Mr. Speaker, at the outset I would like to indicate that I will be sharing my time with the hon. member for Durham.
I begin my address today by extending my personal congratulations to the Minister of Finance. The minister has in this fiscal year achieved something that no other finance minister has been able to do since 1969. He has brought order to the country's finances. Not only are the books balanced this year but it is projected that they will balance for the next two consecutive fiscal years, a feat that has not been matched by any Canadian federal administration for half a century.
I come from a small and traditional farming community that was built firmly upon the premise of hard work. Over the years I remember several instances when, after completing a very long tiring and productive day in the fields or in the barn, all that I desired in the world was a few hours of rest. In short, often the most welcome reward for an honest day's work is a good night's sleep.
Let me be among the first to say that the minister has now completed the proverbial hard day's work and is to be congratulated for that. When the aforementioned theories are applied to the completion of the task of bringing order to our financial house, one would think an accomplishment of this magnitude would be a feat sufficient enough to warrant at least a momentary time of reflection; a break in what has been a constant four year crusade to eliminate the deficit.
That is what one might think. However, as a lifelong farmer turned politician I would have to say that national fiscal management is certainly not comparable to hard work on the farm. If it were, I am afraid that the cattle would long be gone and it would perhaps be too late to close the gate to the corral.
I guess what I am trying to say is that we have now balanced the books but we must not become too complacent. If we let down our guard we run the risk of permitting last year's crop of problems to once again take root. We must never forget it was only four short years ago that our annual deficit stood at over $42 billion. Inflation was soaring. The only thing lower than consumer spending was consumer confidence.
In 1993 there were fierce storm clouds collecting on the horizon. This bleak economic outlook which was perpetrated by a blatant mismanagement of the public purse forced us into a position where we had to borrow over $30 billion annually on foreign money markets just to service the accumulated public debt. In the most basic of terms we were paying our Visa card's minimum monthly balance with our American Express in the hope that we would one day get a pay raise.
It was clear to anyone with even the most rudimentary of mathematical skills that this trend was neither practical nor sustainable. I cannot fathom that even one single Canadian or businessman would have attempted to justify this or to apply the practice to his or her own fiscal life without expecting dire consequences.
I am certain that to an outsider it must have seemed like we were building the social fabric of Canada in a manner which could only be compared to the construction techniques of a house of cards.
In 1993, with financial chaos looming over our heads, Canadians demanded that their government immediately move to rectify the problem of the treasury being in constant overdraft. Canadians called upon the Liberals to tackle the nation's financial crisis. Prior to 1993 the Department of Finance routinely set and missed its own targets, which caused international investors to become apprehensive at the mere mention of investing in Canada. In a nutshell, the confidence that our citizens and business leaders once enjoyed was rapidly and needlessly eliminated.
Immediately after assuming office the government took firm control of the financial reins of the country. In his 1995 budget the Minister of Finance declared “We have broken the back of the deficit”. This was the first in a series of announcements which signalled the beginning of a long and overdue journey along the road to financial recovery.
On February 24 of this year the Minister of Finance announced that the goal had at long last been realized. For the first time in 50 years there seemed to be a genuine light at the end of the tunnel.
There is little doubt that the 1998 federal budget represents a turning point on the national course. Our path both socially and economically has been dramatically altered for the better, hopefully forever. No longer are we financing our current lifestyle by committing to a second and third mortgage on our children's future. In the words of the finance minister “the government has cut up its credit cards”, an announcement that I am all too happy to hear.
Just prior to the budget I held a public forum to consult with my constituents on this issue. As always, I was impressed with the high quality of input I received from the residents of my riding of Huron—Bruce. Although the group was made up of people from several different political stripes, we checked our politics at the door and proceeded to have a productive discussion.
There was unanimity in the belief that our massive federal debt had placed Canada in an ever weakening position with respect to global economic credibility. Our capacity to effectively negotiate trade deals, direct the internal inflation rate, control domestic employment levels, and to set and to execute national priorities were all being seriously hindered. In short, the government's ability to effectively govern was in danger of falling victim to total erosion.
It was agreed that if we were to truly overcome our money problems we must adopt a two pronged approach. First, we must begin to pay down our massive federal debt. Second, we must reinvest in the areas hardest hit by cost cutting: health, education and skills development. In the report presented to the Standing Committee on Finance this notion was summarized by saying that we must not sell the house to pay the mortgage.
Since first assuming office in 1993 our government has maintained that after we managed to remove the red ink from the national balance sheet we would begin to tackle the problem of the debt and that we would expand upon our commitment to reinvest in valuable social programs, youth and skills development.
To that end, this year the budget theme is building Canada for the 21st century a strong economy and a secure society. Financially speaking we are now in a position to begin to reap at least some of the benefits accumulated as a dividend of over four years of belt tightening.
Along with balancing the books this government has once again resisted the urge to increase personal income taxes. Quite to the contrary, we have provided at least some form of tax relief to nearly 14 million low and middle income Canadians. This was done by reducing or eliminating entirely the 3% federal surtax for individuals who have income levels of less than $65,000 per year.
We have also increased the basic personal tax exemption by $500 and we have earmarked another $850 million to enhance the child tax benefit. This is in addition to the various other tax credits and new exemptions that were announced on budget day.
I know that many of our colleagues claim we did not go far enough with our tax reduction strategy. To those people I would say that if reducing or eliminating federal income tax for 90% of the current taxpayers does not constitute real tax relief, then what does?
In the 1997 election the Liberals committed that it was our goal to, after a zero deficit had been achieved, put the debt to GDP ratio on a permanent downward track. Without question we have done just that. It should be noted that in 1995 the aforementioned ratio was hovering at almost 72%. By the turn of the century, it will sit at approximately 63%, nearly a 10% decrease in five short years.
In addition to that, we have managed to broker a new three year agreement with the Bank of Canada that will see a continuation of the inflation control targets. This agreement promises to keep the national rate of inflation inside the range of 1% to 3%.
The objectives of this monetary policy are simple: to contribute to sustainable expansion, to support high levels of employment and a rising standard of living. These I believe are goals that every Canadian can support.
In addition to tax breaks for those who need them the most, in addition to balancing the books into the next millennium and in addition to cutting the cost of running the government, we have also begun to reinvest in education and health. Time and time again these have been clearly identified as national priority areas.
This budget announced measures designed to address the mounting problem of student debt and unemployment. To this end I believe that the $2.5 billion millennium scholarship fund, the 17% of student tax credit, the EI premium holiday for small businesses that hire students and the increase to the RESP levels will go a long way.
I agree there are still unsolved problems facing us, however this budget represents a positive first step. Rome was not built in a day. And who are we to think that a country as great as this one can be repaired with one budget?
Canadians can be proud today. Together we have achieved what seemed impossible only four years ago. Fundamental problems have caused a fundamental change in the way that government operates. The days of wasteful overspending and foolish megaprojects are gone forever. They have been replaced by an era of strategic investment and co-operative partnerships.
We can argue the pros and cons of this budget until the cows come home but the facts are obvious. The business community has begun to once again regain its lost faith in the state of Canada's finances.
Since 1993 interest rates have dropped to record lows, consumer confidence has increased and our economy has begun to grow in leaps and bounds. In fact the latest projections place Canada in the best financial shape of all the G-7 nations.
This House is divided into five officially recognized political parties each applying a somewhat different philosophy and different agenda. As Liberals we have a very long history of fostering a strong sense of community responsibility. Canadians view many of our social programs as defining national characteristics. I am happy to hear that the 1998 budget reaffirms our continuing commitment to many of these core programs.
This budget clearly recognizes the need to stay the course with respect to fiscal prudence. Indeed this budget does many positive things. However its real strength comes from what it does not do. What it does not do is lose sight of the values that we as a country hold in the highest regard.
