Mr. Speaker, it is my honour to lead off this debate. Before discussing Bill C-30, I want to briefly review the focus of the budget which was just presented.
As hon. colleagues know, the 2004 budget takes an integrated approach to social and economic policy while emphasizing the bedrock commitment to financial integrity.
The approach includes building blocks to promote the new agenda for achievement as set out in the Speech from the Throne. It is an agenda based on the principle of government living within its mean by balancing its books, controlling spending, cutting debt and improving accountability through stronger financial controls.
May I say that as the minister and I went across the country, one of the points we heard over and over again was that the government must live within its means and it must balance its books, so I am pleased that we have in fact done that.
Equally important and central to Bill C-30 is an agenda that aims to give Canadians greater means to advance their well-being by taking important steps in key areas such as communities, learning, health care and innovation. In other words, it is an attempt to respond to those other legitimate concerns of Canadians while living within our means. If I may, I will turn to some of those measures shortly, but in any discussion of government spending we need to note the fiscally prudent spending as set out in budget 2004.
This will be the seventh budget in a row, the first time since Confederation, that the Government of Canada has run a surplus. We achieved that in spite of a whole series of economic shocks: SARS, BSE, the Ontario blackout, B.C. forest fires and hurricane Juan, all of which in their own ways hammered the Canadian economy and reduced growth in our domestic economy by some considerable billions of dollars.
This performance--and our continuing commitment to balanced budgets in the better years ahead--underscores why the budget plan maintains the yearly $3 billion contingency reserve and rebuilds prudence in 2004-05 and 2005-06.
May I say that every one of these fiscal shocks ripples its way through the economy. Not only do they ripple in the fiscal year 2003-04, but they go into 2004-05. It is estimated that we in effect lost something in the order of $25 billion worth of economic activity, and that is economic activity that has just disappeared, that will never be replaced.
The government sets its budget based upon a series of assumptions. It assumes that there will be a GDP growth rate of x or y . In the last budget, the previous finance minister anticipated, based upon private sector economists, that the growth rate would be something in the order of about 3.5% of GDP. With all of these shocks it turned out to be about 1.7% of GDP.
Members would be interested to know that every one point reduction in GDP reduces the government's revenues by something in the order of $2.5 billion, so when we drop from 3.5% to 1.7% in the course of a year, members can do the math themselves and realize how much money that cost the government in terms of revenues that it anticipated and budgeted for but does not have.
Other assumptions are in the area of inflation. Just a simple drop of one point in inflation between what the minister sets the expectation at in the budget and what it actually turns out to be over the course of the year will cost the government something in the order of $1.4 billion in revenue. A drop in interest of one point actually will save the government about $800 million in costs.
These are all assumptions that are built into the budget. It is a fairly fluid set of assumptions and that is why the government retains the best and the brightest of private sector economists to give us advice in terms of what we can expect in the future.
Regardless of this, over the last number of years since running surpluses, the government has been able to pay down the national debt by $52 billion. That in effect has delivered savings in the order of about $3 billion on an annual basis, allowing this money to be freed up for use in communities and health care and other priority items of the government.
The government intends to continue down this path and run further surpluses, which will effectively reduce the debt to GDP ratio to 25% over the course of the next 10 years. We think this is a sustainable path, not only by virtue of our fiscal discipline but also by virtue of the anticipated growth in the economy.
In 10 years, the baby boom generation will obviously be 10 years older and the boomers will be at the front wave of collecting their pensions. Canada is the only nation, to my knowledge, that has a fiscally sound and sustainable public pension system. That will be a considerable relief for our children and our grandchildren.
There is another area which I do not think has been discussed very much in the House. If we do maintain this path of debt to GDP ratio going down to 25% over 10 years, the government's financial shape in 10 years will be arguably one of the best, if not the best, in the world.
I do not think that as a matter of principle we are wedded to the concept that we always have to run surpluses, but if we maintain this fiscal discipline over the next 10 years and realize that the front end of the baby boomers will be 65 and therefore contributing less to the economy, the government then will be in shape to provide those calls upon it for health care and other issues that this bulge in the baby boom demographic will create for government finances.
Thus, we are in a strong fiscal and financial position. As I hope I have pointed out in my remarks, that is simply not an end in itself. It is forward planning.
The budget also introduces measures that we will be debating today, measures designed specifically to ensure that we can meet the needs of tomorrow. As I have suggested, tomorrow is not just next year or the planning horizons of the political expediencies of the day. The planning horizons for this budget are upwards of 10 or 15 years.
One of the issues that came up over the course of our deliberations had to do with assistance to communities. For the vast majority of Canadians, communities are the nexus or the meeting place of personal, family and public life. That is where lot of people, certainly politically, get very involved: at the municipal level. It was clear that Canadians want affordable housing, good roads, public transit, safe neighbourhoods and abundant green spaces. If my constituency is any example, those are the concerns of Canadians. I expect other members' constituency offices reflect the same thing. That is why municipalities are facing increasing pressure to maintain and renew their infrastructure and ensure that the necessary social programs are available to residents.
Yet most of us recognize that there are real limits to the extent to which the property tax base, the single most important source of revenue for municipalities, can finance these spending pressures. Certainly Mayor Miller of Toronto and Mayor Murray of Winnipeg have made it abundantly clear to us that their own source revenues have their limitations. The federal government is starting to respond in a meaningful way to that.
We want to ensure that Canadian municipalities have reliable and predictable long term funding. We want to make sure that they can provide more effective program support for pressing infrastructure and social priorities in their communities, in other words, local solutions for local problems.
Prior to the budget, on February 1 the Government of Canada through the Prime Minister and the Minister of Finance announced the GST rebate. One hundred per cent of the goods and services tax and the federal component of the harmonized sales tax will be rebated to the municipalities.
In the city of Toronto that means to the budget chief something in the order of $50 million to $52 million that he was not anticipating as being available to him. I know he will be grateful. I know that the mayor will apply that to the most urgent needs of the people of Toronto. That story has been repeated over and over again throughout the municipalities across the nation.
To ensure transparency, the Minister of National Revenue will have authority to disclose the amount of the incremental rebate paid to individual municipalities. Over the next 10 years these municipal governments will receive an estimated $7 billion in GST relief, or approximately $580 million in the first year alone.
That was not the only response by the federal government. Again using Toronto as an example, members will recollect that this week the Prime Minister went to the 50th anniversary of the TTC. He joined with Premier McGuinty and Mayor Miller in announcing a further $1 billion available to the TTC, which is easily the largest rapid transit system in our country.
The budget also recognizes the importance of communities, but it is also built on the foundation of creating opportunities for individuals. Hon. members know that the federal government, in partnership with the provinces and territories, plays a key role in supporting the Canadian health care system.
The CHST provides support for health, post-secondary education, social assistance, social services, et cetera. The CHST will be separated into two categories effectively today. One will be the Canada health transfer and the other will be the Canada social transfer.
The upcoming social transfer supports social assistance and social programs, including early childhood development, early learning and child care services. They are impacted by this bill. Ensuring that all children receive the best possible start in life is clearly a goal of the government.
Over the years the Government of Canada, in partnership with the provincial and territorial governments, has developed a strong agenda in support of Canada's children. Bill C-30 increases funding to the provinces and territories under the Canada social transfer by $150 million over the next two years, implementing the multilateral framework on early learning and child care.
The member for Don Valley West has worked very hard on this issue for many years. I am sure it is of considerable satisfaction to him and others in our caucus to see that work being recognized.
The framework was agreed to in March 2003 by federal, provincial and territorial ministers responsible for social services. The ministers committed to improve access to affordable, quality and provincially regulated early learning and child care programs.
For this year and next, there will be an increase of $75 million per year over the previously committed funds. That would provide resources for up to 48,000 new child care spaces, or up to 70,000 fully subsidized spaces for children from low income families.
Members have heard much comment by the minister, the Prime Minister, members on this side and indeed members on the other side about the $2 billion announcement for health care. The federal government will follow through with its commitment. I am sure that hon. members realize that this cannot be repeated often enough.