Mr. Speaker, it is my honour to present Bill C-28, the budget implementation act, 2003, for second reading today.
In the course of preparing his budget, the Minister of Finance was advised by Canadians that it must be more than a tallying of accounts: that the budget must reflect the sum of our values as well. The budget the minister presented to the House in February meets the challenge in three arenas of national life.
First, it builds the society Canadians value by making investments in individual Canadians, their families and their communities.
Second, it builds the economy Canadians need by promoting productivity and innovation while staying fiscally prudent.
Third, it builds the accountability Canadians deserve by making government spending more transparent and accountable.
Just as important, the government is able to meet these challenges and pursue significant new investments, without risking a return to deficits, because of our continuing commitment to sound fiscal management. This commitment to fiscal responsibility is real and rigid, not just rhetoric, as demonstrated by the fact that we have already delivered five consecutive surpluses, a $47 billion reduction in the federal debt and the $100 billion tax reduction plan.
The 2003 budget is a budget based on continuity: maintaining the prudent, balanced approach to fiscal planning that has contributed so much, so directly, to Canada's economic stability and success. At the same time, it is a budget marked by milestones and major new commitments.
Economic success and fiscal discipline are only part of good government. They are a means to the much more important end of building the society that Canadians value, where compassion and social responsibility are constant, concrete facts of national life.
No social policy is more vital to Canadians than our publicly funded health care system.
The 2003 accord on health care renewal, agreed to by the Prime Minister and provincial first ministers in February, reflects a common commitment among governments to work together to improve access to the health care system, enhance accountability of how health care dollars are spent, and help ensure that the system remains sustainable in the long term.
Budget 2003 confirms $34.8 billion in increased funding over five years to meet the goals outlined in the health accord. Bill C-28 implements these measures.
First, in terms of increased support through transfers, the budget builds on the significant federal support for health care already provided to the provinces and territories through the Canada health and social transfer, the CHST.
Following the September 2000 agreements on health and early childhood development, the federal government provided provinces and territories with a predictable and growing five year funding framework to 2005-06 through the CHST. Now, this established funding will be further increased by $1.8 billion and extended for an additional two years. As a result, total yearly cash transfers to the provinces will rise to $21.6 billion in 2006-07 and $22.2 billion in 2007-08. Again, let me emphasize that this is over $22 billion for that one year.
Next, an immediate $2.5 billion supplement to the CHST will help relieve existing pressures in the health care system. This funding will be on an equal per capita basis, with provinces and territories having the flexibility to draw down their allocated share of funds, as they require, up to the end of 2005-06.
But the sustained renewal of Canada's health care system needs positive structural change as well as further financing. That is why the first ministers also agreed to restructure the CHST into two separate transfers, a Canada health transfer and a Canada social transfer, effective April 1, 2004.
Creating distinct transfers for health and other social spending will provide Canadians with information on the federal government's long term contribution to health care. At the same time, first ministers reaffirmed the importance of the equalization program in ensuring that all provinces have the ability to provide comparable levels of public services at comparable levels of taxation.
To strengthen the program, the federal government agreed to permanently remove the ceiling on equalization payments beginning in 2002-03.
All of these measures will provide a predictable, sustainable and growing long term funding and planning framework for transfers to the provinces and territories in support of health care and other social programs.
Bill C-28 would also implements other investments agreed to in the health accord.
In terms of health reform transfer, first ministers identified primary health care, home care and catastrophic drug coverage as priority areas where the provinces and territories needed to accelerate and reform to help their residents. The budget responds with a five year $16 billion health reform transfer to help in these priority areas with funds to be distributed on a per capita basis over a five year period beginning on April 1, 2003.
In terms of the diagnostic and medical equipment fund, the first ministers also recognized that more needed to be done to improve access to diagnostic services. The availability of equipment is a key factor in ensuring timely access to quality health care.
Building on the $1 billion provided for medical equipment in 2000, the 2003 budget responds with an additional investment of $1.5 billion over three years. This funding will enable provinces and territories to acquire diagnostic and medical equipment and train specialized staff to operate increasingly sophisticated equipment. Again funds will be distributed on an equal per capita basis and drawn down as provinces require up to the end of 2005-06. Under the accord, governments agreed to report annually on both the health reform transfer and the medical equipment fund so that Canadians can gauge the impact of the new investment.
Another area identified as a priority concern are electronic health records, which are an essential building block for a modernized, more innovative health care system. Under the September 2000 agreement on health, the government announced $500 million to expand the use of health information and communication technologies, including the adoption of electronic health records.
Canada Health Infoway will receive an additional $600 million to accelerate the development of EHRs, common information technology standards, across the country and the further development of tele-health applications.
Without a doubt, research is a vital component of Canada's health care system. The federal government currently provides significant funding for health research through its support for students, researchers, universities, research hospitals and other institutes and also undertakes research in its own laboratories. The 2003 budget recognizes that more can be done. Two such measures are included in this bill.
The first concern is the Canadian Foundation for Innovation, the CFI, which was established to support the modernization of research infrastructure in Canadian universities and colleges, research hospitals and other non-profit research institutions across Canada. The budget allocates $500 million to the CFI to enhance its support for state of the art health research facilities. At the same time, Genome Canada will receive $75 million for applied health genomics. It is perhaps the most exciting sector of biological research in today's world and one where Canada has developed a global reputation.
In terms of other health initiatives, the budget provides significant funding to support a range of other initiatives fundamentally linked to health reform. For example, the budget provides $205 million over five years for governance and accountability initiatives, including funding for the Canadian Institute for Health Information to enable better public reporting on the health system and the health of Canadians.
Funding will also be provided to support the establishment of a new Canadian patient safety institute, as well as to improve the timeliness of Health Canada's regulatory processes with respect to human drugs, to pursue a national immunization strategy and to better assess the use of new diagnostic and treatment technologies.
Another initiative covered by this legislation involves a compassionate care benefit under the employment insurance program to help ease the economic problems facing families who must deal with grave illness. The government recognizes that income support and job protection are key for workers who take time off to care for seriously ill family members, as they often lose income and benefits due to time loss from paid employment.
As a result, starting on January 1, eligible workers will be entitled to a six week paid leave to provide care or support to a gravely ill or dying parent, spouse or child. Also, to enhance its flexibility, the benefit can be shared among eligible family members. The compassionate leave benefit underscores a fundamental social fact, that central to the life of every Canadian is the welfare of their family.
There is no more important investment that we can make than in the opportunities we create for our children. Working through the bill before us, budget 2003 strengthens our longstanding commitment to Canadian children and families in several key areas.
First, annual assistance for children and low income families is increased through the Canada child tax benefit, the CCTB, to $10 billion by 2007 with annual benefits increasing to $3,243 for the first child, $3,016 for the second child and $3,020 for each additional child.
Next, the government recognizes that caring for children with severe disabilities imposes a heavy burden on families. To that end, a new indexed $1,600 child disability benefit, effective July 2003, will provide additional assistance of up to $1,600 annually to low and modest income families with a disabled child.
A third measure provides $80 million per year to enhance tax assistance for persons with disabilities, drawing on the evaluation of existing disability tax credit and the input of a technical advisory committee.
The budget also adds to and builds on the tax measures introduced in previous budgets to provide support to persons with disabilities. More infirmed children or grandchildren will now be able to receive a tax deferred roll over of a deceased parent's or grandparent's RRSP or RRIF proceeds.
The budget expands the list of expenses eligible for the medical expense tax credit to include, for example, certain expenses for real time captioning and note taking services and voice recognition software. In addition, individuals with celiac disease who require a gluten free diet will now be able to claim the medical expense tax credit for the incremental cost of gluten free food products.
Our ability to make major long term investments in boosting the quality of Canadian life without jeopardizing our fiscal balance rests on a healthy, growing economy. However better economic performance tomorrow requires a more productive, innovative and sustainable economy today.
As we know, improved skills and learning are vital to improved productivity, competitiveness and a better life for all Canadians. Budget 2003 takes action to help give Canadians opportunities to gain new skills by committing $60 million over two years to improve the Canada student loans program to put more money in the hands of students and better enable post-secondary graduates to manage their debt. In addition, individuals who are in default of the Canada student loans or have declared bankruptcy will now have access to interest relief. As well, protected persons, including convention refugees, under the Immigration and Refugee Protection Act, will be eligible to Canada student loans.
Canada's high calibre workforce deserves the support of a competitive tax system. That is why in the 2000 budget the government launched a five year $100 billion tax reduction plan, the largest in our country's history. This plan continues to deliver growing tax relief, about $24 billion this year and $30 billion in 2004.
To help sustain our economy, the budget further improves the tax system through incentives to save and invest, to help small and medium sized enterprises and boost Canadian competitiveness.
The legislation promotes savings by Canadians by increasing registered retirement saving plans, RRSPs, and registered pension plans, RPPs, limits to $18,000 over four years and indexing these new limits.
As well, we are providing concrete assistance to our country's entrepreneurs and small businesses, a key source of economic growth and job creation in Canada.
Employment insurance contribution rates will be cut by 12¢ to $1.98 per $100 of insurable earnings for 2004. This is the tenth premium rate cut since 1994 and will give a yearly savings for workers and employers to over $9 billion. While this rate reduction will apply to everyone, it will be particularly beneficial for small businesses.
The federal small business tax rate of 12% will be extended to business income between $200,000 and $300,000 over the next four years. This will result in an annual saving of up to $9,000 for many local Canadian companies.
Another measure eliminates the $2 million limit on the amount of small business investments eligible for the capital gains rollover. This will help small firms to assess the risk capital they need to expand and grow.
The bill reduces business costs and complexity by improving the tax treatment of automobile benefits for employees and auto expenses for employers.
A competitive tax system is necessary to attract investment to Canada and to encourage entrepreneurs to create and grow their businesses and the jobs that they bring.
The government's five year tax reduction plan is putting in place a tax advantage for businesses in Canada as a basic part of the strategy to foster a strong and productive economy. With the tax cuts implemented to date, the average federal-provincial corporate tax rate in Canada is now below the average of the U.S. rate. The budget builds on that advantage over the next five years, totally eliminating the federal capital tax, which is currently levied on all corporations with more than $10 million of capital used in Canada. The first step in the phase out will be to raise the level of the capital at which a firm begins to pay tax to $50 million.
As members can see, the scope of our budget plan is dramatic, and yet I have only covered a portion of the measures in the legislation before us.
We are also taking action in such vital areas of public concern and support as climate change, the environment and agriculture. For example, Bill C-28 includes $250 million to the Sustainable Development Technology Canada Foundation for the development of climate change and clean air technology. Bill C-28 includes $50 million to the Canadian Foundation for Climate and Atmospheric Sciences to increase climate and atmospheric research activities including research related to northern Canada. The bill also includes $20 million to support venture capital investment by Farm Credit Canada in the agriculture sector.
Bill C-28 also includes additional tax measures to confirm the increase in the federal taxes on tobacco products effective June 18, 2002 as part of the government's strategy to discourage tobacco consumption. The bill removes the 4¢ per litre federal excise tax on diesel fuel from bio-diesel. It also provides authority for voluntary arrangements with interested first nations to levy a broadly based sales tax consistent with the GST on first nation lands.
The budget provides important new investments to build the society Canadians value and the economy we need. Canadians have also made it clear that these investments must be backed by enhanced accountability to Parliament and the public. Several new steps will help to make government spending more accountable and transparent.
The budget follows up the government's commitment to review the air travellers security charge to ensure revenue from the charge remains in line with the cost of the enhanced air travel security system through 2006-07. Now that the review has been completed, the government is reducing the charge to $7 from $12 each way for domestic flights. That is by more than 40%.
Accountability is also the anchor of the new health accord. The accord sets out an improved accountability framework that includes a commitment by all governments to report regularly to Canadians. This framework will give Canadians more information about how their tax dollars are used to bring about reform in the health care system.
The government is also making a number of changes to improve the accountability of foundations to Canadians and parliamentarians. Most of these changes can be made through changes to the funding arrangements with the foundations.
However the Canada Foundation for Innovation, the Canada Millennium Scholarship Foundation and the Canada Foundation for Sustainable Development Technology were established through federal statute. Under the existing legislation, unspent funds are distributed among the eligible recipients that receive grants, but the Auditor General believes these moneys should be returned to the government. There will now be provisions that the responsible minister may, at his or her discretion, recover unspent money in the event of winding up a dissolution of these three foundations and return the funds to the consolidated revenue fund.
Finally, the budget terminates the debt servicing and reduction account, the DSRA, which was established to pay interest on the public debt and ultimately reduce the debt. There is no longer any need for this account since the DSRA revenues must ultimately be disposed in the consolidated revenue fund.
Budget 2003 delivers a dramatic range of action while maintaining our commitment to prudent fiscal planning for balanced budgets. The budget takes serious steps forward in the quest to build the society that we value, the economy we need and the accountability we deserve. It is based on sound fiscal management and responsible stewardship of our resources, but is rooted in our values as we seek to give Canadians the tools they need to realize their potential. Above all, it recognizes the crucial link between social and economic policy and how an integrated approach produces policies that benefit all Canadians. The result is a better, more compassionate and competitive Canada today and an even stronger, more prosperous Canada in the years ahead. I urge all hon. members to support the legislation.
