Mr. Speaker, it is a pleasure and an honour to speak this evening to Bill C-24. Canadians understand that equalization has been one of the pillars of our federation for more than four decades now. To begin with, the equalization and the territorial formula financing programs ensure that all Canadians, no matter where they live, have access to reasonably comparable public services. This commitment helps to ensure that all Canadians are treated equally from coast to coast to coast.
However, the provinces and territories have been complaining for several years now about how the federal government funds the equalization and territorial formula financing programs. They have spoken about the planning difficulties they face as a result of the year to year swings in the amount of payments they receive under these programs.
These are legitimate concerns and our government has done everything we can to address them. However, the very good news is that on October 26, Canada's premiers and territorial leaders agreed to the government's framework for equalization. This new framework represents the most fundamental and sweeping changes in the program's history. The goal of this new framework is nothing less than to make payments to the provinces and territories more stable and predictable, while significantly increasing the overall level of funding.
The new framework includes five elements: first, an overall floor of $10 billion for equalization and $1.9 billion for territorial financing for the current fiscal year; second, complete protection for provinces and territories against overall individual declines in payments in 2004-05; third, an increase in the funding base for 2004-05 rising to $10.9 billion for equalization and $2 billion for territorial financing; fourth, a guarantee that equalization and territorial formula financing payments starting in 2006-07 will grow by 3.5% per year until 2009-10; and finally, the creation of an independent panel to provide advice on allocating these moneys among provinces and territories.
Let us take a look at what these changes will mean. Over the next decade, this new framework will provide $33 billion more in equalization and territorial financing payments to the provinces and territories. That is an astonishing sum of money. For the sake of comparison, it means that equalization payments will increase from $8.9 billion in 2004-05, what they would have been without the new framework based on the earlier estimates, to $12.5 billion by 2009-10. That represents an increase of 42% overall, or more than 7% per annum on average.
The idea that Canadians should have access to the same high quality of health and social services regardless of where they live is so fundamental to the fairness and integrity of the Canadian federation that it is protected by the Constitution in the form of equalization.
In short, the equalization program transfers money to the less prosperous provinces and territories in accordance with a formula based on the revenue raising capacity of each province. This means that as a province becomes more prosperous, its equalization entitlement declines.
In fact, equalization payments are designed to make up the difference so that Canadians in any part of the country have access to the quality social and health services they expect and demand.
As well, they prevent the less well-off provinces from having to resort to tax rates that would be bad for the economy in order to be able to afford to deliver such services.
In order to cast some light on the importance we assign to the equalization program, I would remind hon. members that the Prime Minister has announced an improved equalization framework. This new framework represents probably the most important change in the program in its history.
The intent of the changes is to bring stability, predictability and growth to the overall level of funding for these programs, in accordance with third party advice on the best way for the Government of Canada to allocate payments among the provinces and territories.
The changes to the programs would encompass three important elements: complete protection for provinces and territories against overall and individual declines in payments in 2004-05; a new framework for equalization and territorial financing starting in the fiscal years 2005-06; and an independent review of the programs by a panel of experts.
The new framework will, therefore, make payments to provinces and territories more stable and predictable, and ensure the sustained growth of financial assistance.
With respect to the financial impact, over the next 10 years the new framework for these programs will be $33 billion more in equalization and TFF payments to provinces and territories than the amounts estimated at the time of budget 2004, a significant increase.
The equalization program is a faithful reflection of the sense of sharing that characterizes the Canadian nation.
I would also be remiss if I did not point out to the House that our government is committing an additional $41.3 billion for health care as part of its 10 year action strategy on health, agreed to by the Prime Minister and the provincial and territorial leaders last month. This brings me to my closing point.
This new $33 billion framework for equalization and territorial formula financing, when combined with the $41.3 billion in new health care funding, will result in a cumulative and whopping increase of $74 billion in new money transferred from the federal government to the provinces and territories over the next 10 years. By any stretch of the imagination, this is a huge sum of money and it illustrate's our government's commitment to ensuring that Canadians are treated fairly and have access to reasonably comparable levels of service, no matter where they live in the country.
The significant influx of new money to support health care and other national priorities is the direct result of two specific initiatives. Let us give credit where credit is due. First, the hard work and sacrifice hundreds of thousands of Canadians who helped boost our economic performance to a level that is the envy of our G-7 counterparts and a host of other industrialized nations around the world. Second, it is also a product of our government's commitment to disciplined spending practices, balanced budgets and debt reduction.
Since 1997, we have posted seven consecutive balanced budgets and reduced our federal debt by more than $61 billion. This has freed up an additional $3 billion annually and lower interest charges to help fund the priorities of Canadians.
Our government recognizes the need to ensure that all provinces and territories can offer the best possible services to their citizens. The equalization and territorial formula financing programs are clear evidence of our commitment in this area.