Mr. Speaker, I will be sharing my time with the hon. member for Ottawa South.
The October 26 first ministers meeting flowed from an earlier meeting. That was the historic meeting in September which saw the Government of Canada come together with all the provincial and territorial governments to achieve a $41 billion health accord.
In September of this year the premiers made the point that at least some provinces were not able to have a discussion about fixing and funding health care without also having some long term arrangement in place with regard to equalization, because for some provinces equalization is obviously a contributor to health care. The Government of Canada agreed at that time to have a further discussion not only about health care, but also about equalization.
The final arrangement with respect to health care involves $41 billion in incremental federal funding over the course of the next 10 years. To that $41 billion transfer to the provinces and territories, the government has added a further $33 billion over 10 years through the new equalization and territorial funding formula framework. That is a total of $74 billion altogether in new money over the next 10 years. This is a very strong commitment.
Obviously, an arrangement of this sort and a commitment of this size, is not simply drawn up on the back of an envelope. No, the Government of Canada arrived at its calculation by accepting the unanimous request put forward by the premiers at Niagara-on-the-Lake earlier this year. In their final communiqué the premiers asked that the equalization program be restored to the 2000-01 level; that is, they asked that equalization be restored to the highest level it has ever been at $10.9 billion. The Government of Canada agrees.
Following that meeting of the Council of the Federation in July, the premiers also said that they supported reforms to enhance the stability and predictability of the equalization program. Again the Government of Canada agrees.
There is also an escalation factor built in. It is 3.5% per year. To understand what that means, from today's figures which stand at $8.9 billion, what we have put on the table will move that number to $12.5 billion. That is a 42% increase. That is an annual average increase of over 7% per year, almost twice the rate of growth of the Canadian economy.
The objective is quite clear. We want to fill in some of the gap that currently exists between the more wealthy provinces and the less wealthy provinces, not by taking from one province and giving to another; no one is playing Robin Hood. This money comes 100% from the Government of Canada, not the so-called have provinces.
In total, to enable Canadians from coast to coast to coast to enjoy the same levels of social programs, the Government of Canada, the Prime Minister, has made the very firm commitment over the past month to transfer $74 billion in incremental funding to the provinces and territories to assist them in meeting their very important social and economic priorities.
I would like to point out that our recent commitments on health care and equalization are on top of a further $36 billion per year which the federal government currently invests directly and indirectly in the health of Canadians.
As mentioned a few weeks ago in the House, this means that the government has met and surpassed all of the federal financial obligations laid out by the hon. Roy Romanow in his landmark report on health care. We have a long term agreement duly signed by every premier from every province and territory. It provides the best terms ever on transparency. It is a triumph of successful Canadian federalism and allows all of us to focus all of our efforts at long last on the real substance: shorter waiting times; more health care professionals; better equipment; improved primary care; home care and catastrophic drug coverage; better services in the north and for aboriginals; more health innovation; and improved public health and wellness.
The fact that Canada has been a strong fiscal, economic and social performer over the past seven years is a direct result of our successful battle in the 1990s to beat the deficit. It is a battle that we fought and a battle that we won, thanks in no small part to the leadership of the Prime Minister, and to the very strong commitment, determination and hard work of all Canadians.
After nearly three decades of chronic red ink, no growth, high interest rates and lost jobs, we balanced Canada's books in 1997 and we have kept them balanced every year since. We are the only G-7 country to be operating solidly in the black. Our triple A credit ratings have been fully restored from where they were in the mid-1990s and later.
Since moving into surplus, the average standard of living of Canadians has increased at a faster pace. There has been more improvement in the past seven years than in the previous 17.
Our careful planning and prudent budgeting have given Canada the strength to deal with expensive and unpredictable crises, such as security threats and natural disasters. It also gives us the wherewithal to invest in primary Canadian priorities, such as health care, learning, families and innovation, while also paying down debt, cutting taxes and always balancing the books.
However, we can never take our fiscal and economic success for granted. It is crucial to the well-being of Canadians everywhere, but it is not automatic.
Of course there is still that federal debt of more than $500 billion which, incidentally, is nearly double the size of all provincial and territorial debt combined. Just keeping that debt current consumes about 20¢ out of every dollar of federal revenue. It adds up to about $35 billion a year, probably the biggest single expenditure facing the Government of Canada.
No one should doubt the serious responsibilities carried by provincial governments. Of course their jurisdictions, just like the federal jurisdiction, must always be respected. At the same time, in fairness, it also needs to be noted that both orders of government have access to all the same major tax bases. It also has to be noted that some provincial revenue sources, such as royalties and the proceeds from lotteries, are not available to the federal government.
It has to be noted that the provinces have complete autonomy in setting their fiscal policies. It has to be noted that the federal fiscal responsibility, balanced budgets and debt reduction save interest costs not just for the Government of Canada but for all Canadians, including provincial governments.
It has to be noted further that recent improvements in national economic performance will boost not only federal revenues but also provincial revenues.
Our commitment is to balanced budgets, fiscal discipline, steady and sensible debt reduction, and just as we have done in every budget since 1996, further reduction in federal taxes, especially for lower income Canadians, and to enhance the competitiveness of the Canadian economy.
The fact that Canada has been a strong fiscal, economic and social performer over the past seven years is a direct result of our successful battle to beat that deficit. It is a battle won and our fiscal house is in order.
Now that we have transferred that money, all that is left is to continue working with the provinces to transfer new money and certainty in their planning processes. That is the attitude of the Prime Minister and this government.