Mr. Chair, I appreciate this opportunity to speak tonight about our government's work on balancing the budget. It is a key part of our economic policy that has placed Canada in the best possible position to weather the recent global recession. It is why I am especially pleased to report that the government is well on track to return to balanced budgets in 2015. The deficit has been reduced by almost two-thirds since 2009-10 through our Conservative government's fiscal responsibility and sound economic policy. Including measures in economic action plan 2014, the deficit is project to fall to $2.9 billion in the current fiscal year. A surplus of $6.4 billion is expected in 2015-16 after taking into account a $3-billion annual adjustment for risk.
While this is indeed good news, it is also crucial that Canadians understand that balancing the budget is not an end in itself, but rather a means to deliver on the priorities of Canadians, increase Canada's economic potential, improve employment opportunities, and raise all Canadians' standard of living.
First, let me remind hon. members of the distinction between our Conservative government and that of the previous Liberal governments.
Canadians can rest assured that federal transfers to individuals that provide important income support, such as old age security and major transfers to other levels of government for social programs and health care, will not be cut but rather will continue to grow over the forecast horizon.
The cornerstone of the government's efforts to create jobs and opportunities for Canadians is the commitment to return to balanced budgets in 2015. As economic action plan 2014 makes clear, the government is on track to deliver on this commitment.
I will explain, first, what the merits of balancing the budget are; second, how controlling government program spending and improving the integrity of the tax system are crucial to honouring our commitment to balance the budget; and third, how this strategy is and will continue to create the winning conditions for businesses to grow and compete.
I also wish to put this in the broader context by pointing out that since the beginning of the recovery, Canada has achieved one of the best job-creation records in the G7 countries as well as one of the G7's best economic performances.
Balancing the budget and reducing debt are not an end to themselves. Balancing the budget and reducing the debt are a means to increase Canada's economic potential, and as stated previously, to improve employment opportunities and increase the standard of living of Canadians.
The government's plan to return to balanced budgets ensures tax dollars are used to support important social services like health care rather than paying interest costs. It preserves Canada's low-tax plan and allows for further tax reductions, fostering growth and the creation of jobs for the benefit of all Canadians. It helps to keep interest rates low, instilling confidence in consumers and investors whose dollars spur economic growth and job creation. It strengthens the country's ability to respond to longer-term challenges, such as population aging and unexpected global economic shocks. It also signals that public services are sustainable over the long run and ensures fairness and equity for future generations by avoiding tax increases or reductions in services.
Canada's responsible fiscal position is critical to economic growth and job creation for the long term. Canada's efforts to pay down debt before the global recession and control spending have helped ensure that Canada's net debt-to-GDP ratio is the lowest by far of any G7 country and among the lowest of advanced G20 countries as well.
While other countries continue to struggle with debt that is spiralling out of control, Canada remains in an enviable fiscal position among G7 countries. It is also why Canada is among only a handful of countries with an undisputed AAA credit rating with a stable outlook from all major credit rating agencies. I should also point out that Canada is the largest economy that still has an AAA credit rating.
Since budget 2010, our government has controlled direct program spending through targeted savings and reviews focused on reducing spending without compromising priority services to Canadians. Taking into account the new measures in economic action plan 2014, direct program spending is projected to remain broadly in line with the 2010-11 level over the forecast horizon. In fact, direct program spending has declined for three consecutive years, a trend that has not been observed in decades. Rest assured that federal transfers to individuals and major transfers to provinces and territories, including those for social programs and health care, will continue to increase.
These steps have been accompanied by measures to improve the fairness and integrity of the tax system, with a view to ensuring that everyone pays their fair share. Consistent with this commitment, economic action plan 2014 includes measures that address international aggressive tax avoidance, improve tax integrity and strengthen tax compliance, and enhance the fairness of the tax system. Since 2006, and including measures in economic action plan 2014, the government has introduced more than 85 measures to improve the integrity of the tax system.
Together, measures in economic action plan 2014 to address international aggressive tax avoidance, improve tax integrity, strengthen tax compliance, and enhance the fairness of the tax system will provide savings of $44 million in 2014-15 and rising to $454 million in 2018-19, for a total of $1.8 billion from 2013-14 through the following five years.
Our government recognizes the importance of businesses to job creation and economic development. Our government delivered tax reductions totalling more than $60 billion to job-creating businesses from 2008 through 2014. Among these tax-relief measures were the reduction of the federal general corporate income tax rate to 15% in 2012 from over 22% in 2007 and an extension, through 2015, of the temporary accelerated capital cost allowance for machinery and equipment used in manufacturing and processing.
Canada's tax competitiveness and overall business environment have been significantly improved, with the result that Canada now has the lowest overall tax rate on new business investment in the entire G7. The competitiveness of Canada's business tax system is supported by third-party analysis. KPMG's “Competitive Alternatives” 2012 concluded that Canada's total business tax costs are the lowest in the G7 and more than 40% lower than those in the United States. It is also why Canada has been ranked the second best place to do business in the world by Bloomberg, and KPMG's “Competitive Alternatives” 2014 study ranked Canada the most competitive, mature market country for business.
The foundation of our initiatives since 2006 rests on the bedrock of a low-tax plan for jobs, growth, and prosperity. It has seen us through the worst of the global economic and financial crisis. While the NDP and the Liberals keep demanding reckless spending and want to impose higher taxes, our Conservative government remains on track to return to balanced budgets in 2015-16.
We cannot be complacent and must make tough decisions. That is the core of economic leadership and fiscal responsibility, the very same leadership that has allowed Canada to lead the global economic recovery. This is why our government will balance the budget in 2015 and will continue to pursue a prudent fiscal path.
My question for the Minister of Finance is the following: What is the biggest downside risk to the Canadian economy and the assumptions underpinning his fiscal projections?