Mr. Speaker, what we have in the House today is a motion by the Bloc to transfer tax points from the federal government to the provinces. This is not complicated. It means the Bloc simply wants us to give up our power to raise revenue to the provinces. It wants us to give up our power to do the things which are absolutely critical to our country as a nation affecting every province and every person regardless of where they live, not just in particular provinces.
The Bloc wants us to reduce our capacity to make transfers to individuals. Our biggest single expenditure to individuals is over $25 billion a year to Canada's seniors. How much of that does it want us to give up? It wants us to give up our capacity to cut taxes.
We have just introduced the biggest tax cuts in Canadian history, $100 billion over five years. We have seen the benefits of that. Those cuts started January 1. Canada's growth rate in the final quarter of last year was 1.9%. In the first quarter of this year the latest figures show that our growth rate has gone up to 2.5% in spite of the serious downturn in the U.S. economy and one that was threatening us and one that members opposite were saying that we had to do something about, that we had to bring in new budgets because things were not working.
That stimulus presented by the Minister of Finance just when it was needed has ensured that we have not gone into a tailspin, but have been able to cope with that downturn.
The Bloc wants us to give up our capacity to pay down the federal debt in order for the provinces to pay down more of their debt. Paying down debt is good for all of us but the fact is that the federal debt is more than twice that of the provinces. We have made enormous strides in paying it down. When we took office it was 71% of GDP. It is now below 54% of GDP and heading to less than 40% of GDP within five years.
As members know, last year the finance minister paid off $15 billion in Canadian debt. This is important because this payoff is saving us about $2 billion a year in interest.
The provinces should maybe pay down their debt too but their debt cumulatively is less than half of what ours is. We pay about 25 cents out of every tax dollar to service the federal debt. The provinces pay about 12 cents. In terms of fairness, where should that capacity to pay down the debt go first?
When we look at the credit ratings that we get as a country and the lower interest rates that the bond rating agencies give us, it is because we have been able to balance our budgets for the past three years, reduce our taxes and pay down the debt. Those reduced interest rates constitute an enormous savings not only to the federal government but to every one of the provinces.
The Bloc members want us to give up to the provinces our capacity to make strategic investments for the future of Canadians, strategic investments in areas such as education, which is so critical to the economy of the 21st century and to the new economy, and to give up our capacity to support innovation such as through technology partnerships. All these programs are critical to the future economic well-being of Canadians. We are not going to do it.
We have seen an historic accord concluded last September by the Prime Minister of Canada with all of the provincial ministers. It was historic, first, for the amount that was involved, $21.1 billion over five years added to the transfers that we are already making to the provinces. In addition, another $2.2 billion for early childhood development.
What are the overall transfers that we are making as a federal government to the provinces? They are at an historic high. When we look at the CHST, including the tax points, and at equalization, which is at an all time high, it is over $40 billion a year that is transferred to the provinces.
Let us go back historically and take a look at how this whole issue of tax transfers appeared on the agenda. It started in 1977 when the provinces said that they needed more room to tax. The federal government said that it would give them more room but that they had to recognize that those transfers of tax points to the provinces would be transfers of revenue generating capacity. The federal government gave up its capacity to tax by 13.5% on the personal side and 1% on the corporate side. The provinces picked that up by imposing those taxes. They got the cash and we did not. It was a transfer of cash to the provinces.
Ever since then the provinces have said that the federal government was not transferring to them anything more than the cash component. How could they be so short-sighted? How could they go back on their word which they gave in 1977? How could they go back on their commitment to recognize that the tax points they took from us were in fact transfers to those provinces?
The net impact of tax points on taxpayers was zero, but it cost the government a lot of money.
In 1997, the value of tax points transferred to the provinces was $2.7 billion. That amount has been increased and is now at $16 billion, which is about half the total amount provided to provinces under the CHST.
What are our reasons for not going back on what we have done? First, doing tax points creates inequities among the richest and the poorest provinces. A tax point in Ontario is worth $35 per capita today. It was worth only $17 last year in Newfoundland. Is that the type of equity that we are trying to build for all Canadians? On the other hand, when we transfer cash to the provinces it means the same amount per capita. That is equitable.
The second reason we will not go back on this is that we will not give up the federal capacity to legislate the values which are so critical to Canadians, such as the Canada Health Act. This is why we have used the threat of cutting transfers to the provinces, and have actually had to cut in certain cases in order to ensure that the principles of the Canada Health Act were adhered to by the provinces. If all that cash were gone, total leverage would be gone and our admired system of public health in Canada would be finished.
In terms of social assistance, we used it to enforce the fact that provinces could not impose minimal residency requirements. That was fair. If one is a Canadian it does not matter which province one lives in, one's rights will not be cut off. That is what it means to be a Canadian.
We can look at our relative capacity to tax already. In 1977, before the transfer of tax points to the provinces, personal and corporate income taxes brought in about 60 cents for every dollar of federal tax. Today that is up to about 85 cents. When we add federal transfers to that revenue generating capacity in the provinces, the provinces end up with a higher revenue base than in the federal government.
We need the fiscal tools to be strong. Nothing could have demonstrated that better than the Canadian economic miracle of going from a deficit of $41 billion to three straight surpluses, heading to four, and having been called by the economists of London the economic miracle of the west.
The Bloc members, the opposition, have consistently denied the value of the tax points. They say that we give only 15 cents on the dollar to health care. They also ask us to give them more tax points. If tax points are so valuable, why did they ignore the tax points when they said we gave only 15 cents on the dollar for health care? It is over 30 cents. They cannot have it both ways.
That is hypocrisy. Twenty-six per cent of federal funding for research and development goes to Quebec. What percentage of the Canadian population does Quebec account for? Twenty-five per cent.
For industrial research and development, the government spends 33%; for the Canadian Institutes of Health Research, 32%; for infrastructure, 26%; for the Canada Foundation for Innovation as well as for 29 research chairs, 30% of the budget. For the CHST, 50%.
Now we can see why the Bloc Quebecois is proposing this motion. It is obvious. It does not want a federal government, a Canadian government. It wants to destroy Canada. That is their sole objective and that is the reason why a few weeks ago, here in the House, members of the Bloc Quebecois insisted that we switch to a North American dollar. They want to destroy Canada's ability to have an independent monetary policy. The sole motivation of the Bloc Quebecois is to destroy Canada, not to promote it. That, we will never accept.
