Mr. Speaker, it is with pleasure today that I rise to discuss and to support the motion to see a gas tax transfer to Canadian municipalities. It is one element of fiscal imbalance that exists. I agree very strongly with my colleagues from Quebec that the issue of fiscal imbalance in Canada between the federal government and the provincial governments is a reality and I agree with the provincial Liberal minister of finance in Quebec.
I agree with the Quebec finance minister, Yves Séguin. The fiscal imbalance must be addressed. It is not fair for the federal government to have almost all the powers to levy taxes and for the provincial governments to be responsible for providing all the essential services such as health and education.
It is wrong to have a government federally that has the power to raise money and has most of the tax levers, and then to have provincial governments with so much constitutionally enshrined responsibilities to provide the essential services of health care and education. These are growing costs. The cutbacks from the federal side in terms of the transfers to the provinces, combined with the rapid growth in costs of providing the essential services at the provincial level have led to a tremendous fiscal imbalance between the federal and provincial governments. I will be coming back to that later in my comments.
First, the responsibilities of municipal governments in terms of the expenses to provide necessary infrastructure and investment have grown significantly over the last 10 years or 20 years. The municipal governments have even fewer fiscal levers than the provincial governments.
When there are federal cutbacks which lead to provincial cutbacks and ultimately to less money for municipalities, the buck stops at the municipal level. There is really no place except for property taxes for municipal governments to turn to try to raise funds.
The infrastructure programs have been flawed by partisanship in a lot of cases and political interference. That is one of the flaws of it. We have municipalities that know exactly where their infrastructure investments have to be made and ought to be made but then we have the role of the federal government which is getting more involved than it ought to be in terms of the direction of infrastructure money. I do believe that partisanship has played a role in terms of the infrastructure programs that has reduced the ultimate effectiveness of the infrastructure programs.
With the infrastructure programs there is the issue of the candy toss approach. These programs appear every several years and there is a rush by municipalities to submit applications for funding. To have that sort of cyclical approach to important infrastructure funding and investment is simply wrong.
There should be an ongoing program or vehicle through which municipalities can obtain the funding they need to make the types of important investments that are required. It ought not to be cyclical in this sort of candy toss approach where there is a rush for the money every several years when these infrastructure programs appear. This would be a step in the right direction.
We also have to recognize that the municipalities and the municipal governments that are closer to the people being affected by these decisions have a better capacity to determine where to spend the money. There is a democratic accountability issue too, that the same government that has the responsibility to provide the service ought to have the ability to raise the revenue. Without that there is no democratic accountability. It is hard to hold a politician at the municipal or in fact provincial or federal levels accountable for the decisions being made.
I also believe we should work with the provinces and consider the idea of federal tax free or federal tax advantaged municipal bonds. These exist in the U.S. Tax free municipal bonds have helped municipalities across the United States raise billions of dollars for infrastructure investment. The beauty of that system is it represents an indirect transfer from the federal government to the municipalities because of the federal tax free nature of the bonds.
The power ultimately is with the municipal unit, the municipal government and the municipal leaders who can determine how much money they need and where the investment will take place. These bonds are regulated through bond rating agencies. It is good from a Canadian investor perspective. It provides another relatively safe and secure investment for Canadian investors.
These bonds would be good for the investment community. They would be good for municipalities and really good for all Canadians. Canadians would find that they would be well served by their municipalities having the capacity to raise the money and invest in the types of infrastructure requirements that they know are the appropriate ones for their unique situations.
That is an idea that we ought to study in this place and in committee. We could determine whether or not it would be possible and what the advantages or perhaps the disadvantages would be of a federal tax free or a federal tax advantage to the municipal bond approach here in Canada. It would be just another idea that we ought to be considering when we are talking about finding ways to address municipal infrastructure.
The infrastructure issue is extraordinarily important. We have had a tremendous deficit in infrastructure funding and maintenance across Canada. I do not think there is a municipality in Canada that has not faced significant problems in terms of meeting basic infrastructure. We are talking about sewage and water type infrastructure requirements. These are not the types of requirements that can be ignored.
The cost of not dealing with them on an ongoing basis from a preventive maintenance perspective and an ongoing investment perspective is compounded by a decline in the infrastructure. It is bad economics to let the infrastructure requirements of our municipalities grow, and in fact, to let the quality of Canadian infrastructure decline.
Whether we are talking about highways, sewage systems or water systems, it is simply bad economics not to provide a funding mechanism through which provincial or federal governments can raise the money they need to pay for the essential infrastructure that their constituents require.
I would like to return to the federal-provincial fiscal imbalance issue. It does not make a lot of sense to have a federal government that has not been very good at dealing with issues such as trade disputes, has yet to provide a coherent foreign policy that is in Canada's national interest, and has not been able to invest in or manage a military effectively. It does not make a lot of sense to have a government that has not been very good at those purely federal areas of trade, foreign policy and the military, just to give three examples.
To have a government that has not been good at those areas interfere in areas that are purely under provincial jurisdiction, such as health care and education, does not make a lot of sense to me. It does not demonstrate a respect for the constitutionally enshrined jurisdictional rights of the provinces.
Beyond that, it is bad economic policy because in the same way that municipal governments have a better ability to recognize their own infrastructure needs and the best way to meet those needs, provincial governments in many cases have a better ability to analyze their own unique situations and to provide unique and, in some cases, novel approaches to health care and education.
It should not be a constant battle between a federal government that wants to have the control over the constitutionally enshrined jurisdictional enshrined areas of health care and education. It simply does not make sense from a fiscal perspective to have that level of interference.
We need to provide more respect for the provinces. We must encourage the provinces to try new approaches, whether it is in health care or in education.
We must keep in mind that medicare, our national socialized health care system, evolved from an experiment in the Province of Saskatchewan. Provincial experiments, whether in health care, education or other areas of public policy, can lead to national policy. However, that can only happen if we encourage provinces to try new approaches.
We must respect provinces not just in terms of them being best able to analyze their own situations and make the appropriate investments in the right areas, but also to respect the potential role for provinces as laboratories in public policy, and to, in fact, harness that sort of entrepreneurial approach that can occur at a provincial level that is more difficult to emulate at the federal level, particularly in the areas of health care and education.
Therefore, I think we need a new approach in federal-provincial relationships. They should be based on respect and a recognition of not only what is the appropriate role from a constitutional perspective for provinces but from a functionality perspective.
We should look at how we can develop better public policy in a wide range of areas by working with the provinces as laboratories for new approaches in public policy and best practice approaches. We should encourage the sharing of information between provinces and where there is a role for the federal government, for instance, to help identify best practice models from around the world.
I would assert that there could be a role where the federal government identifies some of these best practice models from around the world, whether it is in health care or education or any other area, even in terms of new approaches to infrastructure investment and makes available to the provinces, on a pilot program basis, funding if the provinces want to try a new approach in a particular area.
That would be very different than ramming down the throats of the provinces grandiose federal schemes to address issues. It would enable provinces to try new approaches on a voluntary basis and to participate in or to utilize some of the great ideas that have been developed outside of our borders to address some of these issues. That is just another idea on how we ought to consider federal-provincial relations.
One of the things we should always consider is the principle of democratic accountability. I will give an example in terms of federal-provincial relations. Currently, say in the Province of Ontario, if an individual goes to a provincial MPP and complains about the health care system, that provincial MPP will say that it is not the fault of Ontario, that it is the federal government that cut the transfers to the province. The same constituent then goes to the federal government MP in the Province of Ontario and complains about the health care system and the cuts to the transfers to the provinces. That federal MP might just say that it is not the federal government's fault, it is the fault of the provincial government. There is endless finger pointing. At the end of the day, the constituent does not know who to blame or where the accountability lies.
The provincial governments that face electorates every three to four years--and God help the provincial governments that do not do their utmost to provide the best quality in health care and education because those are two areas of public policy Canadians are very demanding of--face electorates based on those issues.
Therefore, it stands to reason that they are going to do their best to provide the best quality education and health care to their constituents in those provinces. As such, if they were to have access to the funding to provide those services, I think we could have a lot of trust in provincial governments to do their utmost to provide the best services.
We must get away from that patriarchal approach of the federal government, that sort of nanny state, and the federal government knows best approach on a wide range of these issues. It is not only consistent with respect to provincial jurisdictional rights but beyond that, it is good policy and will result in better services, better infrastructure, better health care, and better education for Canadians.
For a variety of reasons, it makes sense to find ways to provide a better ability for municipal and provincial governments to raise the money they need to provide the services they require.
Another debate we can have at another time in the House is how we can change Canada's equalization system to get back to the original principles of providing equal levels of services with equal levels of taxation across Canada and change it from what it is today.
It is a static approach that needs to be updated. It is an approach that is designed to take recipient provinces and find ways for them to grow their economies and prosper. The objective is to grow from being recipients to being contributors to equalization as an end game as opposed to accepting that the equalization system will continue to provide these equal levels of taxation on services. Instead of being satisfied with that, provinces would actually focus on changing equalization so that we strengthen the ability of the provinces to grow their industrial base to go from being recipients to being contributors.
That is a debate for another day, but it is an important one, particularly in light of the recognition that tax levers have a greater impact on growth and prosperity than would have been the case 10 to 20 years ago.
This is about respect for municipal governments. It is about enabling municipal governments to raise the money they need to invest in the infrastructure their constituents require. It is good fiscal policy. It is good from a democratic accountability perspective and we are supportive of this motion.