Mr. Speaker, I am pleased to speak to the matter of full supply of the estimates for fiscal year 1995-96. This year the main estimates total $164.2 billion of which the government is seeking parliamentary approval for $48 billion and new spending authority. The balance of $116.2 billion represents statutory payments which have already received parliamentary approval.
The main estimates incorporate $2.3 billion worth of the $3.4 billion of 1995-96 expenditure reduction measures achieved through the government's program review. The comprehensive review was undertaken last fall to identify the federal government's core roles and responsibilities and to reallocate resources to priority areas in order to provide effective affordable government.
This program review was much more extensive than any previous across-the-board expenditure reduction initiative; every department was reviewed. As a result, all sorts of spending
cuts and resources adjustments were decided, as evidenced by Mr. Martin's budget for 1995.
It all goes to show that the government is committed to cutting expenditures, streamlining operations and making drastic changes in terms of program availability and delivery. In a word, we are determined to redesign the federal administration.
Beyond the program review savings, measures already included in the main estimates are cost recovery measures which will generate new non-tax revenues, initiatives which require prior legislative approval, and other changes announced in the 1995 budget which simply were not finalized on time for inclusion in these estimates. In the latter cases the savings will be achieved through the lapsing of appropriated funds.
Let me give some examples of the types of changes resulting from the program review exercise. Government departments will focus on their core responsibilities. Federal and provincial overlap will be reduced, which is something a number of people have been asking for. Technological improvements will create efficiency gains. Costs of services will be recovered by new or increased fees charged to those who directly benefit from the services. Where feasible, similar programs will be merged to improve efficiency.
By concentrating our efforts in key areas of responsibility and improving program delivery patterns, we will be able to carry out the most significant downsizing of the federal public service since World War II.
If and when all the decisions made following the program review are implemented, the public service workforce could be reduced by as many as 45,000 positions over the next three years.
The President of the Treasury Board has prepared a set of options to ease the transition for affected employees as part of a program that is fair both to the people involved and to Canadian taxpayers.
The bottom line is that these main estimates are $3.5 billion higher than those for 1994-95. However, as I just explained, some of the increase is actually overstated due to the program review savings not yet incorporated into these figures. Even so, at first glance any increase seems inconsistent with our major expenditure reduction efforts.
It must be noted though that the bottom line change is principally the result of an $8.5 billion increase in public debt charges, to $49.5 billion. The rising interest and servicing costs on the debt more than outweigh the significant savings achieved through the program review and previous expenditure reduction measures. This underscores our acknowledged need to live within our means and the need for continuing deficit reduction aimed at moving us in the direction of declining debt charges.
Program spending excluding public debt charges is $114.4 billion or $7 billion less than the 1994-95 estimates level. This is an important figure. By 1996-97 the impact of the program review savings will result in a decrease of 10.8 per cent relative to the 1994-95 level. By 1997-98 that decrease will amount to an impressive 19 per cent reduction in program spending.
Public debt charges come under statutory spending, that is to say expenditures already approved by Parliament. Statutory spending for fiscal year 1995-96 amounts to $166.2 billion, or approximately 71 per cent of the main estimates. This is a $4 billion increase over the 1994-95 main estimates. Besides public debt charges, statutory spending also includes the main transfer payments to Canadians for old age security, the guaranteed income supplement, spouse's allowance and unemployment insurance.
In addition, statutory spending includes federal transfers to the provinces under the fiscal equalization program, the Canada assistance program and established programs financing, providing assistance to Canadians for health care, post-secondary education and social assistance.
Established programs financing assistance to the provinces and territories takes two forms: cash transfers of about $9.1 billion form part of these main estimates. Beyond that amount a further $12.6 billion worth of tax transfers do not appear in the main estimates.
The total consolidated budgetary main estimates, both statutory and voted, of $164.2 billion can be categorized into 11 sectors. Of these, spending in three sectors comprise over 76 per cent of the total estimates: social programs excluding the federal contribution to provincial and territorial social spending account for 30.6 per cent, public debt charges amount to 30.2 per cent, fiscal arrangements with the provinces and territories represent a further 16 per cent of the total. The balance or about 24 per cent is spread between defence, general government services, natural resource based programs, foreign affairs and international assistance, industrial, regional and scientific technological support, justice and legal programs, heritage and culture and the transportation sector.
Social programs comprise the largest area of federal spending at $50.2 billion in 1995-96. This does not include an additional
$16.4 billion in major cash transfers to the provinces and territories for social purposes.
The objectives of the social programs are to promote the health and well-being of Canadians and to foster equality of access by all Canadians to the benefit of Canadian society. Benefits and services are directed at those most in need through a broad range of assistance programs. These encompass employment, health, housing and other initiatives which benefit aboriginal peoples, veterans, senior citizens, children, immigrants and the unemployed.
Generally speaking, the program review helped strengthen the primary mandate of the departments responsible for social programs, including Indian Affairs and Northern Development, Health, Human Resources Development, Citizenship and Immigration, as well as Veterans Affairs.
Reducing spending in priority social programs, a large number of which are closely related to the population increase, is a particularly difficult challenge.
These departments will have to pay greater attention to the streamlining of their operations, in order to function with reduced resources. This means that, more than ever before, social benefits and services will have to be provided to those Canadians who need them the most.
A larger proportion of the costs related to these benefits and services will also be recovered from users who benefit directly from them.
Similar approaches are reflected in all program expenditure sectors within these estimates. For example, natural resource based programs in the 1995 main estimates are $463 million lower than in 1994-95. The departments of agriculture, environment, fisheries and oceans and natural resources have redefined their core mandates in areas of expertise. More emphasis will be placed on the strategic use of public funds to promote sustainable development, enhance Canadian competitiveness and rationalize and recover costs.
The transportation sector estimates show a $329 million decrease, as Transport Canada moves from direct involvement in transportation operations to focus on its core roles of developing policy and legislation, and setting and enforcing safety and security standards. Reduced subsidies paid by or to the transportation crown corporations and agencies also lead to significant expenditure reduction in this sector.
The streamlining of our operations, combined with the greater efficiency achieved through technology, has resulted in savings of $209 million in general government services.
The main estimates also mark the implementation of a new expenditure manager system, one which reflects the government's commitment to funding new requirements by reallocating existing resources. The system will necessitate an ongoing evaluation of priorities, both within departments and government wide, and will lead to more informed spending decisions. Centrally funded policy reserves to support new initiatives have been eliminated.
The operating reserve managed by Treasury Board has significantly diminished, and its role has also changed. Traditionally, the reserve was used as an emergency fund to cover additional expenditures related to existing programs. Under the new expenditure management system, the operating reserve will, in most cases, fulfill the role of a banking institution.
Its main responsibility will be to provide additional financing for projects which have a significant impact in terms of productivity.
Departmental business plans will focus on strategic changes to programs and lines of business while the related outlook documents, a new initiative, will enhance parliamentary review of estimates and future year expenditures with emphasis on performance.
It is recognized that effective management within a fixed level of resources presents a challenge to ministers and departments. In that context, treasury board is examining ways to enhance managerial flexibility and to support reallocation efforts.
The 1995-96 main estimates, along with the related initiatives which I described today, clearly show that the government has taken a new direction as regards expenditure management.
Canadians have responded favourably to the changes put forward in the budget. They recognize that tough choices had to be made, that real change is necessary in order to implement the jobs and growth agenda and to get the country back on track. This year's estimates confirm that those changes have begun.
As I listen to the comments that have been made concerning the government's budget and the ensuring activity, I hear mostly favourable comments directed at the government. The Canadian
people recognize it is easy to cut. But at the end of each cut is a victim, someone who is going to suffer as a result of the decision.
Surely the government must be doing things right. The official opposition suggests that we should not cut, we should be spending more. The third party suggests that we should have cut even more dramatically, recognizing fully that a lot of people have suffered as a result of budgetary decisions.
Canadians understand you must go at this kind of exercise gradually. They want this kind of government. They do not want their co-citizens to suffer unduly.
If anyone is going to be fair minded about the budget and the ensuing activity, he or she will need to acknowledge that the government has taken an important first step at addressing the question of the deficit and the debt, at creating long term, well remunerated employment for Canadians and at addressing the whole issue of social programs that Canadians want for those who need them.
As I indicated, the government has taken a very important first step.