Mr. Speaker, I wish to inform you that I will be sharing my time with the hon. member for Burlington.
The hon. member is opposed, among other things, to our government wanting to unilaterally amend the equalization formula. He says this is because it would be incompatible with the commitment made by the Prime Minister to the Government of Quebec that “transfers to the provinces would be predictable and long term”.
The Government of Canada has amended the equalization formula precisely—and I want to be clear about this—so that these transfers to the provinces may be predictable and long term. I would add that these changes to the equalization formula in no way reduce the transfers, contrary to what some opposition members have tried to say. The equalization payments and all Quebec transfers are at historical peaks and will continue to rise. In 2009-10, Quebec will receive more than $8.3 billion in equalization, a leap of over 70% from what it was in 2005-06, when we came to power. Indeed, the changes we have made only guarantee the sustainable growth of the program, in step with the expansion of the economy.
Out of a concern for fairness, we have taken this opportunity to introduce a floor, so as to avoid a contraction of the overall size of the program, and we have offered transitional protection to the recipient provinces.
It is not clear to me how the hon. member defines the word “sustainable”, but I suspect that his definition differs somewhat from mine. The fact remains that the equalization program has increased from $8.7 billion in 2003-04, under the previous Liberal government, to $14.2 billion in 2009-10, when we implemented the recommendations of Mr. O'Brien’s independent panel of experts. If nothing had been done, the costs of equalization would have risen by over $26 billion over the next five years.
Everyone knows as I do that this pace of growth is not sustainable, and the government would have had much more difficulty avoiding a long-term structural deficit. Like the Government of Canada, the provinces are aware of the consequences of unsustainable program expansion, and I can assure you that “predictable and long-term” funding is not on the list.
Anyone who witnessed the budget cuts of the previous Liberal government in the mid-1990s will say that, at the time, federal appropriations for the provinces were certainly not predictable, long term and on the rise. That is no doubt why, when the details of these changes were released to the provincial and territorial finance ministers last November, Minister Jérôme-Forget of Quebec described them at the ensuing press conference as “reasonable”, particularly in the circumstances facing all governments due to the current Canadian and worldwide recession.
Not only are these changes reasonable, they are also consistent with the recommendations of the O'Brien expert panel, which declares on page 43 of its equalization report:
The Equalization program must be affordable and sustainable over time. The federal government is responsible for determining how much it will spend to achieve the goals of the Equalization program.
Clearly, the O'Brien report recognizes that the financial sustainability of equalization is the responsibility of the Government of Canada. But contrary to what this motion would have us believe, this does not mean that we have acted without informing the provinces and keeping them abreast of the consequences of these changes. As I have said, all the provinces were informed of these changes at the meeting of finance ministers last November 3. They even had the benefit of exceptional advance notice of their equalization entitlement for 2009-10 so that their budget planning would be solidly based. A news release describing these changes was issued on the same day.
All the details of these changes were also sent on November 13 to the provincial civil servants responsible for the technical aspects of the program. In addition, the economic and financial statement of November 27 described the nature of the changes and explained why they were necessary.
When they met in December, the provinces were informed of the projected impact of the changes over five years. I feel that is proof that the provinces have been more than sufficiently informed of the changes.
We will continue to see that the transfers remain viable and fair to Quebeckers as well as all Canadians.
Federal support to the provinces and territories is reaching unprecedented highs. Key transfers are over $51 billion for 2009-10 and will continue to rise. The Canada health transfer will increase by 6%, the Canada social transfer by 3%, and equalization payments will continue to increase and parallel the economy.
At over $17.6 billion, the federal support for Quebec is also at an all-time high and continues to rise. Transfers to Quebec alone have gone up 74% since 2005-06, the highest increase in transfer payments of all the provinces.
And, as I said, transfer payments will continue to rise. In this time of unprecedented economic difficulty however, they will need to progress at a sustainable rate so that future generations can also benefit from them. This is why we are defending the changes we have made to improve the sustainability of the equalization program.
I would like to read from the daily newspaper La Presse some comments by André Pratte:
In reality, the Government of Quebec will lose nothing. The equalization payments it receives, which have increased considerably in recent years, will continue to grow—
He goes on to say:
To review a few figures, in 2005-06, the Government of Quebec received $4.8 billion in equalization payments. Since then, the federal government has expanded the scope of the program and corrected the inequalities and as a result, over five years, the amount received by the province has risen to $8.4 billion in 2009-10, a 74% increase—
Mr. Pratt also wrote:
Politicians—claim that the fiscal imbalance problem remains unsolved. Not only is that position no longer tenable, it is unreal as well. Today, federal transfers represent 22% of the provincial government's budget revenue, exactly the same share as they did in the early 1990s before the cuts imposed by Paul Martin.
Those were the words of André Pratte, a great economist and editorial writer for La Presse, and they confirm what I said earlier.
In the name of all Canadians in all provinces, Quebec included, I ask my colleagues to reject this motion.