Mr. Speaker, I appreciate the opportunity to speak today to the motion tabled by the Canadian Alliance regarding overpayments to certain provinces.
The Alliance Party claims that the error in tax collection would impede the ability of the provinces to pay for health care, education and social programs should the funds be clawed back. The provinces have been overpaid because of a problem that may have been in existence since 1972 in the accounting of the capital gains refund for mutual fund trusts.
As soon as the auditor general confirmed that the problem existed, actions were taken to prevent further overpayments, yet the issue of past overpayments remains. I am sure the hon. member can appreciate that this is in fact a complex matter. As the Minister of Finance said in the House recently, no decision has in fact been made on how to resolve the issue of overpayments to the provinces.
I must take issue with the implication of the hon. member's motion that the wealthy federal government is endangering the finance of the poor, needy provinces. Once again, we are hearing that the needs are in the provinces while the money is in Ottawa.
The reality is that federal and provincial governments have access to a wide range of revenue sources and are free to set their own fiscal and budgetary priorities. Provincial governments, like the federal government, are free to set tax rates consistent with their responsibilities. The fact is that the provinces have access to the same major tax bases as we do, including personal income taxes, corporate income taxes, sales taxes and payroll taxes.
As well, provinces have access to certain tax bases which we do not, such as gaming and liquor profits, property taxes and resource royalties, some of which are growing rapidly. In fact, provincial revenues last year from the combination of liquor and gaming levies, property taxes and resource royalties were $27.4 billion compared to just $10 billion in 1990. That is an annual average growth rate of 10%.
On the other hand, the few federal only revenue bases are small and volatile. For example, due to trade liberalization, import duties have actually shrunk from $4 billion at the start of the 1990s to under $3 billion today. The simple fact is that the total revenues of the provinces have substantially exceeded federal revenues for more than two decades and will continue to do so for the foreseeable future.
On top of this, federal cash transfers to the provinces are expected to increase more than three times faster than the growth in federal revenues over the next five years. These funds are available to provinces to use as they see fit on health care, post-secondary education, social programs and early childhood development. The federal government faces a much higher debt burden than the provinces, almost double that of the provinces on average.
In fact, in the last fiscal year the federal government paid $42.1 billion in interest costs compared to $22.4 billion in total provincial debt charges. This is a huge cost and also makes us more vulnerable to volatility in global interest rates than the provinces. Moreover, it reduces the federal government's fiscal room to manoeuvre when managing its own responsibilities and pressures, pressures which are not inconsiderable.
There is no doubt that health care, education and social services represent major spending challenges for the provinces. Access to health care, education and opportunity is central to the quality of life that families enjoy and that they want for their children. The federal government has recognized those priorities in its own spending. In fact, almost 70% of all new federal spending initiatives we have undertaken since balancing the books have been in the areas of health care, education and innovation.
Indeed, in the 1999 budget the federal government announced an increase in CHST transfers totalling $35 billion. Most recently, in support of the historic agreements reached by the first ministers in September 2000 on health care renewal and early childhood development, $23.4 billion in increased funding is being provided to provinces and territories over five years. Of this, $21.1 billion is for the Canada health and social transfer and $2.3 billion is for targeted investments in medical equipment, primary care reform and new health information technologies.
This investment will lead to innovation in health care, increase the number of doctors and nurses, provide new MRI machines and other medical equipment and enhance the use of technology to improve the care Canadians receive.
This is one of the largest single expenditures by any Canadian government in the country's history and will bring federal transfers to a record high, starting this year. Provinces are receiving $3.6 billion more in CHST cash this year than in 2001, bringing CHST cash to $19.1 billion.
These amounts keep growing. By 2005-06 CHST cash will reach $21 billion, a $5.5 billion or 35% increase over 2000-01 levels. Furthermore, the value of CHST tax points is growing. It will grow to an estimated $16.6 billion this year. This historic agreement added up to $14 billion that the provinces and territories have received in additional CHST transfers since 1999: $11.5 billion announced in the budget in 1999 and a further $2.5 billion in budget 2000.
This funding marks the largest investment the government has ever made and it will be distributed on an equal per capita basis, the same amount for each Canadian in every province. Clearly the quality of social programs is not being jeopardized by the government's actions, as the hon. members opposite would have us believe.
On top of this tremendous investment, the government has provided funding to the Canadian Institute for Health Information, which is playing an increasingly central role in providing Canadians, health care providers and policy makers with the information on the health of Canadians and the health care system. Furthermore, the government provides funding for the 13 Canadian Institutes of Health Research, which are doing groundbreaking work in areas such as aging, cancer, diabetes, arthritis and women's health. Their research today will mean a healthier Canada tomorrow.
The government has always believed that our children are the future of the country. Since our first mandate, education has been a priority. We have demonstrated our commitment by supporting early childhood development, programs for aboriginal children and a number of other initiatives.
For example, in budget 1998 the government announced the Canadian opportunities strategy in order to make knowledge and skills more affordable and accessible for all Canadians. Measures including the Canadian millennium scholarships, the Canada study grants and the Canada education savings grant program were introduced and have since proven to be extremely effective.
In fact just a few months ago, my colleague, the Minister of Human Resources Development, announced that the Canada education savings grant program had passed an important milestone. It has now paid a cumulative amount of $1 billion in grants for the education of more than 1.5 million Canadian children. These grants are the direct result of Canadian families contributing over $5 billion toward their children's post-secondary education.
The federal government is continuing to invest in Canadians' futures. The CESG program is just one proof of our success in encouraging greater investment from all Canadians to invest in the future of their children.
Budget 2001 went even further to give Canadians greater access to skills and knowledge in a variety of practical ways. It increased support for industry led sector councils that help identify skills required in the workforce, develop training programs and point workers to new job opportunities. It enhanced Canada student grants for students with disabilities. It expanded youth entrepreneurship programs. Through partnerships with the private sector, the government will build on existing initiatives that enable talented young people to gain valuable insights into the world of science, technology and business. As well, it provided new tax incentives to encourage Canadians to pursue educational opportunities. These included a new deduction for the extraordinary cost of tools for apprentice vehicle mechanics and extending the education tax credit to include people receiving EI benefits.
Recognizing that research and innovation are keys to success in today's global economy, we also provided universities with $200 million to cover the indirect costs of research. The budget provided additional resources in support of research in natural sciences and engineering, as well as the social sciences and humanities, through their respective granting councils. It increased funding for the National Research Council network of regional technology centres. All of these measures build on significant investments the government has made over the last several years, including the creation of the Canada Foundation for Innovation and the Canada research chairs.
The Canada Foundation for Innovation was established in 1997 to award funds to help post-secondary educational institutions, research hospitals and not for profit institutions modernize their research infrastructure and equip themselves for state of the art research. To date, the foundation has funded projects in every part of the country, reinforcing strengths in both small and large institutions and creating new opportunities for established researchers and promising new researchers.
About half the money awarded to date has been for health research. This year the CFI announced investments of $779 million for projects at 69 Canadian universities, colleges, hospitals and not for profit institutions. This includes research into therapies for recovery from spinal cord injury, for sustainable higher quality water supply, for the prevention and cure of cardiovascular disease, and for improved fire safety in residential and commercial buildings. The work of the CFI is complemented by the Canada research chairs, an initiative of the government to attract and retain the best researchers by establishing and sustaining 2,000 research positions by 2004-05.
We acknowledge that the tax collection agreement overpayment issue is a complex one and we have assured the House and the provinces that we will find a solution that is fair, equitable and fiscally responsible. However, when I read the motion of the opposition it is clear to me that it does lack credibility. I have mentioned just some of the investments that we have made in the areas which the hon. members feel the provinces will not be able to act on. I think that any fair observer of reality, as we see it, would say that in fact the federal government has made some very wise investments, very consistent, may I say, with our economic growth strategy, a strategy that has created literally millions of jobs and prosperity for our nation.
When the economy does well, so do the provinces. That is something that the opposition needs to appreciate. It needs to understand that worldwide, in fact, Canadians are looked at as excellent economic managers. That is the reality.
When the Liberals took office back in 1994-95 what did the Wall Street Journal say about Canada? It said that we were a third world economy. What does the Financial Times of London say about Canada? It says that we are the top dog of the G-7. Why? Because we made smart investments, because we understood that we had to reduce the deficit, that we had to be fiscally disciplined, and that we have to be focused like a laser beam on the future of our nation.
I can tell the House that everywhere I go throughout this country, in every little town and in every big city, what I hear from Canadians, from Canadian businesses and from people in coffee shops, high schools and universities, is that they feel more confident about the economy. They feel confident about the society that we have been able to build, a society that has been able to move forward without leaving anyone behind, a society that has been able to reward the risk takers, celebrate success and bring about positive change in people's lives. This has happened because of our approach, an approach that basically tells people that if they work hard they will be rewarded and that if they take risks we will celebrate their successes with them. What has happened is that over the years we have been able to develop a culture of opportunity that is attracting many people from all over the world to our country.
Since the opposition, I am sure, travels and listens to Canadians, I want to share with members how proud I was, during my brief stint of four months as Secretary of State for Science, Research and Development, to go into research institutes and hospitals and find out that many Americans are coming to Canada because they have opportunities for research. We are becoming a magnet for individuals who want to excel, who want opportunity and who want the best state of the art equipment to bring about the types of inventions that will improve the quality of life and standard of living for everyone.
I was here in opposition back in 1988. I cannot believe the fact that we are now talking not only about balanced budgets, not only about eliminating the deficit, but we are even talking about reducing the national debt. It is no wonder that throughout the world people are referring to Canada's economic miracle, the remarkable comeback of this nation.
While the opposition may use a lot of its time to criticize the agenda of the government, everywhere I go people are saying that it is one thing to sacrifice for nothing but it is another thing to sacrifice for something. What they are finding is that there is a belief in this nation. When they see that a government says it will reward their efforts and cut personal income tax and corporate taxes by $100 billion, the largest tax cut in Canadian history, and may I say even larger than what the opposition proposed, much to its surprise, the reality is that today we essentially celebrate the efforts of Canadians who brought about this economic miracle.
We celebrate their efforts and we celebrate their belief in our country, the ability to generate wealth and the ability to share the benefits with everyone across the country, whether one is from western Canada, whether one belongs to eastern Canada, Quebec or Ontario. The Canadian family is strong. We are definitely back on our feet and looking to the future with a great deal of excitement.
No, I will not allow the naysayers in the House to put down the country. I am not going to allow the naysayers to say that everything is wrong with Canada, because far too many people in this country have worked far too hard to bring about the excellent economic conditions we are witnessing.
It is very difficult for the opposition to accept the fact that over the years, through the wise management of the economy and through a belief in Canadians, because this economic plan would not have been possible without the great support of Canadians, we are now living in a time where people in Canada are happier, consumer confidence is up and business confidence is up. Our stature internationally in economic circles is really amazing to see. The lesson for everyone in the House is that when one has a plan and executes it right, when one gets people to buy into it, then success is achieved.
Today, while we debate a motion that obviously has very little to do with reality, the fact is that the land is strong and Canadians have contributed a great deal. We on this side of the House extend to them our sincerest gratitude for making Canada the greatest nation on earth.