Mr. Speaker, I will be splitting my time with the member for Stoney Creek. I rise today to congratulate the Minister of Finance on budget 2000, the first budget of the 21st century and the next step in the government's balanced and comprehensive plan to make Canada the place to be in the 21st century.
I would like to use my time to highlight parts of the budget by comparing it to the main priorities of my constituents, which were elicited during prebudget consultations last year. Prebudget consultations have become an annual event in my riding. Every year I meet with local business representatives, community activists and members of various community organizations.
Last year I also distributed a prebudget questionnaire in my riding and solicited responses through a local newspaper. Following the consultations I prepared a report which was then forwarded to the Minister of Finance, the Parliamentary Secretary to Minister of Finance and to the chair of the Standing Committee on Finance.
Yesterday the Minister of Finance thanked Canadians who shared their ideas and insights with the Standing Committee on Finance. Today I would like to take this opportunity to thank everyone who participated in my consultations.
When asked what should be the government's main priority in terms of investing the projected budget surplus, the great consensus among my constituents was a balanced approach. However, three major priorities dominated these consultations. First, 40% felt that the government should continue to repay the debt. Second, 35% felt that the government should renew spending and investment in key sectors. Finally, 25% advocated tax cuts.
Virtually everyone during my consultations felt that some action was necessary to pay down the debt. Every year I am finding increased understanding of the debt issue: how large it is in terms of the government's overall finances and how much of our revenues are eaten up in interest payments. I am increasingly hearing that if we are unable to retire a substantial part of the debt during the current relative boom, how will we be able to do so when some day we face a recession?
Others have pointed out the riskiness in very deep tax cuts while the debt and interest payments are still so high. Once again the concern is centred on the prospects of an eventual recession. If taxes are substantially reduced now, it will be politically difficult to raise them again in recessionary times. However, no one has suggested that debt reduction should be the government's singular priority. Most people felt that we were now in a position to reduce debt, address a host of social needs and cut taxes.
What did yesterday's budget say about the debt? The Minister of Finance confirmed that we would not abandon the balanced approach which the government adopted from the beginning, an approach which recognizes that debt reduction, tax relief and spending on health, post-secondary education and other priorities are not competing claims but complementary components of a fair and effective plan.
Let us not forget that the government inherited a record $42 million deficit in 1993. Yet Canada has not just eliminated this deficit. We are one of the few countries that is now reducing the absolute amount of its debt and will indeed continue to do so.
Over the past two years we have paid down the debt by $6 million, resulting in interest savings alone of more than $300 million a year each and every year. The budget also confirmed that we would continue to set aside a $3 billion contingency reserve to protect against unforeseen events. In accordance with our debt repayment plan we will continue to use the contingency reserve fund to reduce the debt when it is not needed.
Canada's debt to gross domestic product ratio, which measures the amount of debt against the size of our economy, has markedly improved. In 1995 Canada's debt ratio was 71%. Today it has dropped to 61% and we predict that it will fall to 50% by 2004. Beyond this the downward track must continue. We are still a long way away from the 25% ratio Canada enjoyed in the late 1960s, which in fact was the last time our books were in the black.
The second priority of my constituents was increased social spending with health care, a children's agenda, the environment, affordable housing and eased access to post-secondary education being most often recommended. Several constituents in fact pointed out that spending such as this should indeed be looked upon as investment in human capital.
I am delighted to advise my constituents that all their top priorities were also the government's top priorities. In fact the very first announcement the Minister of Finance made in his first budget of the 21st century was to increase funding for post-secondary education and health care. Moreover the Minister of Finance confirmed “these are priorities of Canadians and they are ours”. That is why budget 2000 transfers an additional $2.5 billion over four years through the Canada health social transfers to help provinces and territories to address pressing health care and post-secondary education concerns.
In addition, the Minister of Finance acknowledged that scholarships and bursaries were an important part of expanding our access to higher learning. Therefore, to ensure that more students receive their full value the budget increases the tax exemption from its current level of $500 to $3,000.
The environment was also addressed in this budget. The Minister of Finance has made it absolutely clear that protecting the environment is no longer an option. It is something that we must do. For Canada to be the place to be in the 21st century our lakes and air must be clean, our green spaces and diverse habitat and species must be protected, and we must deal with climate change. Consequently budget 2000 proposes to invest $700 million to promote the government's environmental agenda.
The budget also specifically noted that affordable housing was also an essential element of our modern society and critical to meeting the 21st century needs of our municipalities. Moreover, the government announced its intention to improve provincial and municipal infrastructure in cities by committing $450 million over the next two years and $550 million in each of the following four years.
The most important commitment made in the budget was to assist families and our children. Assisting families is not only the smart thing to do. It is the right thing to do. Governments can do this in two ways: through income assistance and support for services on which so many of our families rely.
Budget 2000 takes action on both fronts. First, it enriches the Canada child tax benefit with another $2.5 billion by the year 2004, increasing it to more than $9 billion annually. Second, the budget doubles the duration of employment insurance, maternity and parental benefits to 12 months.
Very quickly let us go to my constituents' third priority, tax relief. Although tax cuts were not as widely advocated as debt reduction and social spending, it was evident that the need for them is growing. The majority of my constituents advocated tax relief for lower income families, especially those with children. Employment insurance premium reductions, indexation and other across the board tax cuts were also adhered to.
Once again budget 2000 has responded to my constituents' concern. We have delivered a five year tax reduction plan that provides an average reduction of 21% to middle and low income families with children by the year 2000. The budget restores full indexation to the personal income tax system immediately and retroactively to January 1, 2000. Over the next five years we will increase the amount Canadians can receive tax free to at least $8,000.
The budget also decreases tax rates which have not come down in the last 12 years. Over the next five years the middle tax rate will be reduced from 26% to 23%. Effective July 1, 2000, the rate will be reduced to 25%. In addition, the income level at which the middle tax rate begins to apply has been increased to $35,000. Since 1994 employment insurance rates have been reduced each and every year from $3.07 to $2.40. The budget also assumes that these rates will continue to fall to $2 by the year 2004.
To conclude, I repeat what the Minister of Finance said yesterday in his closing remarks:
This is a budget with many elements, but a single theme: creating better lives for Canadians in a rapidly changing world.
While the budget may have many elements, it attempts to address the main priorities of not only my constituents but of all Canadians. It does so with one major objective: to translate better finances into a better quality of life for all Canadians. Let us never forget that the values of our society are reflected in the fiscal choices we make.