Mr. Speaker, as we resume debate today on Bill C-17 I welcome the opportunity to join my government colleagues in supporting this very important piece of legislation.
When passed, this bill will implement key aspects of the February budget plan, a plan for action in three core areas on behalf of all Canadians living in all regions. It is a plan to spur job creation and economic growth.
That is one reason Bill C-17 revamps the UI entitlements. These savings will allow us to reduce the payroll taxes identified by business, especially small business, as one of the major barriers to new employment.
It is a plan to get the deficit down and to set the foundations for a balanced budget because we have to stop mortgaging our children's future and pushing taxes eternally higher. This bill is a critical step in meeting this goal by restraining parliamentary and public service salaries and by reducing business subsidies for transportation and energy.
Let me emphasize that the fiscal action we are taking will not jeopardize the work that must be done to make the economy stronger and create opportunity. Losing jobs is no way to pay off debts, not for individuals and not for Canada as a nation.
It is also a budget plan to reform social security so we can boost economic opportunity while ensuring we can sustain the cost of Canada's social safety net. Here again Bill C-17 plays a vital role.
It does this not only through the actions on unemployment insurance but by providing the provinces with two years of certainty on federal transfers under the Canada assistance plan. This will help create the stable window of opportunity and co-operative environment that will allow the two levels of government to work together on this critical task.
More important, the critics and the cynics are absolutely wrong in assuming that this government's commitment to delivering on our deficit reduction pledge was mere political coin. Our government's goal is to restore federal economic
credibility, not continue to debase it. The fundamental fact is with the February budget we have taken unparalleled action to meet the fiscal challenge and that is no exaggeration.
Measures in the budget result in gross savings of $3.7 billion in this fiscal year, rising to $13.6 billion in 1996-97. Over the three year forecast period of the budget gross savings total $28.6 billion.
We have also taken action to encourage growth and job creation, action targeted at enhancing our economic muscle and confidence in the evolving global economy. We have done this in part because restored growth is an essential element of the deficit reduction strategy.
Even with the investments such as the infrastructure program and support for R and D, net savings in the budget total $20.4 billion over three years. They deliver $5 worth of spending cuts for every $1 of revenue. These spending cuts are the most significant of any budget in the past 10 years.
Such measures are not a conclusion. They are simply a foundation. Let me echo what the Minister of Finance has said repeatedly, including at a meeting with major European investors today. The message of our government is very clear. The ultimate goal of this government is to eliminate the deficit.
The deficit ratio of 3 per cent of GDP by 1996-97 is exactly what we have always said it was, an interim target, one that has not been met for 10 years. We are going to meet it through the spending cuts implemented in this year's budget, not a subsequent budget.
The results of a major program review launched in February which should identify further opportunities for savings will be included in the 1995 budget. The goal here and in subsequent budgets will be to take us beyond our interim target on our way to balancing the books of this nation.
Some argue that our deficit action is too little, too slow. We believe, and many Canadians understand, that more drastic action could jeopardize Canada's return to economic health. That would ultimately sabotage our ability to sustain consistent fiscal improvement.
We also believe that restoring budget credibility means looking both beyond and beneath the numbers. Our budget puts an end to many of the practices of the past. We have provided full accounting of all program costs. Nothing is hidden.
We built in substantial reserves to allow us to handle unforeseen contingencies without letting our fiscal objectives suffer. Just as important, we reversed the budget's bias in favour of optimistic, politically correct economic forecasts. As we all recognized in previous years, governments would set targets based on rosy projections in order to look good initially, only to fail eventually.
We believe it is more important to meet a target than to promote a wish list and then fall far short. It is crucial to re-establish the credibility of the government's economic projections. Therefore when we put together our budget we use prudent assumptions drawn from the pessimistic range of private sector forecasters. We believe that is a responsible way for this government to act.
Canada as elsewhere has recently witnessed some volatility in interest rates. That volatility makes the case for the prudent assumptions and contingency reserves built into our budget. We have ensured substantial room for manoeuvre. Interest rate fluctuations are not going to knock us off course. We remain confident that we will hit our targets.
I am glad to see that this confidence is shared by the Royal Bank's Ed Neufeld, the executive vice-president of economic affairs. I understand that at the Royal Bank's annual spring briefing on the economy last week he shared his view that we, the Government of Canada, are on track this year to reach our deficit reduction target.
At the same briefing the Royal Bank also forecasted that Canadian growth will accelerate to 3.5 per cent this year and 4.3 per cent in 1995. It is worth noting that this 1994 forecast is in complete harmony with preliminary reports on the upcoming IMF forecasts for Canadian growth this year.
These forecasts exceed the prudent projections on which our 1994 budget was based. They reflect what I believe was an objective assessment of the growing strength of our economic fundamentals, strength that the budget and other federal actions have contributed to.
Canada is now one of the lowest inflation countries in the world. We are going to stay that way. Last December the Governor of the Bank of Canada and the finance minister announced that the inflation targets which anchor our monetary policy, among the toughest in the world, will continue through 1998.
Another key fundamental is restoring fiscal responsibility to our public finances, a major goal of this legislation, Bill C-17. Let me again emphasize that we are working with the provinces to improve the national debt situation because this truly is a national problem. There are real grounds for renewed national confidence that this challenge can and will be met. It is clear that across Canada governments are applying themselves steadily to the course of fiscal discipline.
Let us remember that fiscal action by governments is only part of the answer for long term balanced budgets. A growing economy is also essential if our debt build-up is to be reversed. Here again there are real grounds for confidence. The economy is starting to grow more firmly. Growth was 3.8 per cent in the last quarter of last year based on solid exports and investment performance.
Surveys for 1994 indicate that public and private sector investment will be up an impressive 4.2 per cent over 1993. Strong gains and competitiveness are behind the firming of economic growth and they too augur well for the future.
Unit labour costs are down and productivity is up. The big unit cost gap that opened up between Canada and the United States has essentially been closed. Our record export growth is the result.
Those facts paint a picture of a competitive economy moving in the right direction. This was further confirmed by the March labour force numbers that came out last Friday. The unemployment rate dropped a full half percentage point, the largest contraction in 10 years since June 1984, and 114,000 new jobs have been created over the last two months, the strongest two month gain in almost five years. I welcome such news and all Canadians welcome this type of news.
There is no question we continue to face challenges and uncertainties. Dislocations can always emerge, sapping public confidence. That is why good news is never an excuse for complacency. That is why we will forge ahead with our strategy of re-engineering the way government operates and the programs it provides. These contribute to a stronger, more flexible Canadian economy.
Our action on unemployment insurance is an excellent example. We reduce spending on UI, something that will save us money. That also means we can roll back payroll taxes that have cost jobs across this country.
Looking at Europe anyone can see the cost of rigid labour market policies. We in Canada were close to developing a similar rigidity. We have now begun to move toward a more flexible system.
The redesign of unemployment insurance with greater emphasis on training to reintegrate the jobless and to discourage habitual dependence will make Canada's labour market much more flexible and efficient than is currently the case. The ultimate result will be a greater national capability to generate growth and, most important, jobs.
I have highlighted areas where our government is committed to fundamental, forward looking change, deficit reduction, support for job creation, social program reform, the process of budget making.
In closing, there is another area of change I want to emphasize. In our endeavour we are taking a new approach to the work of government. It is an approach based on openness, consultation and communication. That is why we framed the 1994 budget as the first part of a two stage process. It took immediate action to meet vital immediate goals but also launched the process of policy review and public debate that will lead to further action in time.
Such an approach is not a case of deferring action or evading responsibility and leadership. Rather, it addresses a fundamental fact in Canadian life, a fact that impacts directly on economic relations. That fact, most important to this government, is that without reasonable consensus and a real sense of public participation and public ownership dramatic change can become a disastrous failure. We do not intend to create this type of failure because Canadians deserve success.
This budget was developed in the most open process we have seen in Canadian political history. It involved meetings across the country and involved an opportunity for Canadians to write the minister, participate in meetings and make their views known.
This process of openness will continue. We have evolved an open process on the budget in which we gave people in different cities a chance to set out the parameters for the expansion of the economy, for assisting the unemployed, for creating jobs and at the same time to begin to deal with the deficit which is a very real burden for all Canadians.
We will continue this process through the House of Commons, through the committee on finance this fall in which we anticipate the 1995 budget process will be even more open and more visible and more transparent so that Canadians can begin to understand and feel part of a process that spends billions of their dollars each year.
This bill will help achieve that success by moving us to real bottom line fiscal improvement and renewed business and investor confidence.
For this reason I have no hesitation in encouraging all members here today to pass this legislation so that we can continue to move ahead with vigour and vision.
