Mr. Speaker, I have just returned from the foreign affairs committee meeting and I am trying to get into stride in this very important debate.
I had an opportunity at the outset to question the parliamentary secretary on the issue of the lifting of the ceiling on equalization payments. It is an arbitrary ceiling that was in fact imposed many years ago. When I was pressing him on this question he took great offence that I was not congratulating the government on actually doing what needed to be done, which is to finally lift that arbitrary ceiling.
This has been a very serious problem and a very punishing one for many provinces. I can speak particularly of my own province of Nova Scotia and others in Atlantic Canada. Other have not provinces as well are in receipt of federal equalization payments. They depend very much on the health and social transfer payments.
The difficulty I have when the Parliamentary Secretary to the Minister of Finance goes on the offence, which I guess is a political tactic, is that the government has now been in power for a full decade. Equalization has been a problem for our provinces that are desperately dependent upon equalization payments for the whole 10 years. If I do not see it as a priority to be falling all over the government and falling on my knees in gratitude to the government that it has finally moved to the point of being ready to lift the ceiling, then I hope he can understand that it arises out of knowing what incredible hardship has been endured in many of those provinces by a great many of our citizens.
Sometimes when we are having a debate about transfer payments and equalization payments it sounds as though it is just a fight over money. It sounds as if it is a question of dollars and cents and playing around with statistics and figures.
Make no mistake about it. It is about the very lives of great numbers of our citizens, particularly our most vulnerable citizens who do not have deep pockets, who do not have fat bank accounts, who are tragically on the receiving end of massive cuts by the federal government.
They are unilateral cuts, reckless cuts and punishing cuts to the most vital public services on which people depend. This is especially true of health care. The government has arbitrarily taken out billions and billions of dollars from transfers to the provinces. It means that the package of our fiscal transfers that includes equalization, the territorial funding formula and the social and health transfers really loses any coherence and integrity.
It is intended that this is a coordinated financial package that theoretically, and the minister said it again and again today in his speeches, exists for the purpose of ensuring that all Canadians, regardless of where they happen to live and regardless of what their wealth is, are able to have reasonably equitable access to the services that they require. These services are supposed to be available to every Canadian citizen. It assures that these services shall be feasible to be provided at roughly the same level of taxation.
That all has been absolutely out of balance since the infamous budget in 1995. That budget began hacking, slashing and burning some of the most vital services. It put further strain on our equalization payments.
To make a brief contextual comment, Canada is one of the most decentralized federations in the world and fiscal arrangements between federal and provincial levels of government are the very glue that ties this nation together.
With that supposed guarantee of comparable levels of service in the areas of health care, education, income support and so on, equalization is the key to the entire system of federal-provincial fiscal relations. What is very frustrating and infuriating is that the government, in coming in today with this legislative measure, expects there to be a great display of gratitude and instant support without there being any question about what is going on here.
The fact of the matter is it is built into the equalization agreement that every five years there will be a full revisiting, review and revisions made to that formula to better serve Canadians. We see here that at the eleventh hour because the government has not gotten that job done, it is asking us to rush something through that would guarantee that the equalization payments would be possible to flow after April 1.
That is not good enough. It shows quite clearly that the government has not taken seriously some of the changes around which there is actually a very high degree of consensus by the provincial governments. In response to that, the federal government should have been moving to introduce the kind of changes that are needed.
It is not just a matter of Canadians feeling aggrieved by the fact that this has not been a priority for the government. It is also something that arouses great fear in Canadians. It is not without foundation. Before very long the prime minister in waiting, the member who largely hides behind the curtains when it comes to a lot of the important decisions being made on the floor of the House of Commons these days is actually going to be the prime minister. He is not going to be just in the role of finance minister where he inflicted great harm on many of these fundamental programs on which Canadians depend, but he is actually going to be the prime minister.
That member will be in a position to fundamentally reorient some of these programs. It is absolutely important that we move to make the kinds of changes that are needed before we find that the member for LaSalle--Émard is in fact prepared to take a meat axe to our equalization payments in the same way that he did to our health and social transfers.
The parliamentary secretary said that the government is making some changes to the CHST. It is true that the government has finally capitulated to the pressure of provincial governments that have said that the federal government cannot keep doing this to them. Great inequities and great injustices were inflicted upon people's lives as a result of the major damage done to these programs over the period when the member for LaSalle--Émard was the finance minister.
I do not think the government should be surprised that there is concern about delaying further on dealing with the new regime of federal-provincial fiscal relations. There is a basis for the apprehension about what we might end up with under the provisional prime minister when he actually is at the helm.
The reality is that for the past two decades as social services expanded, federal transfers kept pace with social spending. That goes back to the early years of these programs. By the 1980s, under the previous Liberal government, the federal government began a series of cuts. It drastically reduced the federal share from 24% of provincial revenue in 1980 to just 15% before we even got to the year 2000. This has put increasing pressures on the poorest provinces which find themselves facing increasing financial constraints.
I recognize that the fiscal capacity of the provinces across the country is not the same by any means. It is the federal government that has been congratulating itself and celebrating the very large surpluses in recent years. Most of the provinces have not had large surpluses with which they could make up the deficiencies from those major cuts at the federal level.
I want to say clearly on the record that I do not have a lot of sympathy for some of the provinces. Some provinces have taken themselves out of the surplus situation in which they would have been by giving massive tax cuts to those who least needed them instead of putting those resources into shoring up and strengthening health care services, child care, home care, accessibility to education and so on.
The reality is that the majority of provinces, and I will speak for my own province and the other Atlantic provinces when I say this, have been absolutely unable to make up for the massive reductions that have come at the hands of the federal government both because of the cuts in social transfers and the arbitrary ceiling that was maintained by the federal government through all of these years. It could have lifted that ceiling instead of shifting the burden onto the provinces that did not have surpluses and did not have any room to generate the extra dollars needed to make up the shortfall.
It is disappointing in the extreme that the government has not dealt with this crisis. Now it is saying it may or may not get to dealing with the revisions in the formula and so it is asking for carte blanche from this Parliament here and now for an extension of the status quo.
If the status quo were adequate, if it were sufficient and equitable and if it worked for people, I do not suppose there would be any resistance on the part of members to carry on with the status quo. The reality is that the status quo is not serving a great many Canadians in the way that is needed. It is not acceptable from our point of view to ask us to simply give the green light to carry on with the inequities and the injustices that are embedded in the current system.
All of the provinces, recipients of equalization payments and non-recipients alike, have consistently supported the call for adequate federal equalization. I have heard the occasional grumbling from Alberta. I was glad to hear some of the members from Alberta, even in the Alliance, say that they actually support a fair system of equalization payments. This is all the more reason the government should get on with delivering on the improvements and the modifications in the current equalization formula and not ask for carte blanche to carry on with the inequities that are there now.
The government tends to talk out of both sides of its mouth. One minute it is crowing and congratulating itself about a very sizeable surplus. We all know the game now. Canadians know the game that when the government brings in its budgets, it lowballs deliberately, quite systematically and somewhat cynically, the size of the surplus. Then when the real size of the surplus becomes apparent, the government again engages in a round of self-congratulation, saying that it has managed so well, not ever acknowledging that this is taken out of the hides of a great many vulnerable Canadians.
The government says that it has managed so well, which was by restricting many programs that are fundamentally important to people, that it now has a bigger surplus, which is a measure of how well it has done. It now looks like we are headed toward a surplus of somewhere between $6 billion and $10 billion. Although at this point we cannot estimate the surplus, it is mind-boggling. Nevertheless, the government is unprepared to make the kind of changes in the equalization formula that would result in some of that surplus being redistributed in the form of equalization payments that are desperately needed.
I am not an authority on the actual figures that we are talking about here. I want to quote briefly from a report that came out of a finance ministers meeting that took place here in Ottawa a week ago today, I believe. What was pointed out was that the kind of changes in the present equalization formula that are being sought by the provinces would result in a $3 billion change in the way the federal government redistributes money to the provinces.
The reality is that Ottawa has a sizable surplus. It has already been confirmed that it is $2.1 billion for the first four months of the year. What we know is that many provinces are facing, not just the normal strains of insufficient resources but in some cases the major punishing strains from totally unpredictable events. I speak of the situation we faced in Nova Scotia but I certainly recognize that this is also true in other provinces, whether we look at the impact of SARS, mad cow disease or the horrendous floods and fires in other provinces.
I want to speak about my province of Nova Scotia and the riding of Halifax that I represent . The current equalization formula does not serve us fairly and adequately. We find ourselves in the situation of huge costs that have been inflicted by hurricane Juan. Almost simultaneous with that, we find out that because of the way the equalization formula applies, and it would seem the inability of government to do the kind of calculations that would allow for a timely adjustment, we also face a huge clawback of equalization money paid in earlier years.
It has to be recognized that the formula that is needed and what has been largely agreed to, as I understand it, among the provinces and in negotiation with the federal government would mean a 20% raise for Nova Scotia in its equalization payments next year. That translates into about $240 million.
I can tell the House that it would be an act of irresponsibility on my part to stand in the House, knowing how inadequate the current formula is and how pressing the financial needs are in Nova Scotia, to simply vote for the status quo when the changes would deliver some desperately needed resources to my province so it could live up to what is supposed to be the purpose of equalization payments and the promise of social and health transfers; that is, for people to be assured of having access to the basic services that they require at roughly comparable taxation rates. The current formula does not do it. That is why we cannot possibly give carte blanche to carry on with it.
The government should move quickly to remedy the inequities and injustices in that formula. If that means keeping this session of Parliament open, we are ready to do that because I for one would not know how to explain that this Parliament is in such a state of paralysis that it will shut down instead of dealing with these kinds of crises that are affecting people in their daily lives.