a number of accomplishments we should take note of.
The federal deficit has been eliminated. The debt to GDP ratio is in a clear downward path. There has been substantial fiscal progress at both federal and provincial government levels, and we have the low inflation records of the 1990s. That is pretty clear, low interest rates, reducing the debt, reducing the burden on Canadians. What happens when we do that? We increase productivity and increase employment opportunities for Canadians and that is essentially what we heard throughout the country.
What did the finance committee have to say about that? We found a great deal of satisfaction on the part of Canadians when it came to these issues. When it comes to fiscal and monetary policy the finance committee recommended that the Government of Canada continue to use prudent economic assumption in the formulation of budgets, that assumptions about short term and long term interests continue to be set at 50 to 100 basis points higher than the private sector average, and that the minister alter the prudence factor as circumstances warrant.
The committee recommended that the federal government continue to employ a contingency reserve which has set aside $3 billion per year. At present the contingency reserve should not be used on increased program spending or tax cuts. The committee also recommended that the government continue to use two year planning horizons for the conduct of fiscal policy.
We recommended that the federal government establish a long term target for a sustainable debt to GDP ratio. We said that an interim debt to GDP target range of 50% to 60% should be achieved in this mandate.
Fiscal and monetary policy is one issue but what are the other contributors in achieving a higher standard of living? If we look at tax policy, taxes can affect the allocation of resources and alter the incentives to work, to save and to invest.
What has this government done, what are its accomplishments? We have seen the beginning of general tax relief, the national child benefit system to support working parents and the HST to reduce compliance costs. These are three of the measures.
While the world, in particular the group of seven countries, is spending a lot of time devising strategies for productivity, in a measured way this government is putting in place the types of policies that speak to the worldwide debate on productivity. In the past three years we have seen an increase in productivity, which I hope is a trend.
Does the finance committee feel the federal government should continue to cut taxes? Absolutely. We have made a number of recommendations in relation to taxes. Last year we called for the elimination of the 3% surtax. This year we call again for the elimination of the 3% surtax for all Canadians. We call for the announcement of a timetable for the elimination of the 5% surtax. We do that because these taxes were introduced as deficit fighting mechanisms. Now that the deficit is gone it is time for the minister to announce a timetable for further tax reduction.
As we did last year, we recommend that the 1998 budget measures to increase the basic personal amount and spousal amount by $500 for lower income taxpayers be increased by a further $200. That would bring to $700 the amount of additional income that can be earned tax free. The committee further recommends that this $700 increase in the basic personal and spousal amounts be available to all Canadian taxpayers.
I will discuss what the government has done to enhance productivity. We must make sure the people who work in our companies have the proper skill sets and education to do things better and quicker, that they can produce more, enhance and generate wealth for our companies and in aggregate for the country. Support for education and skills development gets more people into the workforce by boosting the employment rate. It helps people get higher wage jobs and achieve greater productivity.
Is this not essentially the type of society we want to build? Is the reason an industrially advanced country like Canada entered free trade agreements not because we wanted to compete and generate high paying jobs that require highly skilled workers? That is where our competitive advantage is.
Looking at education and skills development, what has this government done? There are the Canadian opportunity strategy, Canadian millennium scholarships, Canada study grants and tax relief on interest on student loans, the Canada education savings grant, the increased education and tuition tax credits, SchoolNet to give young students Internet access, increased funding for youth at risk who lack basic education and job skills.
This is what it takes to build a country. We need to invest in people. We need to create the economic environment where we as a nation and as a people can generate wealth.
Another key component of a productivity strategy must be researched and developed because it provides the innovation needed to improve production processes, thereby boosting productivity.
The government has moved on several fronts with the Canada foundation for innovation, technology partnership Canada, tax support for R and D, and networks of centres of excellence.
We need labour market policies that work so Canadians can work. They influence work incentives and facilitate workforce participation by removing barriers.
I remember this debate quite clearly when I was parliamentary secretary to the minister of human resources. I remember how we needed to modernize and restructure Canada's social security system so that it would serve our people well.
As a 1990s car cannot be fixed with a 1960s repair manual, the same thing is true of our social security system. We need to modernize it. I think EI reform did that.
Productivity is also impacted by our trade policy. What does trade policy do? It increases competition and allows countries to specialize in products they are good at making. There again the end result is a boost in productivity and competitiveness.
What has this government done in the area of trade policy? We have NAFTA. We are a leading player in the WTO. There are ongoing efforts to ensure the free flow of goods and services within Canada. These are characteristics of a government and a nation that are forward looking, that understand that the route to a higher standard of living is higher productivity.
Another very important component of productivity strategy is letting the market work. Regulation and subsidies can dampen market signals and distort the allocation of resources, inhibiting growth and inhibiting essentially productivity growth. Privatization can enhance and boost productivity.
There is a difference between individuals who talk about these things and governments that do. When we look at the government's record on the important component of increasing the standard of living for Canadians, we see that the government reduced business and transportation subsidies. We have had partial or full privatization of Air Canada, Petro-Canada, Canadair, De Havilland Canada and CN.
It is clear to me that the agenda of the government is working quite well. I heard this throughout the country. It is an agenda that looks to the future with a great deal of optimism. We have eliminated the deficit. We have lowered taxes. We have made key investments in education, research and development.
I am proud to be a Canadian. I am proud to be a member of the House of Commons. It is due to the recommendations of members of parliament that we have been able to build a society and an economy that work. Our next frontier is to work toward a higher standard of living, to secure that our children and our children's children will live in a better country than we live in.