Mr. Speaker, we always appreciate suggestions on how to effectively control spending, ensure that taxpayer dollars are being utilized to their fullest standard of efficiency and look at how we can especially maintain a situation where the government stays out of deficit and moves toward a balanced budget.
The items mentioned by my friend who introduced the motion are certainly areas among a number of things that should be considered in terms of looking at restraint and at how we can maximize the spending of taxpayer dollars. In fairness, there seems to be some focus or, as some would say, possibly an inordinate amount of focus, on one tiny area of budgetary restraint.
I want to say from the outset that if somebody has a suggestion that even saves $1,000, that is worth pursuing because every dollar that comes into the coffers of government is there as a result of a taxpayer somewhere working hard and having part of her or his paycheque taken away to support the government. We all understand that taxes are necessary but taxes can hit a level at which they become stifling and in which they service as a disincentive.
Last week I made an announcement about eliminating 245 government appointed positions, not public service positions but government appointed ones, and the savings were in the area of $1.2 million. We had opposition members saying that it was just $1.2 million. However, to me and to all of my constituents, $1.2 million is a lot of money. These things add up over time. I am not in any way diminishing a particular initiative because its overall expenditure saving might be in the thousands or hundreds of thousands.
I do not think most Canadians have a lot of focus on the so-called ten percenters. I think they like getting information that is clear and succinct as much as possible. However, I want to make something very clear right from the start. The so-called ten percenter program, which allows MPs to have the cost of a small brochure sent out either to their own riding or to other ridings around the country, is a common process in this country and has been going on for years. I know what it is like in my consistency to see a ten percenter that was not one that emanated from my office but in fact from another MP's office and one which was going after a program or certain policy of our party and going after it in a very vigorous way. I might not have liked or even agreed with the content of that particular ten percenter but it is a commonly accepted process and it emanates from all parties.
I realize I cannot wave items around but I have one here from a member from the Liberal Party showing a picture that looks like a cupboard. One little can of spam is in the cupboard and it reads, “They've spent the cupboard bare”. Now is that a factual presentation of a budgetary item or is it something that is being used by the Liberal Party to cast doubts on a particular aspect of government spending? It does not say how that has happened. It just has the picture and the can. I do not want to be seen as talking about one particular brand of processed meat so I will not say the name, but there is a can there.
Does the Liberal member, who introduced, as part of this motion, that we should eliminate this practice of ten percenters, agree with his colleague sending out a picture of a cupboard with a little can of processed meat inside and saying that this represents the government's budget? If he does not have a problem with his own member doing that, then he cannot in all honesty raise issues about this side of the House doing it.
I believe we should always try to communicate honestly, fairly and transparently. That should always be a leading guidepost for us in our communications. We should use that part of the member's motion to guide us in being better communicators in terms of getting the truth, getting it straightforward, and getting it done in a transparent way and a way in which the element that we have introduced can be verified. Those are all things that our taxpayers would appreciate.
I have to believe that the broader picture of concern, and I have to take it at face value from my friends across the way, is about maintaining budgetary responsibility. I have not heard it articulated clearly but I hope they would agree that we should be moving toward a balanced budget. The essence of the budget tabled by the Minister of Finance is that we now have a road map to get toward a balanced situation. We are not projecting that as some kind of philosophical or ideological position. I will reflect on why we are actually doing that.
Broadly speaking, the budget itself contains three approaches to getting back to a balanced budget by about 2014-15. The broad approach covers three areas. The first area is that at the end of this year we will end what is commonly known as the government's stimulus package, a plan of introducing dollars into the economy, even though we knew we would take on debt to do it and run into a deficit at the beginning of the global downturn.
We looked at the global downturn, as most other countries did, as an unprecedented downturn, a recession the nature of which we have not seen since 1929. We said that we would inject some stimulus into the economy for a short period of time but, as we said at the outset, it would be short-term because there needed to be a limit on how much debt a country should take on. We are in the second and final year of that stimulus package.
There are $19 billion of stimulus spending that will go toward a variety of projects across the country for both infrastructure projects and projects of a nature that deal with programs for people. The $19 billion in this budget will be gone at the end of this budget year. Most of us would agree that the budgetary deficit is at about $53 billion right now but at the end of this year $19 billion will come off that right away. That is the first element of the program. A very large chunk will be reduced.
The second area involved looking at our own spending as government. Classically, two approaches can be taken if we are trying to get rid of a deficit and move toward a balanced budget. We could follow the well-documented path chosen by the federal Liberals in the mid-1990s. One of the most significant things they did, and one of the biggest reductions in the deficit at that time, was slash the transfers to the provinces, especially in the areas of health and education. They do not even argue with the fact that those transfers were slashed significantly overnight.
I was involved in provincial government at the time and it was a horrendous shock to see overnight and virtually without warning, the health and education transfers to provinces slashed by upward of 30%. It was a huge impact on all provinces, many of which are still digging themselves out of the hole trying to recover that. In the subsequent years to the slashing of transfers, came the raising of taxes almost 70 different times in 70 different areas. That is one approach.
If we want to get rid of the deficit, we could cut the programs available to people and crank up taxes, which is an approach that is endorsed by an entire school of economic thought. It is largely Keynesian in its roots and it is a particular course of action that we do not endorse in terms of long-term action.
It is the same within our households where, from time to time, we will take on some debt for various reasons. However, for people trying to run their household finances or a small business, they can only continue to acquire debt for so long. Eventually that nasty little item called compound interest gets us.
I just said compound interest and there was a cry from the gallery. It was instinctive. Even a young child understands that compound interest and taking on debt in a non-stop fashion will eventually cause people to collapse. The same is true of governments.
We have made a determination that we will stop that particular process, that long-term borrowing, and rein in our expenses of government. What we have said is that at the end of this budget year, 2010-11, we will freeze the operational portion of all budgets of all departments. That is an envelope of spending of about $54 billion. We have said that this year, 2010-11, it will increase but that for the next two years after that we will put a freeze on it.
Government hiring and the increase in the public service over the last 10 years has been significant. We made a commitment to increase the size of our military and our public security, the RCMP, which we have done, and there are clerical positions that go with that. However, the public service has increased even beyond that for a lot of well-intended and good reasons.
We are simply saying that we need to put a lid on the growth and slow it down. The interesting part is that we will keep growing. Sometimes when we hear members opposite we think that this is the end of civilization as we know it, that all spending will cease and the bottom will drop out of everything the government does. In fact, we will keep growing but we will moderate that level of growth.
To set a positive example of that, we will be introducing legislation to freeze the salaries of members of Parliament, senators, ministers and the Prime Minister. Some people will say that freezing our salaries is just symbolic. Members should try telling people on the street that their salaries will be frozen and see how symbolic that is.
However, there is symbolism plus there is showing responsibility. We need to put certain things in check and show that we can do it, which is the second element of the plan. The first element is getting rid of the stimulus funding and the second is controlling our finances and not increasing the debt load.
Famously, when John Maynard Keynes, who advocated a process for most of his economic life of governments not worrying about increasing debt and deficit, especially in a time of downturn, was asked a question once, “Mr. Keynes, in the long run, isn't that eventually going to catch up to us if we just keep on piling up debt?”, he famously replied, “In the long run, we'll all be dead”.
That part is true. In the long run, we will all be dead. My grandkids and my kids, however, will not be dead. They will still be here long after I am gone and they should not need to carry, in an unnecessary way or an inappropriate way, the spending commitments that are tied to accumulating debt. We should be reining that in now.
Mr. Keynes did not have kids, which perhaps affected his thinking. I am not saying that at all in a pejorative sense, but maybe that was affecting his long-term thinking. However, we need to think long term in terms of the welfare of our country when we look at the area of just bringing on debt and letting it increase.
The third area that we are putting into play is overall service review, expenditure review and administration review of everything we do. As a matter of fact that has been going on for a few years already. Last year we looked at the spending of 20 different departments and asked them to look at their department and reprioritize. We asked them to take 5% of what they spend and show us what 5% would be the lowest priority. We told them that we wanted to see spending move to a higher priority as we needed to begin to pick and choose because of the fiscal situation.
That particular exercise yielded $287 million. This year we will be doing that with a number of departments, boards and agencies. We expect to yield, and I am saying “expect” in that we hope to yield, at least $1.3 billion out of the exercise this year. It may be a little more than that, or it may be a little less.
Nonetheless, year to year we expect that through this particular time of service review, we will see the cost of government continue to be moderated so that the debt and deficit will not continue to pile up.
Any program that government does, and certainly as a minister I have always put this question to administrations and I know my colleagues think the same way, we should always ask what works or does it work, whatever the program is.
I could stand up for quite a bit longer, and I am sure my colleagues would rejoice in that, and go on at great length about our government's good programs, but what really qualifies this is what other people outside of Canada are saying about the approach we have taken.
We could talk about the International Monetary Fund, the Economist Intelligence Unit, the OECD, and the Conference Board of Canada. All of their remarks indicate that this is the particular way to go. It has been remarked that Canada, among the G7 countries, was in the best position going into this recession and is in the best position coming out of it. That is the view of people who are fixed on government or public budgets around the world. They are pointing to Canada and the approach we are taking as showing leadership.
It is also interesting to note what other markets are doing. There was an article in one of last week's financial papers indicating that Russia as a country, and certainly it is having its own fiscal challenges, is planning to strengthen its own currency reserves. Guess which currency it is planning to buy more of? The Canadian dollar. It sees the strength there. There is strength in the dollar.
The largest bond fund manager in the world, whose fund is located in the United States, manages a fund of over $1 trillion. I am not even going to try to paint what a $1 trillion is because it starts to get over my head. However, that $1 trillion fund is made up of institutional investors, pension funds, workers' funds and individuals who invest in this fund. The person who manages the fund announced that he is directing his large institutional investors and smaller individual investors to invest in Canadian bonds and the Canadian dollar because of the strength of the economy and the approach we are taking.
People know, whether they are sophisticated investment managers as with the person who controls this $1 trillion fund or just workers whose funds are vested in a pension plan and know intuitively, that if debt goes too—
