Mr. Speaker, thank you for the opportunity to enter into this debate.
I would like to start by thanking my colleagues on the finance committee for their cooperation on the bill. As hon. members know, the bill is of great significance to the provinces and to those of us in the House who want to see that the legislative timelines are met. I want to particularly acknowledge the help of the committee chair, the member for Etobicoke North, and all members on the committee from both sides of the House who dealt with this in an expeditious fashion.
The measures in the bill pertain to two of the four federal transfer programs, equalization and the Canada health and social transfer, the CHST as it is commonly known.
Through these programs, the territorial formula financing and the new health reform transfer, the federal government, in partnership with the provinces and territories, plays a key role in supporting the Canadian health system and other social programs.
As the largest federal transfer, the CHST provides the provinces and territories with cash payments and tax transfers in support of health care, post-secondary education, social assistance and social services, including early childhood development and early learning and child care.
Equalization, as hon. members know, is the federal government's most important program for reducing fiscal disparities among provinces. It ensures that the less prosperous provinces have the capacity to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.
This is not about the level of equalization. This is about the payment of equalization and extending legislative authority to carry on with payments of equalization.
Bill C-18 supports these two important programs and makes it possible to reach two goals.
First, it provides the Minister of Finance with the authority to continue to make equalization payments according to the current formula for up to a year in the event that the renewal legislation is not in place by April 1, 2004.
Second, it provides the federal government with the authority to pay an additional $2 billion from the consolidated revenue fund to the provinces and territories for health.
Bill C-18 lays out the steps the government is taking to ensure that the provinces and territories receive the payments to which they are entitled, payments supporting the public services provided to Canadians.
The bill before us today enables the continuation of equalization payments while renewal legislation is finalized.
The current version of the legislation authorizing the federal government to make equalization payments to the provinces will expire on March 31, 2004.
While discussions on the five year renewal are underway with the provinces, Bill C-18 represents a preventive measure to authorize the federal government to continue making payments for up to a year, if necessary.
This will assure equalization receiving provinces that they will continue to receive payments if renewal legislation is not in place by the end of March. This is the critical point of the bill. If this legislation does not pass, then those payments cannot be made.
Without Bill C-18, the Government of Canada does not have the authority to make equalization payments, which would result in serious negative impacts for receiving provinces as payments would cease.
Let me briefly review how the program works.
To begin, payments are unconditional, meaning that provinces can spend their funds as they see fit on public services for their residents. Next, payments are calculated according to a formula which responds to the changing economic fortunes and circumstances of all of the provinces.
The formula measures the performances of provincial economies to the average fiscal capacities of the five middle income provinces, which forms a threshold or standard. As the relative fiscal performance of provinces go up and down, equalization entitlements go up and down. These increases or decreases in entitlements are the result of the formula working as it should, not the result of decisions by the Government of Canada to increase or decrease entitlements.
Provinces with revenue raising ability--or fiscal capacity as it is known in the jargon--below the threshold or standard amount receive equalization payments to bring their revenues up to the standard. At present, eight provinces are below the standard and qualify for federal support under the program. Only Ontario and Alberta are not recipients.
The third element of the program involves a floor, which provides provincial governments with protections against unexpected, large and sudden decreases in equalization payments that would otherwise be warranted by the straightforward application of the formula. The floor limits the amount by which the provinces' entitlements can decline from one year to the next.
Two built-in mechanisms ensure that the program remains current. The first is an ongoing review of the program by federal and provincial officials, which makes sure that the differences in fiscal capacity are measured as accurately as possible.
The second mechanism, and the one central to today's debate, is that renewal legislation must be introduced every five years following federal-provincial consultations. The last renewal was in 1999. The current legislation is set to expire on March 31 of this year, as I indicated earlier. The renewal legislation will guarantee that the program remains up to date and that the best possible calculations and data are used to determine equalization payments.
The renewal legislation will also guarantee that the integrity and fundamental objectives of the program are preserved. The government must be able to assure provinces that they will continue to receive equalization payments even if the renewal legislation is not passed by the end of the fiscal year.
Bill C-18 addresses this problem by enabling the continuation of payments for up to a year while the renewal legislation is being finalized. Passage of the bill would ensure that the public services which provinces fund through the equalization program will continue to be protected for the benefit of their citizens. When passed, the renewal legislation will both supersede the extension and be retroactive to April 1, 2004.
In considering Bill C-18, I urge hon. colleagues to keep in mind that the impact on equalization receiving provinces and their residents could be very significant if the bill is not passed. It is therefore imperative that this legislation be passed quickly.
Now, if I may, I will turn to the health part of the bill. As my hon. colleagues know, federal support for the Canadian health system is provided primarily through the CHST and the new health reform transfer.
Bill C-18 would amend the existing CHST to authorize payment of $2 billion as a supplement to the CHST. This fulfills the commitment made by the Prime Minister following the January 2004 first ministers meeting. It is also in keeping with commitments made in the 2003 first ministers accord on health renewal, the 2003 budget and the 2003 economic update.
I would like to point out that this funding is in addition to the increased federal investment of $34.8 billion over five years for health that was confirmed in the 2003 budget. As a result, this funding will bring the federal government's total commitment in support of the 2003 health accord to $37 billion over five years.
I would like to point out that this funding can be provided without the government going into deficit. I want to point out, as I accompanied the minister across the country, that one of the things we heard repeatedly is that the government should not go into deficit under any circumstances.
Passage of the bill will provide the provinces and territories with the flexibility to begin drawing down these funds as they require, which would help them better plan for the future and provide health care services to their residents.
I encourage my hon. colleagues to pass Bill C-18 without delay. The measures in the bill affect the provinces and territories and thus their residents who depend upon them for public services. Not only is additional funding for health part of the federal government's ongoing commitment to health care, it is being provided within a framework of balanced budgets which will ensure its sustainability over the long run.
As hon. members know, the Prime Minister intends to meet with his counterparts in the summer to discuss long term sustainability of our publicly funded health care system. In the meantime, the bill would ensure that our health care system continues to be a proud example of our national values at work, as recently described by the Prime Minister.
Further, the equalization provisions in the bill underscore the priority that the government places on this federal transfer and ensure uninterrupted funding to the provinces until the renewed legislation can be finalized.
Through our federal system of transfer payments, all Canadians are guaranteed equal access to health care, a safety net to support those most in need, freedom to move throughout the country to seek work, higher education and training available to all who qualify, and reasonably comparable services in whichever province they choose to live.
The measures in Bill C-18 are designed to ensure that those goals continue to be met.