Six, after my presentation. That is very encouraging.
The equalization program dates back to 1957 when only three sources of revenue were identified. I mentioned them earlier: personal and corporate income taxes and successive duties. The revenue base is expanded now to 33 and I mentioned what some of those tax areas are. There is a list in the legislation and it is a bit of a shock to read all of the different tax bases that exist in the provincial jurisdiction. I recognize only a few of them.
In the 1982 budget I remember Allan MacEachen introducing a change to the system where the national standard of 10 provinces was replaced with a five province standard. At that time the situation in all 10 provinces was considered. Mr. MacEachen then changed it to only a five province standard. It was felt that Alberta on top with its oil revenues and the Atlantic provinces on the bottom skewed the national standard so much that the five in between provinces of Quebec, Ontario, Manitoba, Saskatchewan and B.C. replaced this national standard. It was done.
However, after all is said and done there can be no disputing that it is all about the bottom line situation and that is how much each individual provinces gets under the operating formula.
This implies that along with the very basic financial need there have always been some very serious political considerations applied in reaching agreement on these transfer payments.
We remember with interest how when the information came to the province of Newfoundland about the change in equalization payments and that this was to bump up the payments to Newfoundland all of a sudden, bingo, Brian Tobin had a balanced budget. That was helpful presumably in the days just before the election in Newfoundland.
Politics does play a role because there has to be agreement with the provincial jurisdictions and I guess whenever agreement is sought politics is certainly an element of consideration at least.
I mentioned already the timing of this situation. To suggest a few weeks of consideration at the tail end of the process for parliament is simply inadequate. I propose that rather than look at this every five years we should look at this annually. This should go to the finance committee on an annual basis with a thorough briefing so that it is parliament that plays a meaningful role in this equalization process as opposed to simply bureaucrats from the federal and provincial governments involved.
It is fair to say without being overly critical of the political element that we really have not had an opportunity to deal with this adequately and effectively to ensure that what we are agreeing to here today is in the best interest of the country. We assume it is because of what people tell us but I do not think we have an adequate grasp to make that decision comfortably ourselves.
It would be better to communicate these changes on an annual basis rather than at the end of the five year cyclical renewal period. I agree with the points made in the 1997 auditor general's report on equalization. It made a number of recommendations that encouraged an improved a more important role for parliament in the renewal process.
For example, in his report to parliament he made the point that a very clear statement of the objectives of the program ought to be made so that it would be perfectly clear in everybody's mind what is behind all this. Someone may say it appears perfectly clear. We have just gone through a federal budget where there were a number of changes to the transfers to provinces, another form, I suppose, of equalization. We appreciate now that the government is moving to a per capita system with those transfers for health, education and social services. This will change things. I am not even certain people know that has happened, that it is moving toward a per capita basis.
With the changes to the transfers from the federal government to the provinces combined now with the equalization program, what does it mean in terms of the provinces? This gets more complicated and it seems to me we need to look very carefully at what the objectives of this program now are in light of the changes being made to the federal transfers to the provinces and perhaps, more important, to have a clear understanding of what the expectations of these transfers are.
I listened with alarm to my friend from the Reform Party when he made his presentation in terms of how he sees the world and how he see what Canada ought to be. I respect his view but it is totally different from mine. I wonder if it is clear what we expect from these equalization payments in terms of how they are spent. Let us face it, when the money goes to the provinces it is just handed over. There are no strings attached. It is done in good faith, here is the money and you folks deal with it as you wish or deem appropriate.
Such an important program is trying to create a level playing field for all citizens in Canada. I hate to use that term because it conjures up the wrong things. We ought to make that very clear, that we have some expectations in terms of what the moneys from these equalization payments ought to be attached to and then have a very clear, acceptable and understandable way of reporting the results from these expectations.
We could apply this to most federal programs in the system where there is little clarity in what we expect from this program and certainly very little reporting on how we reach that expectation. A best example of that would be the tax system. We have had a lot of tax discussion in the House during the last little while and I do not want to get into it at this point. It would be inappropriate.
What is curious to think about is if we took every significant tax expenditure program and applied to that a cost benefit analysis to the country of who benefits, how much, what is the point of this, what is the goal and how effective is this in reaching that goal. I wonder how many of those tax expenditures, or as the Minister of Finance even now calls them, tax loopholes, would continue in the system. My guess would be very few. I suppose they had laudable goals at one point but there was never any measurement put into the system and I suspect most of them have long outlived their usefulness. However, that is a little beside the point.
The resource revenues that are now part of the new formula will reflect the value rather than volume in resources, including timber, which I mentioned earlier, as well as gas and oil receipts.
The recipient provinces such as New Brunswick and Quebec are satisfied with this formula for calculating forestry revenues because the old formula overestimated provincial fiscal capacities.
On the whole issue of oil revenues, there has been another change to acknowledge that new oil is more expensive to extract than old oil. This now also is being reflected in this new formula so that those parts of Canada now that are relying on revenues from a new oil source as opposed to an old oil source will have much higher levels of expense. That reality will be reflected now in these new categories as well.
I mentioned gaming already. The one thing we overlooked in this gaming business, acknowledging that revenues from gaming will be an important part of any province's revenue base, is the cost associated with gaming. Let us face it, when a whole lot of people are gambling in one province, a lot more than in another province where the facilities are less accessible, there will probably be a lot of people having troubles. I am referring to gambling addicts and that sort of thing where there are a lot of costs attached to provincial jurisdictions as a result of dealing with gambling addicts and losses attached to that sort of thing. That is something we want to look at in the future in terms of fine tuning this process of the complicated base.
Once again, recognizing that there are floors and ceilings in this to help out and there are seven provinces eligible for equalization payments, not British Columbia, Alberta and Ontario, the equalization transfers for this year ensure that all provinces with average tax rates have revenues of $5,431 per person in order to fund public services. Most provinces are very supportive but Manitoba has some concerns. I will leave it at that and I look forward to the vote later today.