Mr. Speaker, it is my pleasure to stand today to speak to Bill C-18. I will be splitting my time with the member for Acadie—Bathurst.
Bill C-18 is an act to remove the cap on equalization payments for the fiscal year beginning on April 1, 1999. The act concerns me and the other members of the New Democratic Party a great deal because of the implications it will have for the have not provinces in Canada.
The equalization program has enabled less prosperous provincial governments to provide their residents with reasonably comparable levels of public service and taxation. Equalization payments are unconditional in that the receiving provinces are free to spend them in public services according to their priorities.
The NDP has always supported transfer payments and equalization payments as a way of cementing the country and its provinces together. Many years ago we had the EPF, the established programs financing program. It was equal, with 50:50 funding for established programs within the various provinces. The NDP believes it was of far greater benefit to the provinces when we had the federal government in control of implementing national standards with the funding formula of 50% and 50%. It was simple. If one of the provinces chose not to comply with the national standards that were in place, it was jeopardized in that the 50:50 funding formula was pulled back.
The established programs financing worked very well. We then saw CAP, the Canada assistance plan, come in, followed by the cap on CAP. Then came the CHST. Now we are seeing a removal of the cap of the new ceiling imposed in a temporary way.
In earlier debates, New Democratic Party members pointed out the devastating impact of the CHST on social programs in the country. It should be stated clearly and abundantly, so the public hears it over and over again, that the government stripped 33% of the funding out of federal social transfers with the CHST. I believe the total figure since 1995 is $23 billion. The government went from $19.1 billion to $11 billion in social transfers.
When the equalization program was renewed in 1999, the ceiling was reduced by roughly $1 billion per year to an arbitrary level of $10 billion in 1999-2000, in spite of the broad objections from virtually every finance minister in the various provinces. It was then indexed by GDP growth in subsequent years.
Adequate levels of equalization and social transfers are critical to provinces like Nova Scotia. Otherwise Nova Scotians would not get what they are entitled to under the constitution, namely, reasonably comparable services at reasonably comparable levels of taxation.
Why do we need federal transfers to ensure that services in Nova Scotia are reasonably comparable to those elsewhere? We need them because our economy is smaller and weaker and does not produce as much wealth as the economies of most other provinces. Because there is less wealth, tax rates in Nova Scotia need to be higher to raise the minimum revenue needed to maintain public services. However, even though we pay a higher rate of taxation than most other Canadians, when it comes to public services Nova Scotians pay more and get less.
Nova Scotians value education and the role that good education plays in making possible a better and more prosperous future, and we in Nova Scotia invest our scarce resources in education. In 1995 Nova Scotians invested 8.4% of their gross domestic product in education. That was the highest rate of investment in education of any province, higher than Alberta, Ontario, B.C. or Quebec. Only Newfoundland put a bigger share of its collective wealth into education.
What did we get as a result? Did we get well funded schools, low pupil-teacher ratios and gilt-edged support services? Not a chance. Because our economy is small relative to other provinces, putting more of our economy into education still left us at the bottom of the class in terms of educational expenditures per student. I have spoken with many people in my riding who do not believe for a minute that Nova Scotia students are enjoying reasonably comparable services when it comes to education.
Health spending is another case in point. Last year Nova Scotians spent 11.3% of their provincial gross domestic product on health. The national average was just 9.3%, but because we are taking a larger piece of a considerably smaller pie the slice was not big enough to adequately serve our population. Once again we paid more and got less. The health care we can afford left our per capita spending the second lowest in the country. It was a full 9% below the national average. With that, we are expected to serve a population that needs more health care, 10% or 15% more than the national average. With those kinds of numbers, we have to wonder whether Nova Scotians are getting health services that are reasonably comparable to those enjoyed by many other Canadians.
Rather than improving, it is a sad fact that financial support has been declining since the promises of comparable service levels were put into the constitution. In 1980 federal transfers amounted to almost 48% of the revenues available to the province of Nova Scotia. By 1993 when the Liberal government took office, the percentage had dropped to 38.6%. Last year it was down to 37.2%.
By lowering the level of equalization payments, which is indeed where Bill C-18 will take us, the government will be moving us even further away from the goal of providing reasonably comparable services at reasonably comparable levels of taxation.
We in the New Democratic Party oppose Bill C-18. We oppose further cuts to the baseline equalization payments. In fact, in a time of galloping surplus we see the need to augment our equalization payments to allow for equal standards of education and health care across the country.
Now is the time to correct the crippling impact of inadequate funding on our education and on our health care, on our schools and on our hospitals. Now is the time to revisit the equalization formula to ensure that all provinces are afforded an equal level of services and all Canadians an equal level of citizenship.