Mr. Speaker, I am pleased to be sharing my time with the member for Acadie—Bathurst. Together we are going to be talking about the impact that the equalization program has on Atlantic Canada.
I wanted to start by saying it is a pleasure to speak to this bill but I find that any optimism I once had that the Liberal government was willing to be fair in its dealings on equalization has been sorely shaken by the latest figures on equalization released by Treasury Board. Unfortunately, since November 2003, when I last spoke in the House on equalization and the effects on the Atlantic provinces, the situation has become much worse. I will outline what I mean by that.
Between 2000-01 and 2004-05 total major transfers to the provinces, and that includes the Canada health and social transfer, equalization and tax points, increased by almost 18%. That is up from 15% in October 2003. That is the good news and that sounds not bad. However, in Atlantic Canada, total major transfers dropped by almost 4% during the same period, so the news only gets worse for the poorest provinces.
When I spoke to this issue in November 2003, the Treasury Board estimates indicated that of the $6.4 billion increase in major federal transfers, the Atlantic provinces received minus $200 million. The latest estimates show that out of a $7.6 billion increase in total major federal transfers, the Atlantic provinces received minus $240 million. What a difference four months makes. The have less provinces continue to get even less.
Since Bill C-18 seeks to maintain the status quo on equalization from one year to another, I have to wonder how the government believes it is helping the have less provinces. Apologists for the government will say that the Atlantic provinces should not complain, that we have offshore oil and gas and that our ship has come in. There may be those who say that we should be proud because we are less dependent on federal transfers.
First of all, there is no oil and gas off the shores of New Brunswick and P.E.I. Why have they seen increases in federal transfers that are just one-quarter and one-sixth, respectively, of the national increase? I will tell members why. It has nothing to do with oil and gas. It is that the system of federal transfers is defective. The system is based on population and our region is losing population.
Federal policies are driving people out of our region so our provincial governments are losing hundreds of millions, even billions, in federal transfer money. That is a great system, is it not? Federal economic policies, or lack thereof, drive people out of those have less regions and the government responsible pockets a windfall.
Take equalization payments to Nova Scotia as an example. Last February the Department of Finance estimated that between 2001-02 and 2003-04 Nova Scotia would get $3.72 billion in equalization payments. This February we found that Nova Scotia would only get $3.55 billion. This is a shortfall for Nova Scotia of $170 million, but a windfall of $179 million for the Liberals, almost enough to pay for another Groupaction fiasco.
With an unexpected shortfall of $170 million, there is not enough revenue left to meet the needs of the remaining population in Nova Scotia, let alone to bring forward the economic and social policies we need so that our people will not have to go down the road. It might not be so bad if the Liberals put the money they are clawing back from the Atlantic provinces into the policies we need in order to turn around our outmigration, but they are not doing that. If they are not wasting it on some boondoggle, they are recycling it and claiming it is new.
Over the last two years the government has saved over $3 billion in equalization payments to the provinces. That is roughly half of the “new money” that has gone into health care over that period.
More money for health care, even though it is nowhere near enough, is a good thing, but when half of it is clawed back in equalization, it is like robbing a bunch of Peters, Johns and Garys to pay Paul. When we consider that most of the new health money will go to the provinces with the larger populations, the have provinces, then we have something worse. It is Robin Hood in reverse, taking from the have less to give to the have mores.
The Minister of Natural Resources talked this week about changes to the offshore energy agreement with Nova Scotia and Newfoundland. Please let me emphasize that P.E.I. and New Brunswick do not benefit from offshore energy agreements at all. I am pleased to hear that the Liberals are finally ready to consider that the offshore agreements were not fair to begin with. I recognize that it was the Mulroney Tories who came up with the original deal.
The news about this offshore industry has not been good and many doubt that we will ever have a production boom such as Alberta had. The fact is that getting oil or gas from below the ocean floor is more expensive, more dangerous for workers and the environment, and more uncertain in its values than any land based operation.
People in Nova Scotia and Newfoundland should not be penalized through an equalization program that expects a payoff in the future. Until the offshore industry is guaranteed and long term, instead of a series of underproducing operations, potential offshore royalties should not affect the equalization formula at all.
I want to echo something my colleague, the member for Halifax, said in a previous debate on equalization. The provinces have asked for a 10 province plan, one that considers all the provinces, not the middle five that the federal government uses now.
That would make the payments more equitable and would better reflect the economic situation of the majority of provinces. It would also prevent a huge loss in equalization when one province has a bad year, as was the case last year with Ontario.
The status quo simply is not adequate when it comes to the equalization plan. I fear that giving the federal government another year's grace to renegotiate equalization will result in an even less equitable program as provinces get more desperate for funds. In the end it is not the provinces that suffer, it is Canadians.
I will now turn to the second part of the bill, the payment of an extra $2 billion to the provinces for health care. The intent of the equalization program is to allow every province to offer reasonably comparable services to other provinces and to their citizens.
I was horrified to hear Lorne Calvert, the premier of Saskatchewan, quoted in the papers this week as saying that without immediate aid from the federal government, we can expect to see the Canadian health care system as we know it disappear within 10 years. What is going on for one of our premiers to be saying that?
When I look around, I see how the wealth of Canada has increased many times since medicare was first proposed and implemented. We have more money now than at any other time in our history, but the government chooses not to spend that money where Canadians want to see it spent. Canadians want a health care system that they can depend on. We want the money to be there and we know the money is there with the federal surplus, $7 billion to $8 billion this year.
Why are the Liberals letting the health care system fail when there is money available to sustain and improve it? It is like a homeowner who decides never to repair the leaks or pay for upkeep so that the mortgage can be paid down sooner, but when the mortgage is finally paid off, there is only a pile of wood and tar that can never be put back together.
A payment of $2 billion is a small start in helping the provinces improve health care. However, the way the Liberal government agreed to provide the money was stingy in the first place. It put debt management ahead of sustaining our health care system. Then it did not offer more money when it became clear that there would be a much larger surplus than was expected. This does not give much hope that the Liberal government takes Canadians' concerns seriously.
In conclusion, the NDP will support this bill to ensure the provinces continue to receive their money, but the system itself is flawed. There needs to be a more equitable equalization formula. The NDP will continue to push the government to work with the provinces for a formula that benefits Canadians in all provinces.