Mr. Speaker, I am pleased to speak to Bill C-24 today. I am going to talk first about the equalization environment but most of my time will be spent on how this will affect the territories and particularly my riding of Yukon. I know that my colleague from Mississauga South will elaborate in great detail on the formula as it relates to the provinces.
On October 26, as everyone knows, the Prime Minister met with the provincial premiers and territorial leaders to discuss the changes in the equalization formula and the territorial formula financing programs that were put forward by the federal government in the September meeting. My colleagues in the Bloc were complaining that the parliamentary secretary said it was almost historic. It was not almost historic; it was historic. This is the most significant improvement in equalization and territorial financing programs in their history.
By providing predictability, stability and increased funding, the new framework will play an essential role in ensuring that Canadians no matter where they live have access to comparable public services.
The new framework for equalization and territorial formula financing will increase the support provided to provinces and territories by $33 billion over 10 years. Regardless of the details of the changes in the mechanism, I think the bottom line will be a huge increase in funding of $33 billion.
Officials in the various provinces and territories will be happy to have an increase in the funding available to them to provide their services. This will assist Canada's less prosperous provinces and the three territories in meeting their commitments under the 10 year plan to strengthen health care as well as funding for other important social and economic development.
As members know, an historic health care agreement was signed recently and the federal government has put in a substantial amount of money. But of course the provincial and territorial governments have to come up with a major share of the funding and this increase in equalization will also help them with their health care over and above the extra funds we have provided in this area.
The spirit of cooperation in which this agreement was developed so new in this mandate is of course very important because it reflects on a lot of other agreements and on a lot of other work that we have to do with the provinces and territories.
We are working on the new child care deal and the deal with cities and communities. We have work to do on the environment and a number of projects with the provinces and territories, so the fact that they have been able to work closely together with the federal government is an excellent start to this mandate.
These increases are not going to stop this year but will carry on. In 2005-06, the funding levels will be set at $10.9 billion for equalization and $2 billion for the territorial formula financing, the highest levels ever reached by these programs. It will go on from there and still increase, because both amounts are going to increase by 3.5% a year starting in 2006-07. Equalization payments will therefore increase from $8.9 billion to $12.5 billion over the first five years of the new framework, a 42% increase.
Just to ensure that when the new formula comes into effect no one goes backwards this time related to the old formula, there was also a floor put on it so that no province or territory will receive less than was originally predicted in the 2004 budget under the old system.
I want to talk more specifically about the territorial financing formula, because it is a different scenario than equalization financing. At the time of the meetings, the equalization process and the territorial financing formula were quite different. They have somewhat different objectives, and I will get to that later on.
At the meeting held from September 13 to September 16, changes were made to the territorial financing formula that are the most significant in history. The changes were made to try to make these payments more stable and more predictable for the territorial governments. The old formula had a lot of determinants and was very complex. Several years behind the statistics arriving, it could result a reduction in funding that made it difficult for the territories to cover certain fixed costs.
To address concerns about the levels of financing and increasing financing, beginning immediately the government will provide protection against those declines, thereby providing stability. The overall level of 2004-05 for the three territories will be protected with $1.9 billion. There of course will be a guarantee that no territory will receive less than was estimated at the time of budget 2004.
The new framework will establish fixed payment levels, and provide predictable and growing funding for the territories. As the provinces will go up, the territories will go up and their funds will go up to $2 billion. It will also grow at a rate of 3.5% a year. Over the next 10 years and subject to review after the first five years, these changes will provide an estimated $4 billion in territorial formula financing, compared to the annual amounts in 2004-05. There are all sorts of challenges to governing in the territories and I know this $4 billion in extra funds will be well received.
All this of course is on top of the extra funds of $41 million in the health care agreement that was signed and invested in the provinces and territories over the next 10 years. This is an excellent sign for future fiscal cooperation. Within a few weeks, the new House has a historic deal on health care and then a historic deal on equalization,
I want to speak about how the agreement and the funding will affect my riding in the Yukon Territory. Once again, it would like more funds and it would like stability in its funding to help cover fixed costs.
The current data indicates that the Yukon Territory will receive about $448 million in this fiscal year of 2004-05 representing $14,907 per person. Even though the territorial financing in Yukon has increased each over recent years, and it has been growing steadily, there were still concerns about the adequacy of funding. I am sure in that respect Yukon will be happy for this additional funding.
The economic environments in the territories are a boom and bust cycle. As I said earlier, if certain parts of the formula were to go down there could be a sharp decrease in the funding available and governments have fixed costs.
Therefore, the territorial financing is slightly different in purpose from equalization. My territory wants to ensure people understand that equalization is to ensure that as the various provinces exceed in prosperity, whereas others are having a rough time at a particular time, then there is equalization of funding so that they can provide similar equivalent services. At any particular time one province could be having a rough time in obtaining equalization payments and at another time it may have a boom and prosper, and can help out those provinces that are less able.
The territories have a fixed challenge that will be there all the time, in that they have a very northern harsh climate and it is very costly to deliver government service. Relative to the rest of Canada there are few constituents in a very large area that increases the costs of delivering government services. There are of course very few taxpayers to fund those services.
Therefore, just the challenge of operating a government in such a harsh situation requires added funding. That is the purpose of territorial financing. It is to ensure that there is increased funding to cover these added costs.
There are always fixed costs. To have a government in place, there are fixed costs regardless of the situation in population, the economy and taxes available. We can only go down below a certain level. The floor permits those funds from going down.
A member suggested earlier in the debate that the government may not recognize the added funding requirement to do business in the north. That is not true. There has been a tremendous recognition by the government. I know that northern members have been very excited and happy about some of the special arrangements that have been made for the recognition of these added costs in the north.
I will refer to a couple of examples of the recognition of the added costs of doing business in the north, which is why we have extra money in the territorial financing formula to help cover those costs.
The first example is with health care. As we know, there was a historic agreement between the federal government and the provinces for health care in 2003. Every province and territory received funds, but in recognition of the added costs of health care in the north, the territories were provided an extra $20 million in that agreement.
Coming along to the new agreement on September 13 to 15, as everyone knows, there will be $41.3 billion provided to the provinces and territories over the next 10 years. Of that, my riding in the Yukon Territory received another increase in funding for health care. Our proportion was at, first of all, $3 million for the health transfer, $34 million for the Canadian health transfer base and $.5 million for medical equipment. That is more than $37 million in additional funds. I am reading out of the November 23, 2004 Hansard . That is another $37 million in recognition of the added costs of providing services like health care in the north.
In places like Vancouver or Toronto when a serious incident occurs, someone could get into an ambulance for very little cost and in very few miles that person would be in a hospital. Whereas, such a situation in Nunavut, the Northwest Territories or Yukon could take $5,000, $10,000, $20,000, or $25,000 simply in Medivac fees for small planes, and in special spots large planes, to get these people to a hospital where major surgery could occur. Of course, with only 100,000 or so people in the north, there is not a large enough volume of people to maintain specialists in every discipline there. That would not make any sense either, so people have to go outside for those specialists and that is another tremendous cost in the north.
We are absolutely delighted that the government has recognized those special costs in the north with the $20 million in 2003 and the extra $37 million in this year's agreement. In this year's agreement there will also be other moneys that will be very helpful in the northern parts of Canada. There was money for aboriginal people related to health care. About 23% or so of my riding is made up of aboriginal people. We are very happy with the attention being paid to aboriginal people.
The first part of that money is $200 million for the health care transition fund. As we know, there are a number of programs delivered by various bodies to aboriginal people and this will help ensure a seamless service there.
There is also, as I mentioned in the debate this morning, $100 million for the aboriginal health human resources initiative. I applaud the government and the Canadian Medical Association for trying to ensure that there are more aboriginal people and professionals working in the health care system.
There is also $400 million over the next five years for health promotion and disease prevention for aboriginal people. In my personal opinion, this was one of the exciting components of the 2003 agreement because the money invested in prevention and promotion is certainly saved many times over when dealing with the health care system.
All the money has been given especially to the north to deal with its special problems, challenges and extra costs in health care. Over and above all of that, the Minister of Finance made a special deal due to these extra costs and provided in the deal in September for an extra $150 million over five years, $65 million for the territorial health access fund, $10 million for the federal-territorial working group, and $75 million for medical transportation.
This kind of money can be used for services like Telehealth, which is an essential way of reducing the Medivac costs. If it can be done with modern technology, where I think we are leading in some ways, medicine over the computer with screens and X-rays can sometimes prevent a trip south and save the costs I was speaking about earlier of $10,000, $20,000, or $30,000, but more important, it can save lives. It was very heartwarming for me to hear about a person whose life had been saved by some of that recently funded equipment.
The other example for my colleague opposite who suggested that the difference was not recognized in the north relates to the infrastructure programs. As we know, when these programs first came out, they were totally done on a per capita basis. For the reasons I stated earlier, this would not make any sense in the northern territories. We could not possibly make enough progress. We have vast areas to cover. If we are building a road, or a sewer along that road, there may be only two or three taxpayers, whereas in an urban area, there would be many taxpayers. That particular sewer could buckle due to permafrost and heaving. We would have all sorts of extra heating costs. In fact, sometimes we would even have extra freezing costs because we do not want the infrastructure to thaw and, therefore, buckle. It is much more complicated, much more expensive, and there are less resources available.
When the strategic infrastructure program came in, the government very kindly agreed to the point made by the members from the three territories. Instead of providing roughly $600,000, which might fix the length of one road and one sewer in a community, and I could tell members that we have needs, the government said, “We will give you a base amount”. A few years ago I saw one of those sewers that was being replaced by the infrastructure program and it was still made out of wood staves. We got $20 million per territory so that we could realistically deal with those challenges in the north.
Subsequently, the strategic infrastructure program was very successful across the country. With major projects being done that could not be funded by all the projects that were done under the smaller community and rural infrastructure funds, that were also very popular, this program was increased again. Once again, instead of getting a few hundred thousand dollars, the territories got $20 million. I know in my riding, for instance, we are finalizing the rebuilding of the Alaska Highway with that money, which is important to our economy, resource extraction and tourism.
When the municipal rural infrastructure fund comes in, all of rural Canada has to thank the government because most of that fund goes to rural Canada, and it is a big chunk for the north. We would have received $600,000 if it had been done on a per capita basis but, instead, our riding will be receiving $15 million. The eight municipalities and the first nations in my riding have a lot of projects waiting for that fund.
Over the next 10 years there would be $4 billion of extra funding for the territorial funding formula. I thank the government and congratulate it on its success in this new regime.