Madam Speaker, I am happy to be sharing my time with the member for Mississauga South and to support his campaign regarding fetal alcohol syndrome. Certainly all of us have been enriched by his interest in that file, including myself. I appreciate his comments.
This budget is another in a long series of budgets with fiscal responsibility. I was happy to go to my riding the morning after and do a budget breakfast. The business community came out in fairly good droves. I would like to thank the Clarington Board of Trade for its support and also the local accounting firm of Hobb Bakker Bergin Hill. The budget was well received among the business community.
The only way I can measure whether people are happy with our policies is when they phone us, contact us, or tell us we made a mistake. I would say that by a long country mile the people have been telling us that the government is going in the right direction.
I want to touch on a few points in the budget that concern me. There are some positive and some negative things as well.
My first point deals with the whole accountability framework. We talk a lot in the House about accountability in government and I was happy to see that within the budget documents not only is there a commitment for improved accountability in the government itself, but actually there is a mechanism which will make it work.
It is clear in the documents that $1 billion worth of resources are to be allocated on a yearly basis and that $1 billion is being reallocated from older programs to finance new initiatives. In fact, over 15% of the new spending initiatives announced in the budget would be financed by reallocating dollars from other programs.
People ask why we have to do that. What I have discovered in this place is that often governments set up various programs for good reasons, but they often take on a life of their own. We do not spend enough time reviewing them, maybe five or ten years down the road, to question whether in fact these programs are doing what they originally intended. Maybe the problem has gone away, maybe it has been exasperated or maybe there are better ways to solve it today. We do not spend enough time doing that. Governments are good on policy decisions, but they have been pretty bad in some ways about program delivery when it actually hits the people in our riding.
I was happy to see that the government not only has a commitment there but a line in the sand saying we must find at least $1 billion every year to reallocate in this fashion. That is a positive thing for the taxpayers in the country because it will force governments to ensure that the programs that they are executing have efficiency and will require, through the Treasury Board and individual departments, for them to be accountable.
They will have to step up to the plate and explain why it is that their program should continue or whether in fact their program should be either curtailed or eliminated due to this provision in the budget. This is a positive thing that we have put in place and I look forward to seeing how that is going to be executed.
Another issue that was quickly mentioned, glossed over and people quickly forgot about was the whole issue of the move to accrual accounting in the budget. The Minister of Finance made passing reference to it saying he was not sure what it meant but finally has learned to embrace the concept.
Accrual accounting is the concept that we have to take in all of our assets and all of our liabilities into our balance sheet.
For the government, it was quite complicated, especially in the area of defence, where it had to determine the value of a destroyer or the House of Commons on its balance sheet when we never actually thought of putting that in as an asset of the government. Similarly, some of the liabilities that have been outstanding for years have often been almost forgotten, things like government guarantees on loans. Even the liability of pensions for members of Parliament must now be included as a liability of the government.
Every year I give my constituents an analysis of where the debt is going. When preoccupied by the debt, a lot of people say we do not have to worry about it any more because it is based on a percentage of our GDP, it is something like 50% and therefore we should not be worrying about it. However, that is erroneous because the debt to GDP ratio is just that, it is a ratio and it presupposes that our gross domestic product continues to rise. Heaven forbid that we ever get into a recession or a contraction of the economy where in fact the GDP goes the other way because the debt to GDP ratio will start to rise again.
That is important because it gives governments flexibility in how they spend money and if we have a high debt commitment and high debt servicing cost, then we have a lack of flexibility in government financing. The budget from 2002-03 showed an $8 billion reduction in the overall debt. At the same time it showed about a $2 billion reduction in debt service payments.
Let us think about how much flexibility we would have if we could reduce our debt service payments, that is, money that we pay out in interest on government debt of something like $2 billion a year. This would allow us to make all kinds of decisions for the betterment of the people of Canada. I would encourage the government, and I know the numbers going out show contingency reserves and so forth, to flatline the debt even though some members across the way are doing comparisons with the Americans. They talk about the deviation in income tax rates and so forth even though our rates are now equal to or better than theirs.
Even so, the United States has one big problem and that is it has not funded a lot of its social infrastructure. Its social insurance system is unsustainable based on the current levels of premiums and government financing. Without increased government financing it will have difficulty in the future years servicing those kinds of social commitments. In Canada we have the old age pension and other pension systems. The Canadian system is a lot more sustainable than the American one. Even though it would appear on the surface that Canada's taxation system is marginally higher than that of the United States, the United States is simply having short term gain, but in fact will probably have some long term pain when these factors start kicking in.
I mentioned the debt of the accrual accounting system because I was amazed when I was preparing this summary for my constituents that all of a sudden $30 billion seemed to disappear from the debt. I had to go back and try to figure out why that was. It was a sleight of the pen that said that the increase in assets, the destroyers, the House of Commons, et cetera, minus the addition of liabilities, in fact, saw $30 billion more showing on the financial statements of the Government of Canada.
It is probably more a result that people did not understand it, but I am surprised that more people from a political point of view did not run around saying that there has been a $30 billion payment on our debt. In fact, it received little attention whatsoever. It does seem to indicate one important factor and that is that the previous system did not acknowledge all of the assets that we really had. It is nice to know that we are not nearly in debt as we thought we were. However, the problem with the accrual system is that managers in the future may have a tendency to look at the fact that asset acquisitions are no longer being expended. They are being amortized over the life of the asset.
This is a concern as we go out that managers will have a tendency to buy more fixed assets than they would do normally in their budget because it does not show as an immediate expense. We are hoping that does not happen.
Finally I want to touch on a major issue. I want to talk about seniors and the importance of increasing the payments to the old age pension.