Mr. Speaker, given a topic as complex and contentious as federal transfer payments and interprovincial equity, it is only to be expected that there would be points of both agreement and disagreement in connection with the opposition motion that is before the House today.
For example, the motion calls for “expanded benefits” to flow from the Government of Canada to all the provinces. In fact, we are already doing that under the equalization program and under virtually every other federal transfer payment program. Federal transfers are now at an all time record high and they are rising year after year.
Let us look at some of the actual numbers. Equalization payments this coming year will total $10.9 billion, matching the highest level ever. The pool of federal equalization dollars available to help the less wealthy provinces will continue to go up at the annual rate of 3.5%. Over 10 years, the cumulative provincial gains will total more than $33 billion.
The Canada health transfer this coming year will total $19 billion in cash. Again, that is the highest level ever. It too will keep increasing by 6% per annum over 10 years. The cumulative provincial gains in cash for health care will total more than $41 billion. To that total we have to add also health related tax transfers from the federal government to the provinces, which today are worth about $11.5 billion per year. They too are rising.
Then there is the Canada social transfer. This coming year it will total $8.4 billion in cash, plus another $7 billion in tax transfers, and again it is on the rise.
In addition, there are several other existing federal transfers to help provinces with immigration, public infrastructure, ongoing social housing services, new affordable housing projects and much more.
Plus, we are currently adding two new federal transfers for child care and for municipalities, which will bring a further $5 billion each in new federal support for or through provinces and territories over the next five years.
Therefore, on the issue of bigger federal benefits obviously we are already moving in that very direction and the dollar values involved are very large.
In structuring all of this, the Government of Canada is constantly striving for fairness, but in a country as big and diverse and complicated as Canada, fairness is not a simple matter of one size fits all. The various provinces and territories unfortunately do not share the same geography, the same history, the same population bases, the same physical resources, both renewable and non-renewable, or the same level of economic development or future potential. A cookie cutter approach from province to province or from region to region has never worked in Canada and it likely never will.
With respect to the arrangements concluded earlier this year with Newfoundland and Labrador and with Nova Scotia under their pre-existing Atlantic accords, which are separate and apart from equalization, the straight extension of these arrangements to every other province, as appealing as that might sound, would not in fact increase benefits to all, nor would this apparently easy approach necessarily improve equity among provinces.
For example, the Atlantic arrangements are applicable only if a recipient province is already eligible to receive equalization payments. In other words, their internal provincial revenue-raising capacity must fall short of the national equalization standard, which last year was about $6,200 per capita. This means by definition that four provinces, British Columbia, Saskatchewan, Ontario and Alberta, would be missed by the opposition's specific proposal.
Second, for the Atlantic arrangements to continue for the longer term, a recipient province would have to carry a provincial debt burden that is among the four worst in the country. By definition that would leave out the other six.
To illustrate where things stand at the moment on debt loads, the debt to GDP ratio in Nova Scotia is close to 43%. In Newfoundland and Labrador it is a whopping 63%. These are the two most heavily indebted provinces in the nation.
The average for all the provinces is some 25% and that is about where a province like Saskatchewan stands, better actually than the debt ratio of the Government of Canada, which is about 38%.
In this search for fairness and equitable treatment, which we are all in the House concerned about, it is not as simple or as easy as just extending the Atlantic arrangements. On the issue of equalization clawbacks, as mentioned in today's motion, it must be noted that such a mechanism applies in the present formula to all so-called overpayments under the equalization system, not just to those that result from non-renewable natural resources. It would therefore be difficult for a majority of the provinces, as things stand now, to accept a clawback exemption or exception for only non-renewable sources of revenue.
Indeed, Premier Hamm of Nova Scotia, Premier Binns of Prince Edward Island, Premier Lord of New Brunswick, Premier Charest of Quebec, Premier McGuinty of Ontario and Premier Doer of Manitoba, to be precise, three Conservatives, two Liberals and a New Democrat, are all on the public record clearly opposing this approach that is embedded in the opposition's motion today.
I make this point not to be critical of the benefits, which the opposition wishes to see extended, but to underscore the complex challenge of accomplishing that objective in a way that is perceived by all to be fair to all. Change in this very difficult area must be accomplished in a careful and thoughtful way.
That is why, before we began to tackle the various issues related to the equalization program through back to back first ministers' meetings last fall, we gave the provinces some guarantees about what would happen during a two year transition period. The equalization receiving provinces had at that time just experienced a sudden drop in their benefits in one particular year. It caught everybody by surprise. They complained that the program was too complicated, too unpredictable and not adequate to meet their needs. They said that they could not conclude a reasonable deal on health care unless they knew where they stood on equalization.
To accommodate all of that, we put a floor under the program to overcome that previous shortfall, bringing the benefits of equalization to $10 billion this year, then up to $10.9 billion next year and then indexed annually thereafter, as I mentioned earlier. We also eliminated the clawback effect for this year and for next year. We are distributing the available dollars according to an interim formula, pre-negotiated and agreed in advance with all of the premiers. That is for 2004-05 and 2005-06.
For the future we have commissioned a team of acknowledged, independent and impartial experts to consult with all the provinces and with others and to report back by the end of 2005 on the best possible allocation of equalization entitlements, ways to make these payments more stable and more predictable, the most appropriate methods of measuring disparities among the provinces, and the proper way to treat various provincial revenue sources, such as natural resources, property taxes and user fees, all of which have been the subject of interprovincial disagreements from time to time.
That gives a flavour of the difficulty and the complexity of dealing with this issue. At any given moment in time the equalization program has 1,320 moving parts, spread over four fiscal years, so one can imagine the difficulty in trying to achieve genuine fairness and equity out of that very complex picture.
The five distinguished Canadians who will be serving on the expert panel on equalization are: Mr. Al O'Brien, a retired deputy provincial treasurer from Alberta with a 35 year career in the provincial public service; Elizabeth Parr Johnston, a private consultant who formerly headed up both Mount St. Vincent University in Nova Scotia and the University of New Brunswick; Dr. Robert Lacroix, the much respected rector of the Université de Montréal; Fred Gorbet, a public policy adviser with 24 years of experience in the federal public service; and Michael Percy, the dean of the School of Business at the University of Alberta. Their nominations to serve on this important panel have been very well received. I sincerely thank each and every one of them for taking on a difficult but crucial assignment to make the equalization system better.
While we await the panel's advice on how to make equalization as effective and timely as possible, there are many other fronts upon which we can make and are making progress. The success and well-being of Canadians is not solely a function of intergovernmental fiscal transfers. They are important, obviously, but there are many other important ways in which the Government of Canada contributes to the provincial and regional strength and prosperity of this country.
For example, in the 2005 federal budget the Government of Canada is investing more than $1 billion over five years in Canada's regional development agencies. We are putting another $1 billion toward maintaining the momentum of our innovation strategy ensuring that all Canadians, east, west, north and centre, are fully a part of the knowledge based, technology driven and highly skilled world of the 21st century.
In British Columbia, among other things, the innovation agenda includes world leading particle physics research through the TRIUMF project.
In Atlantic Canada, it is a host of new initiatives under the Atlantic innovation fund and the NRC's Atlantic technology clusters.
In Quebec, among other things, it includes major new work in the field of genomics research and through the Canadian Space Agency located in Montreal.
In Saskatchewan, it is the Canadian light source Syncrotron, the new InterVac Vaccine Centre and the Petroleum Technology Research Centre which houses probably the world's most useful science on mitigating the effects of climate change.
In Ontario, it is more federal funding to the automotive sector and through all of our science granting councils and more help to universities to defray their indirect costs of advanced research in Toronto, Guelph, Kitchener-Waterloo, at Western and the list goes on.
We are also investing in vital public infrastructure in cities and communities, both large and small, in every corner of Canada. This includes $3 billion in the direct infrastructure initiatives for municipal and rural projects, for strategic projects and for border projects that are already up and running; plus $300 million more in the budget for the green municipal funds administered by the Federation of Canadian Municipalities; plus $7 billion more over 10 years through the full GST rebate to all municipalities; plus $5 billion more ramping up over the coming five years through the sharing of the federal excise tax on gasoline, and then an ongoing $2 billion per year thereafter for cities and communities from the Government of Canada.
I mention all these examples to underscore the point that federal investments in fairness and in equity and federal support for regional growth and strength is not limited to transfer payments. It goes far beyond that, billions and billions of dollars beyond equalization and other transfers to the benefit of Canadians everywhere.
Since the mover of the motion today and I both come from Saskatchewan let me close my remarks today with a couple of points specifically about my own home province.
Since 1957, since equalization first began, Saskatchewan has had to rely on these payments to keep its head above water. However recently that is beginning to change partly because of the adjustments that we made to the equalization program last year which brought an extra $710 million into Saskatchewan from the Government of Canada, and that is the biggest equalization bonus to Saskatchewan ever in history.
However the truly good news is that Saskatchewan does appear to be graduating from its historic reliance on equalization for a big chunk of the provincial government's annual budget. Not including equalization, Saskatchewan is now collecting its biggest provincial tax revenues in history and has joined the ranks of the three or four most fiscally secure provinces. Commodity price forecasters are projecting strong ongoing markets for oil and gas supplies worldwide and that augers well for Saskatchewan's fiscal future.
If this province needs to fall back upon equalization once again, the program will be there to help, hopefully an improved program as a result of the work of the panel.
Rather than struggling with the perpetual uncertainty and the minimized ambitions that such reliance upon equalization implies, Saskatchewan, happily, is increasingly in the position to break free from its historic limitations and to move boldly ahead. As the reform of equalization continues to unfold, I want to ensure that Saskatchewan is in all respects treated fairly just as I want every province in this country to be treated fairly.
The expert panel, for instance, will be asked specifically for its advice about how to deal with natural resources in the equalization formula. The cases to be made by Saskatchewan about how to adjust the formula for the future will be afforded a full and fair hearing.
At the same time, as we all strive to make equalization as robust and as fair as possible for Saskatchewan and for every other province, let us keep our eyes equally upon economic growth, investment, new business development, new jobs, the things that could propel Saskatchewan beyond the status quo of the last 50 years to a new kind of future, not boxed in by history or geography, distance or climate, politics or defeatism.
The Government of Canada must invest in Saskatchewan and in other parts of the country in more than just equalization. For example, it must invest in a bold plan about water development for the future, in energy development, in new innovations, science and technology, in value added in the livestock sector, and in social and economic infusion, particularly to attract new Canadians to Saskatchewan and to better engage our aboriginal population.
I am an optimist about Saskatchewan. This is the centennial year of the province, 1905-2005. While paying proud tribute to our past, we need to be equally focused on our future and we need to build that future. Would it not be great for the historians 50 years from now to analyze this time, to look back on these early years of the 21st century and say, “That's when Saskatchewan regained its momentum. That's when it gained its traction, its self-confidence. That's when Saskatchewan moved beyond old dependencies and limitations. It focused on growth. It believed in itself. It seized its future and it never looked back”.