Mr. Speaker, net debt differs from the federal debt as it is defined as total liabilities less financial assets, while the federal debt is defined as total liabilities less total assets. Furthermore, the target that was established in 2006 is for total government net debt on a national accounts basis (excluding government employee unfunded pension liabilities to conform with the Organisation for Economic Co-operation and Development measure of net debt), which includes not only the federal net debt, but also the net debt of provincial-territorial and local governments, as well as the assets of the Canada pension plan and Quebec pension plan.
Balanced budgets and low levels of public debt are critical to Canada’s long-term growth and prosperity.
That is why, since taking office in 2006, the government aggressively reduced the federal debt by nearly $40 billion from 2005-06 to 2007-08. However, in response to the deepest and most synchronized global recession since the Great Depression, the government made a difficult, but necessary, decision to run temporary deficits in order to make investments to protect Canadians under Canada’s Economic Action Plan, leading to a short-term increase in federal debt.
The Government of Canada is committed to returning to balanced budgets in the medium term. Budget 2010 announced a three-point plan to support a return to balanced budgets (for more information, please visit http://www.budget.gc.ca/2010/plan/chap4a-eng.html). Building on that plan, budget 2011 outlined further savings by delivering on the 2010 round of strategic reviews, as well as taking action to close tax loopholes (for more information, please visit http://www.budget.gc.ca/2011/plan/chap5-eng.html).
To maintain Canada’s solid fiscal position, in budget 2011, the government also announced its deficit reduction action plan, which will review direct program spending in order to achieve at least $4 billion in ongoing annual savings by 2014-15. This review will place particular emphasis on generating savings from operating expenses and improving productivity, while also examining the relevance and effectiveness of programs. Savings proposals are currently being assessed by a specially constituted committee of Treasury Board. The government will report on the results of this review in budget 2012. These savings will support a return to balanced budgets by 2015-16. The budgetary savings associated with the deficit reduction action plan will be reflected in the fiscal projections once these actions are determined and implemented in budget 2012.