Mr. Speaker, thank you for the opportunity to introduce the 2005 budget implementation act at second reading. This is all about the government delivering on its commitments. That has been the theme of this year's budget and indeed it is the theme of the bill before us today.
Canadians expect the government to take major steps to deliver on our commitments and that is exactly what we have done. I hope over the next few minutes to demonstrate that this is exactly what we have done.
In the 2005 budget we have set out an ambitious agenda to promote national well-being, centring on five mutually reinforcing commitments: first, maintaining sound fiscal management; second, encouraging a productive and growing economy; third, securing our social foundations; fourth, promoting sustainable environment and communities; and fifth, strengthening Canada's role in the world. As I said, I hope that these five mutually reinforcing commitments will become obvious over the course of the next few minutes.
Proposals contained in the bill take major steps to deliver on these commitments, with action carefully paced over the next five years. I hope in the next few moments to illustrate how the measures contained in the bill reflect each one of these commitments. Before I do that, I think it is important to make a few comments about our economic situation, because this underlies each and every budget.
Canada is in an enviable position. Since balancing the federal budget in 1997, Canada has led the G-7 industrial nations with the best job creation record and the fastest growth in living standards.
Right now I can hear someone calling in their support, Mr. Speaker, so certainly there does seem to be someone who is agreeing with me on that very significant point.
Looking ahead, and based upon the average forecast by economists from the private sector, the real growth in 2005 is expected to be 2.9% of GDP, rising to 3.1% in the 2006. I would note in parenthesis, however, that since the budget has been proclaimed, private sector economists have actually rounded down the GDP growth for 2005 from 2.9% to 2.6%, so it gives us some sense that private sector economists are possibly not as robust as they were when the budget was being made. That of course is a concern to each and every one of us who considers a sound fiscal framework to be the cornerstone of our prosperity.
These forecasts are always subject to risk, including the evolving impact of the rapid rise in the value of our dollar. Canada is probably one of the most global trading nations, if not the most global, and because of that our risks are frequently risks that are outside of our control.
For instance, the principal risk is with the twin U.S. budget and account deficits. These could cause higher interest rates, slower U.S. growth and further depreciation of the American dollar, all leading to slower Canadian growth and some economic adjustment which could in many instances be quite painful for each one of us.
As I said, we do not have control over how the U.S. issues its budget or controls its current account deficit. These are principal risks to the forecasting which are completely outside of our control, similarly with the economy of China and with rising oil prices and things of that nature which are by and large outside the control of our economy.
It is the possibility of future risk that motivates the government's first commitment, and that is to sound financial management, with balanced budgets or better based on prudent fiscal planning. Even after dramatic investments in funding for provinces and territories and further new measures, budget 2005 projects a surplus for the current fiscal year ending March 31, a surplus for the eighth year in a row. That is the longest string of surpluses since 1867 and the founding of the nation.
The budget projects balanced budgets or better over the next five year period. The five year fiscal projection reflects the fact that the vast majority of the commitments it makes extend beyond the traditional two year planning horizon. This has further positioned Canada as a world leader and the only G-7 country to post total government surpluses in each of the past three years and the only nation that can expect to be in surplus in 2005 and in 2006.
Our strong performance has fueled a $60 billion plus reduction in Canada's public debt and a saving of more than $3 billion annually each and every year in debt servicing costs. This has led to Canada having a triple-A credit rating, producing lower interest rates for provinces, cities, businesses and families.
Again as a parenthesis, in my own community of Scarborough—Guildwood what we have noticed is a vacating of a lot of lower-end apartments while people get out and buy homes, because the interest rates are now such that the home which was heretofore unaffordable has become affordable. People are leaving the apartments and moving into their homes because their mortgage payments are the same as or less than their rental payments.
The combination of lower debt and lower interest rates has meant that the share of government revenue going to debt servicing or interest rates has been cut from almost 38¢ of each revenue $1; that is, 38¢ or well over one-third of every $1 was going to service debt. Now we are down to around 19¢. We have shaved it entirely in half. For the provinces, on average that has meant a significant reduction in their debt interest costs as well. Some provinces are down around an average of 12¢ of every revenue $1, and again, these are savings that are passed on to any entity that borrows money.
To sustain these benefits and to position Canada to meet future pressures such as our aging population, the government aims to bring down the debt to 25% of GDP within 10 years.
Balancing budgets and bringing down debt do not happen by accident. They require prudent fiscal planning. For this reason, budget 2005 again sets aside $3 billion in an annual contingency reserve. If not needed to keep our books in balance, these funds will go directly to reduce the debt.
We have also continued to build economic prudence into the budget plan, starting at $1 billion. If not needed, it will be used to invest in other priorities of Canadians.
Fiscal discipline also demands a rigorous approach to delivering value for the taxpayer dollar. That is why the government established the expenditure review committee of cabinet to scrutinize each and every line of government spending.
The committee has identified $11 billion in cumulative savings over the next five years. Almost 90% of that $11 billion comes from greater efficiencies in procurement, property management, service delivery and program administration. These savings have been incorporated in budget 2005 and are being reinvested in core federal programs and services.
The government's second commitment to Canadians is to encourage a productive and growing economy. Canada's current economic progress shows that we are on the right path, but increased prosperity and growth need constant improvements in productivity and our ability to compete in a fast-changing global environment.
Again in parenthesis, we have noticed in the last year some fall off in productivity, which is worrisome. I think it is largely reflected by the rapid appreciation in the Canadian dollar and that has made it very difficult for some businesses to adjust quickly. We can live with a higher Canadian dollar, but it is the haste at which that change occurs which makes it very difficult for businesses to adjust and build into their situation and productivity improvements that keep them competitive.
We face the challenge of a soon to retire baby boom generation followed by a much smaller generation of workers. This means we will no longer be able to automatically rely on labour force growth to boost the economy. It means that the workforce has to be as inclusive as possible, and we need the workforce to be as skilled and productive as possible to beat international competition.
Budget 2005 takes action to meet those challenges. This action starts with the understanding that quality child care and early learning is much more than just merely good social policy. It is also an investment in better productivity and economic success in the years ahead. I will reference this back to when I said that we needed an inclusive workforce. Clearly, men and women, as they raise children and work, need to have the most flexible arrangements possible for raising families.
Bill C-43 would provide for the creation of $700 million trusts for provinces to invest in early learning and child care programs. This amount is the 2004-05, 2005-06 portion of the $5 billion commitment by the federal government for five years to develop a shared early learning and child care initiative in collaboration with the provinces and territories.
We are also taking action to reduce taxes. A competitive tax system makes individuals more prosperous and firms more productive. That is why the federal government has cut taxes each and every year since the budget was first balanced in 1997, including the record five year $100 billion tax cut introduced in the year 2000.
The budget builds on these reductions by committing to increase the basic personal amount of income that all Canadians can earn to $10,000 by the year 2009. This will benefit all taxpayers, but in particular, it will remove 860,000 low income earners from the tax rolls, almost a quarter million of whom will be seniors.
Next, to help Canadians save for retirement, Budget 2005 boosts the overall contribution to the RRSPs and registered pension plans to $22,000 by the year 2010. This especially will benefit those who are entrepreneurs, the self-employed and small businesses, people who have no large pension entity to support them. As well, to expand the investment opportunities for Canadians, the government will remove the 30% foreign property limits, such as shares on RRSPs and pension plans.
Bill C-43 also takes action to maintain a competitive corporate tax environment to stimulate growth and jobs. It proposes to eliminate corporate surtax in 2008. This will benefit businesses, both small and medium sized. By 2010, the government proposes to reduce a 21% general corporate income tax rate to 19%. Even in the face of corporate tax reductions in the U.S., these measures will still maintain a tax rate advantage for Canadian businesses.
Further, a productive and environmentally sustainable economy is only part of the Canadian well-being. Budget 2005 also delivers on the government's fourth commitment to make further investments to secure social foundations. These investments build upon a $41 billion agreement for health care in Canada, which the Prime Minister entered into with the premiers last fall, and the new $33 billion framework for provincial equalization and territorial financing.
For example, the Prime Minister and the territorial first ministers have agreed to work together to develop a comprehensive strategy for the north. The north is entering into a time of unprecedented promise and opportunity, particularly with respect to the economic opportunities relating to oil, gas and diamond development.
Bill C-43 proposes to create a $120 million trust to help the territories meet the goals of the northern strategy, a joint initiative between the Government of Canada and territorial governments aimed at improving the quality of life for northerners.
Budget 2005 also recognizes our debts to seniors. Indeed, the budget makes significant investments across a wide range of policies that matter to seniors. An investment in health care, which was made in the fall, is of most benefit to those who are aging. People use up most of their health care allotment in the latter part of their lives. The health care investment is for us all, but is of particular significance to those who are seniors.
In Bill C-43 the increase in the guaranteed income supplement is a payment of $2.7 billion over five years, with improvements in place in less than two years. This will benefit 1.6 million seniors, the majority of whom are women. The maximum GIS will go up by more than $400 per year for a single senior and almost $700 for a couple.
The third commitment on the government's agenda is in recognition of the fact that a smart economic policy and environmental policy can go hand in hand, improving the quality of life, the health of communities and opportunities for growth. Budget 2005 introduces a $5 billion package of measures over five years to support sustainable environment. These include the new clean fund and a partnership fund to reduce greenhouse gas emissions.
Bill C-43 proposes to establish a new agency under Environment Canada to manage the $1 billion climate fund which will provide incentives for reduction and removal of greenhouse gases. Moreover, the bill proposes to amend the Canadian Environmental Protection Act to facilitate the future addition of greenhouse gases to the list of substances under the act. This will allow the Minister of the Environment to regulate emissions and implement the proposed large final emitter regime and emissions trading system.
Bill C-43 also would provide $300 million to the green municipal funds to support local environment projects. Of this amount, $150 million would be used to help communities clean up and redevelop brownfields.
A key element of the environment for Canadians is our cities and communities. Budget 2005 builds on the new deal for communities launched last year by providing municipalities with a growing share of the federal excise tax on gasoline. Bill C-43 proposes to provide initial funding of $600 million for this initiative, the equivalent of 1.5¢ per litre. This will grow to $2 billion a year for additional revenues over five years, delivering again on this government's commitment.
Canada's meeting its domestic needs should not obscure the fact that events like tsunami disaster emphasized that we in live in a global village. For example, when the tsunami struck southeast Asia last December, Canadians were deeply affected by this tragedy. Again in parenthesis, the Sri Lankan community, of which I have the honour to represent in my riding, is deeply affected by this tragedy. Canada responded very generously with an assistance package totalling $425 million.
In true Canadian fashion Canadians responded generously with their personal donations of approximately $200 million to charitable organizations and the government matched that.
Finally, the measures contained in Bill C-43 represent a comprehensive, integrated plan to enhance the well-being of Canadians. Over this period and over this budget, we have delivered on our commitments.