Mr. Speaker, I am pleased to address Private Members' Motion M-148. It is a motion that asks the government to recognize the onerous burden of taxation on the family and to take immediate measures to provide the family with tax relief, including balancing the federal budget.
Let me start by underscoring that the government fully understands the impact of Canada's level of taxation on many families. Unfortunately, what the hon. member fails to appreciate are the dramatic actions we are taking to put the country's finances in order. And she overlooks the measures we have introduced to provide targeted tax relief for families.
It is because we are acting not with quick fixes but through a strategic approach that will deliver sustained and permanent fiscal progress that I must oppose this well intended but precipitous motion. Allow me to outline how the government is addressing the fiscal and tax burden concerns raised in this private members' motion.
First let us remember not to put the cart before the horse. The fact is that we cannot begin serious tax reduction until the deficit is under control. To cut taxes in any other way would simply mean an even higher deficit and that simply guarantees that taxes would go back up again in the near future because it is the taxpayer who has to pay the interest on government borrowing.
Again, let me make the relationship clear. It is because we have had too many years of high deficits that our tax burden today is so high. We are paying for the borrowing appetite of the past. That is why we have moved on deficit reduction with courage and commitment. But we have not acted in a way that will do more damage than good. That would be the result if we took a slash and burn approach to eliminate the deficit in just a year or two. We would see too many Canadians facing real hardship, too many valid government programs virtually eliminated.
That is not our approach because that is not what the majority of Canadians want. Their choice is for a firm, balanced progress and
that we are delivering. That approach was again emphasized earlier this month when the Minister of Finance delivered his third budget. It is the third step in a comprehensive and determined effort to restore fiscal health to the country.
The budget plan shows that the government is staying on course to eliminate the deficit and put the debt to GDP ratio on a constant downward track. The fact is the government bettered its deficit target for 1994-95 and it is now clear that the deficit target for 1995-96 will be achieved or again, bettered. We are on track to reach our 3 per cent of GDP target for 1996-97. The budget even announced actions to reach a new deficit target for 1997-98 of $17 billion or 2 per cent of the gross domestic product. Indeed, these actions will enable us to move beyond the 2 per cent target toward budget balance.
These actions build on the major deficit reduction measures announced in the government's first two budgets. They include further cuts in federal departmental spending amounting to almost $2 billion. These cuts will take effect in 1998-99. For most departments this means further budget cuts of 3.5 per cent in 1998-99 and for some departments the cuts are even higher.
These measures together with the spending cuts announced in our first two budgets add up to a dramatic decline in federal government spending. In the 1993-94 time period, government spending on programs was $120 billion. By 1998-99, after six consecutive years of absolute spending declines, we will have reduced it to $105.5 billion.
In relation to the size of the economy the scale of this achievement is even more evident. Program spending that accounted for close to 20 per cent of the gross domestic product a decade ago will be reduced to 12 per cent of the GDP. This will be its lowest level in 50 years. These spending cuts will also reduce the amount of new money the government must borrow on financial markets every year.
In 1993-94 Canada's borrowing requirements were $30 billion or 4.2 per cent of our economy. By 1997-98 our actions will have reduced this requirement to just $6 billion, or only .7 per cent of GDP. This represents major progress in tackling our fiscal problems.
In 1997-98 the federal government's borrowing requirements will be at the lowest level in almost 30 years and lower than those projected for the central government of any other G-7 country.
As hon. members know, this government has focused on spending cuts not tax increases to restore the country's fiscal health. Over the three budgets taken together we will have cut seven dollars in
spending for each one dollar in new revenue. Most important, there have been no increases in personal income tax rates.
This should prove that our government is very conscious of the tax burden on Canadians. Indeed our whole program of fiscal measures is designed to achieve two payoffs. The first is to secure the future viability of key Canadian social programs such as medicare and our public pension programs. The second is to reduce taxes for Canadians.
This government believes that it would not be responsible to introduce major tax cuts before the country's fiscal problems are resolved. Nevertheless in the 1996 budget we have been able to provide targeted tax relief to families that most need it. We have not done this though at the expense of progress in reducing the deficit; rather we have reallocated revenues within the tax system.
Low income families with children are a priority concern for our government. In the 1996 budget we introduced several changes to address the needs of these families in particular.
First, we introduced a new child support system that includes guidelines to ensure fairer and consistent child support settlements, measures to help ensure that child support orders are enforced and a change in the tax treatment of child support. The new tax rules apply to new and amended child support awards beginning May 1, 1997.
Under these rules child support will not be included in the income of the recipient for tax purposes, nor will it be tax deductible for the payer. This will ensure that children who need the support most get it. It will also eliminate the need for complex tax calculations and planning by parents. Our approach will treat spending on children the same for separated parents as for intact families.
Second, to increase support for children the budget proposes to increase the working income supplement under the child tax benefit. This supplement assists low income parents to meet work expenses such as child care, transportation and clothing. It also helps to make up for the benefits lost by parents who leave social assistance and re-enter the workforce. The maximum annual benefit will be doubled in two steps. It will increase from $500 to $750 in July 1997 and to $1,000 in July 1998. When fully phased in, it will increase support by $250 million to about 700,000 low income parents.
Third, the budget proposed additional support to parents through an increase in the age limit on the child care expense deduction from 14 years to 16 years. This will be of particular benefit to single parents whose jobs require them to be away from the home at night.
Fourth, the government proposes to provide additional assistance to Canadians who provide in-home care for adult children and other relatives with disabilities. The value of the infirm dependant credit will be increased from $270 to $400 and the income threshold for the reduction in this benefit will be raised from $2,690 to $4,103.
Fifth, the government introduced several measure in the 1996 budget to increase support for students and their families. These measures provide an additional $165 million in support over three years so that students and their families will be better able to deal with the increased costs of education.
The education credit will be increased from $80 to $100 per month. This credit recognizes the non-tuition costs of schooling. The limit on the transfer of the tuition and education credits will be raised from $680 to $850 per year. This will provide a transferable credit against costs of $5,000 per year, up from $4,000 under the current rules. This measure will assist parents and spouses who pay the education costs of students.
Again, the annual limits on contributions to registered education savings plans will be increased from $1,500 to $2,000 and the lifetime limit from $31,500 to $42,000. This will assist parents to save for their children's education.
Finally, single parents attending school full time will be able to deduct child care expenses against unearned income and the deduction will apply to those completing high school. This will assist parents to undertake education or retraining.
In summary, I feel I have demonstrated that this government is taking responsible steps to put the country's finances in order and so provide a sound platform for future tax cuts. At the same time, the government is acting to provide targeted tax relief for families that need help the most.
Accordingly, I urge this House to withhold support for private member's Motion No. 148.