Mr. Speaker, it is with pleasure today that I rise to speak to the opposition day motion brought to the House by the member for Saint-Hyacinthe—Bagot. I share the hon. member's view that federal-provincial co-operation needs to be expedited in the area of tax point transfer.
We have a huge difficulty in Canada now with the reticence of the federal government to engage in any meaningful co-operative effort with the provinces. The PC Party has a strong history in this regard, going back to our 1997 platform in which we proposed a tax point transfer to the provinces to enable provinces to better address some of the social investment needs. The provinces are probably most capable of determining those priorities as they are closest to the people affected by the decisions.
We need some sort of practical action to create a new system of government that is much more responsive, more accountable and ultimately more efficient. By giving provincial and regional concerns a clearer voice, Canada can become a stronger country.
These practical changes can be achieved through federal-provincial discussion and agreement without constitutional amendments. That is important because I think most Canadians want to avoid a constitutional dialogue at this point. If we can achieve that through federal-provincial discussions, which we can, then we should proceed.
This requires co-operative federalism, not brinkmanship, bravado and disdain for the provinces, which have been the trademarks of the government since 1993. The Liberal government has had a paternalistic approach to the provinces. It is an Ottawa knows best approach. Whether on health care, education or any social spending, the government has attacked the provinces since 1993 with draconian cuts to transfers. These arbitrary and unilateral cuts have created, for instance, a health care crisis in every region of the country. The government has also slashed transfers to the provinces while barely tinkering with its own spending in terms of program spending.
The Liberal government had a choice to balance its books. Instead of reducing federal program spending significantly, it chose to maintain federal program spending but to cut the transfers to the provinces such that the hard decisions ultimately had to be made by the provinces.
The question is why the federal government slashed health care transfers to the provinces while leaving its own departments unscathed. The answer is because it could. It had the power to. It was able to escape the accountability of explaining and dealing with the impacts of those cuts because it had the power to act unilaterally and arbitrarily.
This proposal of a tax point transfer to the provinces could go a long way to ensure that federal governments do not have that unfettered power to do again what this government did in the early and mid-1990s by cutting the transfers to the provinces so dramatically.
Again, the big problem here is that the federal government currently has the power to trample over the provinces and escape accountability for the consequences of these actions. Currently the provinces have very little authority over their revenues, yet they have all of the responsibilities for how the programs, investments and spending programs will be administered. It is like what Mark Twain once referred to as a bad job. We could say that currently the provinces have a bad job: a lot of responsibility but no authority.
The same federal government that created the health care and post-secondary education crises across Canada by its cuts to the provinces has tried to act like a knight in shining armour by introducing, for instance, a millennium scholarship program to directly fund students from the federal coffers. The government is more interested in whose names are on the cheques than in the long term interests of ordinary Canadians who want health care and education systems they can depend on. Clearly some sort of reform is necessary.
However, that is not exactly what the hon. member is calling for with this motion. He is actually just calling for a first ministers conference to discuss the possibility of a tax point transfer. Clearly there is nothing wrong with having a discussion of first ministers on an issue of this importance. I would hope that members opposite and members of all parties would see that in the interests of a constructive approach we should all be supportive of the notion of a first ministers conference to explore the possibility of this type of initiative. It makes a lot of sense.
Not only does this initiative make sense, but even those who may disagree with the notion of a tax point transfer should at least agree to the idea of having a discussion with the first ministers of the provinces on this. We also need to broaden the nature of this discussion to include equalization. Our equalization system is currently broken. When we look at the history of equalization, a cornerstone of Canadian public policy and the only constitutionally enshrined spending program, we see that it was introduced around 1958. At that time the stated goals of equalization were to achieve approximately equal levels of taxation and equal levels of services across Canada.
Clearly, particularly on the tax front, with some provinces like Ontario and Alberta increasingly in positions to take fairly aggressive tax reduction policies, we are seeing a ghettoization of Canada in terms of the very important role of tax policy. Ten years ago I do not think anyone recognized how important tax policy could be in terms of creating levels of economic growth, opportunity and ultimately prosperity for citizens within a particular jurisdiction. However, today we have seen what has happened in countries like Ireland, where an aggressive tax strategy focused on capital taxes and corporate taxes has helped achieve a 92% growth in GDP per capita over a 10 year period during a period of time when Canada has had a 5% growth.
Enabling the provinces to have through equalization a little more control over their natural resource wealth, for instance, would go a long way in provinces like Nova Scotia and Newfoundland toward actually enabling those provinces to reduce taxes and to create greater levels of economic growth, not specifically in resource areas but in new economy ventures et cetera. Clearly we have to address the issue of the clawback of resource revenues that impacts provinces like Nova Scotia and Newfoundland in such a negative way.
We also have to address the issue, as my colleague from Richmond—Arthabaska mentioned in his comments, of the caps on equalization. We have 10 provinces with 10 premiers who have agreed that now we should take the caps off the equalization levels that go a long way toward denying individual provinces and recipient provinces the opportunities and the ability to grasp the economic levers they need to grasp, including tax policy and social investment policy, in order to create some level of sustainable economy and to ultimately be independent of equalization.
In regard to the current equalization system's treatment of recipient provinces, it is like how in certain jurisdictions social welfare systems sometimes treat people worse if they get a job. If they actually get a job they end up worse off than if they stay on welfare. In some ways we have an equalization system that has created a welfare trap, in that we actually treat provinces that are starting to become successful and starting to forge ahead worse than if they were not to pursue and embrace economic opportunities in a way that we should be encouraging.
The former premier of Newfoundland, currently the Minister of Industry and self-promotion, said in October:
—the development of offshore oil and gas both here and in Nova Scotia have been made more difficult by the way the current equalization formula works. The current claw back provisions in particular slow the pace at which equalization receiving provinces can catch up to the Canadian average standard of living.
I could not agree more with his comments then. Goodness knows where he is on that today.
We need a consistent commitment from the government to enable provinces, through equalization, through tax point transfers, to achieve on behalf of their constituents prosperity and equality in the 21st century.