Mr. Speaker, I am pleased to speak to Bill C-65, an act to amend the Federal-Provincial Fiscal Arrangements Act, at second reading.
I have spent some time listening to the debate of hon. members and thought it would be appropriate to get back to the bill and to put on the record some of the principles with regard to equalization.
The equalization program is one of the cornerstones of the country. It has played a major role in defining the Canadian federation. Equalization ensures that all provinces have the resources they need to provide reasonably comparable services to Canadians, no matter where they live, without having to resort to higher levels of taxation than other provinces. That is a very important principle within equalization.
Equalization is also an unconditional federal payment and the provinces can use it as they wish. Seven provinces currently receive equalization payments: Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan. They all currently qualify for payments.
The proposed Bill C-65 would renew the equalization program for a five year period from April 1, 1999 to March 31, 2004. The basic structure of the equalization program would remain the same as proposed under Bill C-65. There is no change to the basic structure of the program.
The bill includes changes to the program to ensure that it continues to measure the ability of provinces to raise revenues as accurately as possible. These improvements will increase the costs of the equalization program by an estimated $242 million and the changes will be phased in over the course of a five year renewal period. The bill also includes changes to the ceiling and floor provisions of the equalization program which protect against unusually large fluctuation in equalization transfers.
The proposed amendments are the result of over two years of extensive consultations and review of the equalization program by the federal and provincial governments. It is important for members to know that the review of this process that has been with us for some time took two years to look at the rationale of the program, its benefits, its fairness and its equity. The premiers and provincial representatives along with the federal government concurred with the principles of our equalization program.
At the time of the 1998 budget it was projected that equalization in 1998-99 would amount to $8.5 billion. The last official estimates released in October show an increase to $8.8 billion. New estimates of equalization will be provided when the 1999 budget is tabled in the House on February 16.
The bill also includes changes to the ceiling and floor provisions of the equalization program which protect against unusually large fluctuations in equalization transfers. The bill would also renew the provincial personal income tax revenue guarantee program for the same five year period. This program protects those provinces participating in tax collection agreements from many major revenue reductions that may be caused during the course of the year by changes in federal tax policy.
Those are the principal elements of the bill before the House. This is second reading. The speaker who just addressed the House raised some concern that he did not want to rubber stamp approval of the bill and that he was opposed to it. This is not the time to deal with approval of the bill. This is the time to look at some of its elements. The bill will go to the finance committee which has representatives of all parties. Members of parliament do a lot of their work in committee where officials appear before the committee—