Mr. Speaker, it is very wrong to claim that our government has failed to honour its commitments to the people of Quebec. I would therefore like to take the opportunity I have been offered to set the record straight.
In my speech today I would like to look at the exceptional results of our Conservative government’s commitment to restoring the fiscal balance for the benefit of Quebec, and in fact for the benefit of all the provinces and territories. Nothing less will do, to ensure that there is full and balanced debate on this issue.
There is a huge range of programs that illustrate our government’s commitment, in particular when it comes to levelling the playing field throughout Canada through the equalization program.
Those payments mean that all provinces are able to provide a reasonably comparable level of service at reasonably comparable levels of taxation.
Equalization is designed to help the less well-off provinces and it must be fairly dynamic in order to adapt to changing economic circumstances.
Our government not only places great priority on preserving and strengthening programs, it also focuses on the future. Ensuring that the equalization program is sustainable is crucial to Canadians as well as to our government.
Equalization payments have risen by 56% since 2003-2004. The government has taken steps to ensure that equalization payments will rise at a viable pace.
Last fall, the unprecedented volatility in international financial markets and natural resource prices called for us to take firm and decisive action. The government responded quickly to mitigate the impact of the global credit crisis on Canadian financial institutions.
As well, the equalization program has to adapt to new developments that no one could have foreseen, in particular the extreme volatility of natural resource prices, which has put intolerable pressure on the program.
For example, at the meeting of finance ministers held on November 3, 2008, the provinces were informed of upcoming changes to the equalization program, and we told them in advance what the amounts would be for payments to be made in 2009-2010, to facilitate their budget planning.
At the November meetings, the government announced that because Ontario had become an equalization-recipient province, the baseline fiscal capacity for the new equalization program would correspond to the average fiscal capacity of the recipient provinces.
That was the explanation for the projected increase, based on a three-year moving average, along with the new ceiling, which was based on the average fiscal capacity after equalization of the provinces that receive payments under the program.
The detailed calculations, including the impact on each of the provinces, were presented on November 13.
On November 21, the provinces were made aware of the proposed legislative approach to be incorporated in the bill to give effect to the changes. The changes were again explained and justified in the economic and fiscal statement presented by the Minister of Finance on November 27, 2008.
In addition, the provinces were informed of the projected impact of the changes over five years at the December meeting of finance ministers.
The equalization changes that were discussed in November were confirmed in the 2009 budget that was introduced in January.
At that time, the government reaffirmed the commitment it had made, in the context of restoring fiscal balance, to offering growing, long-term transfers to the provinces and territories.
Those changes are an important aspect of Canada’s economic action plan, which will enable us to meet the exceptional challenges of our times. Viable growth in the equalization program is now assured, in line with the economy.
I would like to quickly highlight a few of the most significant measures our government has adopted in this important area. The 2007 budget, which was supported by the party of our colleague who has presented this motion today, provided for the renewal and strengthening of equalization by including a principle-based approach and long-term fair, growing funding.
We made adjustments to the equalization program consistent with the O’Brien recommendations and within the principle-based structure set out in the 2007 budget, which provide for long-term funding growth. Specifically, equalization will grow in line with the economy. The growth provision will also act as a floor to protect provinces against reductions in overall equalization.
The growth path will reflect a three-year moving average of nominal gross domestic product growth, which will help to ensure stability and predictability for both orders of government while still being responsive to changes in economic conditions.
The government periodically consults all the territories and provinces, and we adopt measures to maintain sustainable, fair growth in the equalization program.
I would now like to take a few minutes to show how our government has succeeded in meeting its two key commitments, starting with the commitment to fairness. Until 2008-2009, the fiscal capacity of the lowest non-receiving province was used as the measure to ensure fairness and provide stability. However, if the number of receiving provinces expands to cover roughly two-thirds of the Canadian economy, a new measure is required to both ensure fairness and that provinces continue to receive a meaningful and stable net fiscal benefit from resources.
The new ceiling has been set to reflect the average post-equalization fiscal capacity of those provinces receiving equalization. The result is that receiving provinces will get a net fiscal benefit from their resources equivalent to half the per capita resource revenues of the receiving provinces.
In keeping with the fiscal balance approach, the government is providing transition payments for 2009-2010, to ensure that a province that receives equalization in that year will receive no less than its payments for 2008-2009. Overall, equalization will continue to be fair as a result of these changes.
Mr. Speaker—