Mr. Speaker, I will be splitting my time with the member for Prince George—Peace River.
There are a number of issues that arise from the $3.3 billion overpayment that was discovered by the Canada Customs and Revenue Agency at the end of January. Just to remind the House, between 1993 and 1999 there was an overpayment of about $3.3 billion: $2.8 billion to Ontario; about $408 million to Manitoba; $121 million to British Columbia; and about $4.4 million to Alberta. There are a number of issues that flow from this.
One is the issue of competence. How could an overpayment of that magnitude occur and escape the notice of the finance people at the CCRA who are supposed to be in charge of this? That is one issue and some people have addressed that. Another issue that flows from this is the propensity of the government to make these wild projections. Also there is the issue of high taxation.
The one issue I want to talk about is the issue of fairness. I want to do that by reminding people about some of the history of federal-provincial negotiations, discussions and transfers going back a number of years.
When we look back over the last number of years with respect to federal-provincial transfers and we go back to the beginning of the modern health care system in Canada, I want to remind the House that the agreement at the time medicare was brought in was that the federal government would fund 50% of health care and the provinces would be responsible for the other 50%. In exchange for agreeing to that, the provinces were to be bound by the Canada Health Act. That was the agreement the two sides came to.
Consequently after that period, although the provinces adhered to their side of the bargain and abided by the Canada Health Act, the federal government broke its contract with the provinces and started to reduce the level of transfers to them. Subsequent to that there were a number of agreements between the federal government and the provinces establishing new levels of transfers through the CAP. There were all kinds of different transfer programs over the years but federal governments kept breaking the deals.
The last example of that, and the most famous one of modern times, was in 1995 when the federal Liberal government broke a deal with the provinces to fund health care to a certain level in Canada. It arbitrarily cut $25 billion in transfers for health care to the provinces. The result was that the provinces had to cut funding for hospitals. Because of that there were, and still are today, much longer waiting lists for surgery. As well, money was not available to provide funding for nurses and doctors and many of them went to the United States.
The provinces took the political heat for these arbitrary cutbacks by the federal government. When it came to protest this, the protestors did not go to the lawn of Parliament Hill, they went to the provincial capitals and protested.
The federal government has repeatedly broken deals with the provinces with respect to funding health care. Now we have a situation where there is an overpayment to the provinces, such as the $2.8 billion to Ontario, which the federal government is preparing to demand be paid back. As an example, Ontario in particular has been cheated out of billions of dollars because in 1995 the federal government arbitrarily broke an agreement it had reached with the provinces. It really strikes me as odd that the government is even contemplating forcing the provinces to pay back this money when it has cheated them out of billions and billions of dollars for health care, $25 billion since 1995 alone. That is the point I really wanted to make.
Even more galling is that now we are in a situation where because of these huge cuts in transfers to the provinces, the federal government is running a big surplus of $10 billion a year. There is so much money that the government is starting to hide it in all kinds of trust funds which the auditor general has taken issue with and has suggested is completely improper. With all this money pouring in, running a surplus of $10 billion, the government is driving up spending as much as it can in order to eat it up.
The point is simply that the provinces are the ones that had to increase spending dramatically for health care. They are not in the same rosy situation the federal government has been in. They are the ones that had to drive up spending for health care. They are struggling to maintain a balanced budget but because the federal government cut the transfers for health care so dramatically, it now has big surpluses and again is taking issue with the idea that the provinces should not have to pay back the overpayment that was made to them.
I want to make another point about fairness. I talked about the long history of broken contracts between the federal government and the provincial governments, with the federal government always being the one breaking the contracts.
Back in the 1980s when we ran into the financial wall and the government of the day was trying to figure out a way to deal with its budget problems, it imposed a cap on transfers to the have provinces, whereas the have not provinces continued to get larger transfers that reflected the increase in the cost of health care to some degree. The provinces of Alberta, Ontario and British Columbia at that time were regarded as have provinces. Coincidentally those are three of the four provinces that received an overpayment.
I want to argue that during the 1980s when the federal government imposed this new regime that it arbitrarily decided to do certainly without the concurrence of the provinces, it threw everything out of whack. The age old formula we used to have in determining how the transfers should be paid to the provinces was completely changed. It was the have provinces, Alberta, British Columbia and Ontario, that paid even more. Remember that through equalization and just about every program the government runs, they already pay more. By coincidence they are the ones that were given an overpayment between 1993 and 1999.
One could make a pretty good argument that they have already paid over and over again, especially through the 1980s, much more than anyone else because they were have provinces. One could make a successful argument that they are getting back money that was really owed to them over the course of time.
Having said that, I am certainly not arguing that we should make this a habit. I want to argue that the federal government has made a big error, but now that the money has been spent by the provinces at a time when they are really pinched and when the only way to recover the money would be to probably take a whack out of health care again because it is one of the biggest budgets, the federal government should leave it alone and just promise never to do it again. Clearly that is the appropriate approach. If we do not do that, we will be in exactly the same situation we were in in 1995 when the federal government cut transfers to the provinces for health care. Again it was the provinces that took the heat at that time, not the federal government.
My argument is a simple one. Over many years the federal government has broken contracts with the provinces. It has cut their ability to fund health care. This is a bit of money coming back the other way, granted through a mistake, in kind of an ad hoc way. I do not think we want to see that continue, but now that it has been done and because the only solution would be to cut deeply into programs like health care, we need to let sleeping dogs lie.
We urge the federal government to vote in favour of the motion.