Madam Speaker, I am pleased to speak to an important bill concerning equalization payments in Canada.
First off, I wish to comment on what the Leader of the Reform Party said earlier about the equalization program. The Leader of the Opposion said that it was complex, incomprehensible and riddled with political interventions. With all due respect, I would differ.
If there is one program right now that is clear, technical and technically comprehensible when one takes the trouble to look more closely, that is fair to all Canadian provinces, that is based on verifiable, scientific facts and not on political decisions, that is the very foundation of what has been described as the compassion of this regime from its very inception, it is the equalization payment program.
For the benefit of all those listening, I would like to give a brief explanation of the origins of equalization payments, what they are, how they are calculated, and how they benefit the public.
Equalization payments are not a recent phenomenon. They first began in 1957. Why do we have them? They are the result of the post-World War II Rowell-Sirois report, a huge royal commission of inquiry into the workings of the Canadian federation which, after months of discussions, briefs and analyses, recommended certain directions that the federation should take to ensure a fairer future for all Canadians.
One of the recommendations was equalization payments, a program to ensure that provinces across the country, even those with differing tax capacities, could all provide reasonably comparable levels of public service.
For a self-respecting federalist, and even for a sovereignist looking at the system from the outside, equalization payments are the foundation of fiscal federalism. They make it possible to reduce—but not eliminate—the disparities from coast to coast, as the members opposite would say.
How are payments arrived at? Using a very specific formula, an analysis is made of the tax revenues that each province and each local government is capable of raising from their populations in order to provide public services that are comparable from one province to another without levying additional taxes that would bleed taxpayers dry.
First, the sources of revenue for each of the provinces and local governments are identified. When the program was first introduced in 1957, three sources of revenue were identified for each province. Now there are 30. These include property taxes, income taxes, sales taxes, and so forth, for a total of 30 categories. There is nothing political about it. It is simply a list of 30 ways in which each of the provinces generates provincial and local fiscal revenue. A list is compiled for each province.
Then, one takes five provinces considered representative and puts them through the same process. For each of the five representative provinces, such as Ontario and Quebec in particular, a standard is developed against which every other province will be assessed in terms of its capacity to levy taxes on its territory.
These 30 fiscal parameters for each province, the standard developed for the five representative provinces, will serve as the basis for calculating the equalization payments each one is entitled to, unless they are not eligible because they exceed the standard set for the five Canadian provinces regarding the capacity to levy taxes.
After all this has been done, the federal government agrees with the provinces that, for the next five years, equalization payments will be calculated per capita—and this is a very important detail—so that each province can provide public services in a fair manner, at approximately the same level, taking into account its particular fiscal capacity and economic strength.
There is nothing political about this, nothing off the wall, as the Leader of the Opposition suggested. If there is a program that is still appreciated, regardless of how much is paid to each province, it is this one. We may come back to this later. There are individuals who are getting a lot of political mileage out of this. But regardless of the amounts paid, equalization per se is a very good principle. It is also a principle that would deserve further and more serious consideration, and more social understanding as well, especially on the part of a staunch federalist.
There is nothing complicated in equalization. Finance Canada has put out a booklet, about 30 pages long, that outlines the situation very well. For those with more inquisitive minds, who put more energy into understanding what is going on in this country, there is, of course, 450 pages of annexes. Hard work can be done on every aspect of the fiscal parameters.
As I said, this is a matter of personal taste and preference. My preference would be the fiscal system. It is a system that has captivated me for many years.
Even though we have concerns about the estimates done for certain of the parameters used to calculate equalization payments per province, we will wait until the bill goes to committee to ask more precise questions, in order to have an even better idea of the results of the last negotiation and of the new equalization system that will apply as of April 1.
In the meantime, allow me to set the record straight and to denounce certain members across the way who are trying to score political points in talking about equalization and Quebec—