Mr. Speaker, it is my pleasure to celebrate Bill C-67. It is indeed a bill for which I have been waiting for a long time because it finally marks a point at which Canada has fully achieved the recovery that was necessary from the circumstances that it inherited back in 1993.
I had a written a speech to give on Bill C-67 to talk about the details of the bill, but the members very well understand the bill and they really want to talk about other aspects of the financial administration of the country.
It is fair to say that members who have spoken and the three finance critics who addressed the House after the minister this morning, all addressed Bill C-67 with the assumption that there will no longer be a federal budget in Canada, that Bill C-67 will replace the federal budgeting process.
They went on to argue that to take the surplus at the end of the year and allocate the excess of $3 billion to one-third to debt, one-third to tax relief and one-third to spending priorities is just a mathematical game, and that it is no way to govern a country.
First, the premise of that assertion is wrong. There is still a budgeting process. There are budget consultations with Canadians still going on. They are going on right now. We will have a budget before the commencement of the next fiscal year. To remind Canadians and all hon. members, the fiscal year of the government ends on March 31. The current year will end on March 31, 2006. There will be a budget which will be for the year starting April 1, 2006. The priorities within that budget and the assumptions that will be made for Canadians are being made now as we speak, as the consultations go on with Canadians and with experts.
We are now talking about Bill C-67, which is not establishing the priorities for spending and how we will deal with any surplus. We are dealing with a bill that finally brings to the House a process. It is proposing a process that we will use to deal with surpluses that exist after budget priorities have been taken care of and that is really important.
Let me reflect on the comments of the Conservative finance critic who said that productivity is where we should be, that we have to have improved productivity, that we have to have corporate tax cuts for the manufacturing sector and create those jobs, and that we have to have income tax cuts for middle income earners. I do not disagree, but not exclusively.
Let us reflect on what the Bloc finance critic had to say to the House. He dismissed the bill as being arithmetic. Then he said that we really should be worrying about the fiscal imbalance, that there is a fiscal imbalance in Quebec, that the federal government has more money and Quebec should get some of it, and that if we were to just transfer the money, that would solve all the problems because there is a fiscal imbalance.
Quebec has the same taxing authority that the federal government does. That province has responsibility for spending exclusively in certain areas and there are areas in which there are shared responsibilities such as health care, post-secondary education, and social assistance. There is federal participation.
However, Quebeckers are also entitled to tax cuts. They are also entitled to live in a secure financial situation. Debt servicing, debt repayment and the savings of interest are important also to Canadians who live in Quebec. This is just one part of it.
Let me reflect on the NDP finance critic. She came to the House and totally dismissed Bill C-67 in her first sentence. She then went on to say that we should be dealing with child poverty, affordable housing, foreign aid and a whole bunch of issues, many of which are included in Bill C-48 which was adopted by the House. It does authorize spending in those areas to the extent that it is fiscally sustainable and the House has approved that.
Having listened to the speeches by the finance critics, it is clear that their assumption is that Bill C-67 somehow replaces the budget, but it does not. They want Canadians and other members in the House to believe the budget and priority process we go through in planning a budget will somehow be replaced by a mathematical formula of one-third, one-third, one-third. That is not the case. This is a celebration.
Let us reflect on where we have been. Prior to 1997, Canada experienced deficits for 27 years. That was 27 years of spending more money than it brought in. Nobody could operate a household like that. How did governments do that? How did this happen? The national debt increased to $500 billion, a mortgage on our future. At the time, we had a debt to GDP ratio of 70%. Interest rates were up, social programs were in jeopardy and our economic sovereignty was questioned. We were described as a Third World economy.
Our debt was 68.4% of GDP. It is now down to 38.7%. Within the decade, it will be down to 25%. We have the best performance in the G-7. The foreign content of our debt has gone from 43% to 17%. That is very significant. Canadians said that too many foreigners were holding the debt. Now it is down to 17%. Debt interest was costing us 38¢ of every dollar collected from Canadians. Today it is down to 19¢, a very significant improvement. Canada is now back to a triple-A rating. Everyone should celebrate because we are now the envy of the G-7. That is important for Canadians to know and to understand.
We still have a budget. We are going through this process, a budget will be forthcoming and it will be before the commencement of the next fiscal year, which starts on April 1, 2006.
If Bill C-67 is not what the opposition is suggesting, what would it do? Bill C-67 is not a spending bill. As a consequence, it is not a confidence bill. Bill C-67 describes a process. On March 31, 2004, we had a surplus of $9.1 billion. After the plans for the year were executed, the books were closed on March 31. Six months later, after the audit by the Auditor General in September, she announced that the surplus was $9.1 billion. For the year ended March 31, 2005, she announced a surplus of $1.9 billion.
Under the rules set by the Auditor General and the rules of Parliament, all of the $9.1 billion had to go to pay down debt. No year end adjustments can change that. There are minor accruals, but no additional spending. Once March 31 was over, an audit was done and a $9.1 billion surplus was reported six months later by the Auditor General.
We always have built in a $3 billion cushion to make absolutely sure that we never again go into deficit. Canadians have said that they do not want more deficits, and that $3 billion is the cushion. To the extent that there is a surplus in any fiscal period which is in excess of that $3 billion, we need a process on how we will get the authority of Parliament to dispose of some of that without having it all go to debt. Bill C-67 provides that instrument.
It basically says that an appropriation can be put through which reserves the excess surplus over the $3 billion. That excess surplus, which was unanticipated and could not have been spent before March 31, now can be allocated. The bill proposes the process, which is one-third will go to debt, one-third to tax relief and one-third will be for additional program spending and supports.
Everyone understands the importance of continuing to pay down the debt, which also saves interest. Since we balanced the budget in 1997, $65 billion of national debt has been paid down. It has saved Canada over $3 billion annually of interest expense, which is available for health care, for housing and for the social needs of Canadian.
With regard to the one-third that would be for tax relief, it is established initially as a one-time credit. We do not know what will happen next year. The bill also provides a process that where we continue to have room to provide these credits, this one-time credit can be a permanent tax relief credit to Canadians.
Finally, with regard to the program spending, members somehow are suggesting that the finance minister can choose what he wants to do. It is clear in the bill, if the members would read it, that no spending of the one-third for program spending can be made except pursuant to a bill passed by Parliament. It is not at the discretion of the minister. It is at the discretion of Parliament.
I think members now understand that there still is a budget process which establishes our key priorities. Bill C-67 would not take away anything from the importance of having a fair, transparent and open consultation process with Canadians and with parliamentarians to determine our priorities. It provides us with the last necessary piece so if there ever again is a surplus which is far in excess of the $3 billion of contingency, we have an opportunity to use it in a way other than repayment of debt.
I want to comment very briefly on the $9.1 billion surplus of the fiscal year ending March 31, 2004. In the fourth quarter of that year, corporate revenues were way beyond the fiscal forecasts of any of the forecasters, so far beyond that there was absolutely no way even to detect it. By the time it was reported, the year end was already over. It was substantively a revenue opportunity which just occurred. The economy was booming. The corporate sector was doing its job. We could not have anticipated it 18 months earlier when the budget was set. In fact, this is a perfect example of an unanticipated surplus, all of which, in the absence of Bill C-67, had to go to pay down the national debt. None was available to deal with the other priorities of Canadians. If we had known, there would have been programs.
It is important to look at where we were. It is important to see what happened when we had large surpluses. We have to understand that last year there was not a surplus in excess of $3 billion and Bill C-67 would not have kicked in. There would not have been any one-third, one-third, one-third, simply because the surplus of last year was only $1.9 billion.
I hope this helps members and Canadians to understand that Bill C-67 does not establish priorities for Canadians. It establishes a process by which, in certain circumstances, Parliament has an opportunity to agree upon and pass legislation to authorize further spending in areas as a consequence of unanticipated surpluses.
It is extremely important to summarize again the themes and the importance of why we should consider Bill C-67 to be a bill of celebration.
First, the legislation would allow the government to allocate future unanticipated federal surpluses equally among cutting personal taxes, spending on social and economic priorities and reducing federal debt, a balanced approach. It would apply any of the surplus over the $3 billion contingency reserve before closing the federal books, starting in the fiscal year.
One-third of the surplus would go toward tax relief to all taxpayers in a one-time credit, which is non-refundable credit. This means each and every Canadian would equally share in the distribution of the tax relief.
One-third of the surplus in excess of the $3 billion contingency would go toward spending priorities, again, approved by Parliament, not dictated by the Minister of Finance as the previous speaker indicated.
This process would provide for greater transparency, accountability, fairness and balance. The bill is all about that.
Canadians have consistently told us that they do not want to go back into deficit. We do not have legislation that says we cannot go into deficit. We are managing the finances of the country by providing contingencies, by providing prudence in our estimates and by consulting widely with the forecasting community to make absolutely sure that we have the fundamentals right or at least as right as we can get them 18 months in advance of the year end.
Sometimes we cannot anticipate economic blips. Some years they will be good and in other years they will be bad. We have seen that over the last eight years. However, we have continued to balance the books eight consecutive balanced budgets. We fully anticipate that the next two budgets will also be balanced.
I remind members that under the current accounting rules guiding Parliament and the books of the Government of Canada, any surplus that is determined to exist at the end of the year automatically goes against the debt. The purpose of Bill C-67 is to provide a process so we can take part of that surplus in excess of the $3 billion and use it for something other than debt repayment, where there are priorities.
Also in the past, when some of the surplus was larger than anticipated, it was important to go after some areas, and I think that the House would agree. If not, maybe members would tell me which of these they did not agree with, in terms of unbudgeted spending.
How about the enormous amount of money that was put out for the mad cow crisis? How about the terrible tragedy of the SARS outbreak? How about the provincial health accord? How about the child care initiative? How about the B.C. pine beetle? How about the national security requirements, as a result of the tragedy of 9/11?
Sometimes very significant events occur in our world. A government has to be able to respond quickly. That is why we have put prudency factors. Sometimes that $3 billion may be required to meet emergency priorities, in the best interest of all Canadians. If the members feel that any of that spending, whether it be on mad cow, on SARS, on the health accord or on the national security issues related to 9/11, was not appropriate, please tell me what would be because I could not imagine anything else.
Today's legislation would give the government the authority to allocate this unexpected surplus. On the tax side, it would continue to build on the $100 billion tax cut program of the year 2000, which is now fully implemented. The indexation of the income tax system, as well as the other changes to the non-refundable tax credits that have been provided, have added a further $13 billion of tax savings for Canadians.
On the spending side, it specifies how year end spending, starting with the current fiscal year, could go directly toward clearly defined priorities, as approved by Parliament, not by the minister. On the debt side, the legislation would provide for the repayment of the debt of the $3 billion contingency, as well as one-third of the surplus over that amount.
Finally, many countries today are in no position to study approaches toward unanticipated surpluses because they do not exist. Canada remains to be in good financial shape. Canada continues to consult with Canadians on important priorities. We are in the area of keeping our books in good shape, meeting the health and social needs of our people, meeting the priorities of our children and seniors, meeting the priorities of our provinces and making sure we have the security and stability that makes Canada the envy of the world.