Mr. Speaker, it gives me pleasure to speak on Bill C-76, an act to implement certain provisions of the budget tabled on February 27, 1995, and specifically the Bloc amendment thereto.
The 1995 budget was one of the most important in the history of Canada. It was a budget of fundamental reform and national renewal.
On October 18, 1994 the Minister of Finance addressed the finance committee and indeed all Canadians. I would like to quote the finance minister. At that meeting he stated: "We came into government to help build a better Canada, a Canada of jobs and growth. That is our only goal and it is because of that that we must act decisively on the debt challenge today. We must not waste this recovery."
That commitment continues to be met by this budget and it is reflected in the confidence level of the financial markets, of the business community, and indeed of the Canadian people.
The budget incorporated numerous provisions for all sectors. The deficit targets have been met using prudent economic assumptions. The total savings from the budget actions of $29 billion over three years are the largest set of actions since the demobilization of the second world war. The deficit was planned to be cut to 3 per cent of GDP or about $24.3 billion in the 1996-97 year. If the private sector economic forecasts are right, the deficit will likely be lower.
New borrowing from financial markets is down to $13.7 billion in the 1996-97 year or 1.7 per cent of GDP, less than projected for the national government of any other G-7 country. Debt to GDP begins to decline in 1996-97 as the debt grows more slowly than the economy.
The deficit reduction was largely due to expenditure cuts. The budget delivers $25.3 billion of cumulative spending cuts over three years, with $16.9 billion from the top to bottom program review. Almost $7 in expenditure reductions were made for every $1 of new tax revenue over the next three years. As all Canadians know, there is no increase in personal income taxes.
Program spending will decline from $120 billion in 1993-94 to $107.9 billion in 1996-97. This is the lowest program spending in relation to the size of the economy since 1951.
There has also been a dramatic reduction in departmental budgets. Several have been halved over the three years. As all Canadians know, 45,000 public service positions were cut as part of the budget.
In addition, there were structural changes to ensure that we have continued savings. There is a fundamental change in the structure of program spending, which will keep the deficit on a downward track. Major cuts in business subsidies were made. They are down by 60 per cent from $3.8 billion in 1994-95 to $1.5 billion in the 1997-98 year. Many programs have been consolidated, merged or commercialized.
The new Canada social transfer to the provinces in 1996-97 has been created to provide more flexible, sustainable block funding. Unemployment insurance reform is intended to be in place by July 1, 1996. A course has been charted for the reform of our public pension system to make it fairer and more sustainable in the long term.
The burden of the restraint must be shared equitably among all Canadians. Impact of budget actions have been equitably distributed across Canada. For instance, the transfers to the provinces declined 4.4 per cent from 1994-95 to the 1996-97 year compared with a 7.3 per cent cut in other federal programs. It demonstrates that the provinces have been asked to contribute far less than the federal government.
The increased cost recovery in other fees, such as the $975 immigration fee per adult immigrant, also recognizes that social programs must seek to provide self-funding to the greatest extent possible. There have also been new measures to ensure the collection of taxes owed. Tax fairness has been improved with tighter rules for tax deferrals on foreign and family trusts, R and D incentives, and RRSPs. There are also higher taxes for corporations and large banks and, as we know, a small excise tax increase of 1.5 cents per litre to help reduce the deficit.
One of the specific provisions within the budget that is of particular interest to me is the provision that deals with the tax deferral of unincorporated businesses and self-employed businesses. Businesses that are self-employed or unincorporated have the opportunity under the tax act to choose a year end that suits their needs. It does not necessarily have to coincide with the calendar year. That was brought in initially to provide businesses with the opportunity to have the cash flow they would need in those start-up periods so they could continue to establish the business.
The tax deferral of those deferred months is a permanent deferral. Take for example a business that has a year end of January 31. It means that the income from the past 12 months ending January 31, 1995 would not be reported until his or her personal income tax return was filed in 1996, which would not be until April of that year at the latest. Theoretically businesses would have a permanent deferral of up to 11 months. The budget changed the law so that after 1994 all businesses will have to declare income on a calendar year basis.
We understand the treatment involves a catch up of the deferral of reporting that income. To provide the transition period available, the budget proposes that the recouping of those taxes will take place over 10 years, 5 per cent in year one, 10 per cent in years two to nine and the balance of 15 per cent in the 10th year.
In addition, the government has extended the filing date for the tax returns of these taxpayers until June 15, although the taxes otherwise owing have to still be paid by April 30.
Most parliamentarians have made very clear their views on the budget. The most important aspect of the budget reaction is how Canadians feel about it. I would like to very briefly read some of the figures from the latest Angus Reid poll on the budget. First, more than two-thirds or 69 per cent of Canadians surveyed said they believed that the federal government is on the right track with the overall approach they have taken in the budget.
A majority of respondents from all major socio-demographic segments of the population endorse the overall direction of the budget. A clear majority of Canadians in every region support it.
A majority of Canadians, some 57 per cent, say that the budget is better than most federal budgets in the past decade or so. Fifty-six per cent of Canadians also say that they are more confident in the federal government's ability to manage the economy as a result of the budget.
I could go on but I think it is clear to say at this point that Canadians are happy with the work we have done. The biggest debate that has been going on has to do with the size of the debt. There is no question the government is committed to eliminating the deficit and to start paying down our debt. At $550 billion, it represents a substantial expenditure to service that debt.
Canadians, I know, are aware that the government is committed not only to hitting a target of 3 per cent of GDP for the deficit by the end of the third year but to getting it as low as possible as quickly as possible, but in a fair and compassionate manner.
The renewal of Canada's fiscal health must include compassion. That is a very important issue. Canadians must be consulted on the kind of Canada we want. Those who rely continually on government must be weaned off their dependency for social handouts.
The government can no longer afford to subsidize the payrolls of businesses through UI. The system must be restructured to a bona fide system of insurance. Also the government can no longer afford to sustain the same level of social spending. Seventy-five per cent of the people on welfare are employable. We must pursue every opportunity to promote job creation and training for Canadians so they can have meaningful employment.
The Canadian people spoke up very clearly on how they felt about increased taxes and the minister responded in the budget. The job of restoring the fiscal and social well-being of Canada has begun. We have work to do on behalf of all Canadians. It must be done in a fair and compassionate manner.
