Mr. Speaker, let me say that I am new to this profession. In my previous life I was used to debating budgets and economic matters in the banking and university worlds. Generally we had debates of substance and we did not go back and forth telling each other that our statistics were wrong.
This is quite a different world when dealing with the opposition. In just about every debate opposition members have thrown out statistics that were absolutely false. Yesterday there was a particularly egregious example coming from the hon. member for Medicine Hat, the best finance critic the Alliance has ever produced. However he twice claimed that Canadians, presumably because of the Liberals, suffered declining living standards in the year 2000 compared with 1999.
I looked into this and discovered that after inflation real disposable income went up in the year 2000 by 3.5%, the biggest increase in at least a decade. I will be factually based in my remarks unlike the hon. member for Medicine Hat and his successor. In terms of public debate it is better to get one's facts correct and then one can go on to substantive issues of debate.
I begin with the issue of deficits and surpluses. We have two extremes that are both wrong. The Alliance is saying that we would go back into a deficit or that we would have a planning deficit. It is wrong.
Then we have the Bloc Quebecois saying that we have an enormous surplus of around $13 billion, which is astronomical compared to what all of the other economists in the country are saying.
I want to deal with both because both extremes are wrong. We are being attacked by the opposition for reducing the size of our contingency reserve or for eating into part of the contingency reserve.
What are contingency reserves for? They are for unexpected negative contingencies. What was September 11 and its aftermath? If ever there was an unexpected negative contingency it had to be September 11 and its aftermath. One could call it the mother of all contingencies. Therefore it is entirely appropriate that we use a part of the contingency reserve in the face of this tremendously tragic event which is also bad for the economy.
We have no planning deficit; we have a surplus. The idea that economists are saying we are in a deficit is crazy. Economists, not the government, do the fiscal projections on which the surplus projections are based. As the minister pointed out in the budget, even if we take the four most pessimistic economists and the four most pessimistic projections we would be in a surplus this year, the next year and the year after. We are the only G-7 country which would avoid going back into a deficit so the Alliance is wrong. Let us now go to the other extreme.
This $13 billion surplus the Bloc Quebecois is referring to, which is astronomical when compared to what all of the other economists in Canada are saying, can be explained in one of two ways: either the Bloc Quebecois is wrong—one economist—or else all of the other economists in the country are wrong. Take your pick. As far as I am concerned, the Bloc Quebecois' forecast has no credibility.
My second point concerns the question of fiscal stimulus. There are those on the other side of the House who have claimed that we are doing nothing to help Canadians at this time of economic slowdown, that we are doing nothing to promote health care and so on. Both those claims are wrong. What matters for individual Canadians and the Canadian economy is the support they received this year. It does not matter whether that support was announced in this budget or the last budget.
Last year we had a $100 billion tax cut. We cannot have a $100 billion tax cut every year, strange as that may seem to the opposition. The measures taken a year ago are now coming onstream and providing significant support to the Canadian economy and to individual Canadians at this time of global slowdown.
We had an additional $17 billion in tax cuts which came onstream January 1 of this year just at the time of the economic slowdown. I am not saying the government predicted that but as things turned out these were impeccably timed tax cuts putting an extra $17 billion into the pockets of Canadians and for Canadian companies.
There is an extra $3 billion this year for health care and $23 billion over five years. The idea the federal government is pulling back from health care is false. It is true that there were cuts in the first half of the nineties because when the federal government came to power in 1993 it inherited a $42 billion Tory deficit. It would have been unsustainable had we gone along with that. We would have hit the wall. We had to get rid of that deficit, so early on there were some cuts.
A couple of days ago on the 22nd anniversary of the defeat of the government of the right hon. member for Calgary Centre on its budget the then prime minister boasted that having inherited a deficit of $38 billion from the Liberals in 1984 he bequeathed us a deficit of $42 billion in 1993. That is a strange idea of Tory progress, from a deficit of $38 billion to a deficit of $42 billion, whereas the Liberals not only wiped out the $42 billion deficit but we turned it into surpluses.
There were cuts at the beginning but we have been restoring funding to health care in the last five years. Five years ago the federal government accounted for 21% of total Ontario program spending. Now it is 30%. We have been accounting for an increasing share of the expenditures of the government of Ontario including health care. It is even more for Quebec.
Perhaps the Bloc Quebecois members are not familiar with the figures, but federal transfers account for 30% of the spending programs in the province of Quebec.
If we go further east to the maritimes, it is up to 40%. A very major component of that fiscal stimulus, in addition to the $17 billion in tax cuts going into the pockets of Canadians, was an additional $3 billion for the health care system. We, like other Canadians, acknowledge that this is our top priority. In addition to that there were a number of other initiatives: infrastructure, research and so on, putting the amount of the stimulus to well over $20 billion to $26 billion and probably larger than that. Certainly it is larger than what the Americans are talking about doing, not that they have implemented it yet.
Let us treat facts as facts. If we look at the forecasts of the OECD, of the IMF, of any economist we care to imagine, all of them say that this year and next year the Canadian economy will outperform that of the U.S., both in growth and in jobs. This is in sharp contrast to the early eighties and the early nineties when we did worse. These economists and experts are unanimous in the view that we will do better. Part of the reason for that is this very large stimulus that the government has provided this year and that will get even bigger next year. In addition to that we have the lowest interest rates in 40 years.
It is for this reason, having put our fiscal house in order, having started from a starting point of a $17 billion surplus, that we have been able both to provide this very substantial support for the Canadian economy and the lowest interest rates in 40 years and to do all of that without going back into deficit. It is largely for those reasons that these experts are unanimously of the view that our country will do better than our neighbour in jobs and growth this year and next year.
Now I would like to deal with the question of tax cuts and the capital tax. We have been taken to task by the Canadian Alliance for not cutting taxes further in the budget, and wrongly so, because who is the keenest in the land on further tax cuts, apart from the Alliance? I would say the BCNI, the Business Council on National Issues, and the Canadian Chamber of Commerce. Both of those entities have acted in what I would describe as enlightened self-interest by stating explicitly that they were not calling for further tax cuts in the budget, partly because they recognize the exceptional circumstances in which we find ourselves today and partly because they recognize that $100 billion worth of tax cuts is already on stream and in the process of being implemented.
From the corporate point of view, what have we done? We get criticisms from the Tories on productivity. We get criticisms from the Alliance on tax cuts. We have implemented halving of the capital gains tax. That is good for productivity. That is a major tax cut. We have got rid of the income tax surtax. We have improved the treatment of stock options, which is important for the new economy. Perhaps most important for business, we have set in motion reductions in the corporate tax rate so that by the year 2004-05 our corporate tax rate will be about five percentage points lower than that of the United States.
All of that adds up to a massively pro-productivity agenda, contrary to what the Tories are saying. It means that we do not need to have further tax cuts in the budget, as approved by the BCNI and the chamber of commerce, contrary to what the Canadian Alliance has been saying. I would now like to say a few words about tax points and the Bloc.
Its position is completely ridiculous. The government has already made numerous transfers to Quebec in the past, in the form of tax points. We have given the provinces, including Quebec, more leeway to collect taxes.
In Quebec accounting practices, in separatist accounting practices, when funds are transferred to the provinces in the form of tax points, the federal contribution counts for nothing. That is the first point.
Given that, for them, current tax point transfers count for nothing, now they want us to transfer more in tax points, so that they can count these new tax points for nothing as well.
The Bloc Quebecois is asking us to convert the cash transfers, which do count, into tax point transfers, which do not count. Clearly, from a separatist point of view, for the PQ and the BQ, this is an excellent idea, since they receive more money and can turn around and say that the federal contribution is nothing. But from our perspective, we will not be taken for fools. We will not be taken in by this separatist ploy to give more resources to the separatists, only to have them say that we are not giving anything. We are not idiots on this side of the House.
In conclusion, I hope that we can in future be somewhat more fact based in our comments in the House, notably the Canadian Alliance. Out of every six facts it has, approximately four turn out to be totally erroneous. To summarize my position, I think this is an excellent budget because it has achieved four things.
It has put safety and security first. It has put what is necessary but not more than necessary into those safety and security measures.
Second, at a time of substantial global economic weakness it has provided massive support to the Canadian economy in the form of tax cuts, health care spending and other investments. This will stand us well in withstanding the global turbulence better than we have done in the past and emerging from it strong, and stronger than our neighbours.
Third, it has remained faithful to the government's longer term agenda, the social agenda, aboriginals, foreign aid, innovation, research, and the environment and so on. We have taken measures in all those areas.
Finally, incredible though it may seem, we have achieved all this in a time of extreme global slowdown without going back into deficit.
