CANADA House of Commons Debates VOLUME 139 Ï NUMBER 020 Ï 3rd SESSION Ï 37th PARLIAMENT OFFICIAL REPORT (HANSARD) Friday, February 27, 2004 Speaker: The Honourable Peter Milliken CONTENTS (Table of Contents appears at back of this issue.) All parliamentary publications are available on the ``Parliamentary Internet Parlementaire´´ at the following address: http://www.parl.gc.ca 1145 HOUSE OF COMMONS Friday, February 27, 2004 The House met at 10 a.m. Equalization, as hon. members know, is the federal government's most important program for reducing fiscal disparities among Prayers provinces. It ensures that the less prosperous provinces have the capacity to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. GOVERNMENT ORDERS This is not about the level of equalization. This is about the payment of equalization and extending legislative authority to carry Ï (1000) on with payments of equalization. [English] [Translation] FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS ACT Bill C-18 supports these two important programs and makes it Hon. Judy Sgro (for the Minister of Finance) moved that Bill possible to reach two goals. C-18, an act respecting equalization and authorizing the Minister of Finance to make certain payments related to health, be read the third [English] time and passed. First, it provides the Minister of Finance with the authority to continue to make equalization payments according to the current Ï (1005) formula for up to a year in the event that the renewal legislation is not in place by April 1, 2004. Hon. John McKay (Parliamentary Secretary to the Minister of Finance, Lib.): Mr. Speaker, thank you for the opportunity to enter Second, it provides the federal government with the authority to into this debate. pay an additional $2 billion from the consolidated revenue fund to I would like to start by thanking my colleagues on the finance the provinces and territories for health. committee for their cooperation on the bill. As hon. members know, Bill C-18 lays out the steps the government is taking to ensure that the bill is of great significance to the provinces and to those of us in the provinces and territories receive the payments to which they are the House who want to see that the legislative timelines are met. I entitled, payments supporting the public services provided to want to particularly acknowledge the help of the committee chair, the Canadians. member for Etobicoke North, and all members on the committee from both sides of the House who dealt with this in an expeditious The bill before us today enables the continuation of equalization fashion. payments while renewal legislation is finalized. The measures in the bill pertain to two of the four federal transfer [Translation] programs, equalization and the Canada health and social transfer, the CHST as it is commonly known. The current version of the legislation authorizing the federal [Translation] government to make equalization payments to the provinces will expire on March 31, 2004. Through these programs, the territorial formula financing and the new health reform transfer, the federal government, in partnership While discussions on the five year renewal are underway with the with the provinces and territories, plays a key role in supporting the provinces, Bill C-18 represents a preventive measure to authorize the Canadian health system and other social programs. federal government to continue making payments for up to a year, if necessary. [English] [English] As the largest federal transfer, the CHST provides the provinces and territories with cash payments and tax transfers in support of This will assure equalization receiving provinces that they will health care, post-secondary education, social assistance and social continue to receive payments if renewal legislation is not in place by services, including early childhood development and early learning the end of March. This is the critical point of the bill. If this and child care. legislation does not pass, then those payments cannot be made. 1146 COMMONS DEBATES February 27, 2004 Government Orders Without Bill C-18, the Government of Canada does not have the In considering Bill C-18, I urge hon. colleagues to keep in mind authority to make equalization payments, which would result in that the impact on equalization receiving provinces and their serious negative impacts for receiving provinces as payments would residents could be very significant if the bill is not passed. It is cease. therefore imperative that this legislation be passed quickly. Let me briefly review how the program works. Now, if I may, I will turn to the health part of the bill. As my hon. colleagues know, federal support for the Canadian health system is To begin, payments are unconditional, meaning that provinces can provided primarily through the CHST and the new health reform spend their funds as they see fit on public services for their residents. transfer. Next, payments are calculated according to a formula which responds to the changing economic fortunes and circumstances of Ï (1010) all of the provinces. Bill C-18 would amend the existing CHST to authorize payment of $2 billion as a supplement to the CHST. This fulfills the The formula measures the performances of provincial economies commitment made by the Prime Minister following the January 2004 to the average fiscal capacities of the five middle income provinces, first ministers meeting. It is also in keeping with commitments made which forms a threshold or standard. As the relative fiscal in the 2003 first ministers accord on health renewal, the 2003 budget performance of provinces go up and down, equalization entitlements and the 2003 economic update. go up and down. These increases or decreases in entitlements are the result of the formula working as it should, not the result of decisions I would like to point out that this funding is in addition to the by the Government of Canada to increase or decrease entitlements. increased federal investment of $34.8 billion over five years for health that was confirmed in the 2003 budget. As a result, this Provinces with revenue raising ability—or fiscal capacity as it is funding will bring the federal government's total commitment in known in the jargon—below the threshold or standard amount support of the 2003 health accord to $37 billion over five years. receive equalization payments to bring their revenues up to the standard. At present, eight provinces are below the standard and I would like to point out that this funding can be provided without qualify for federal support under the program. Only Ontario and the government going into deficit. I want to point out, as I Alberta are not recipients. accompanied the minister across the country, that one of the things we heard repeatedly is that the government should not go into deficit The third element of the program involves a floor, which provides under any circumstances. provincial governments with protections against unexpected, large and sudden decreases in equalization payments that would otherwise Passage of the bill will provide the provinces and territories with be warranted by the straightforward application of the formula. The the flexibility to begin drawing down these funds as they require, floor limits the amount by which the provinces' entitlements can which would help them better plan for the future and provide health decline from one year to the next. care services to their residents. Two built-in mechanisms ensure that the program remains current. I encourage my hon. colleagues to pass Bill C-18 without delay. The first is an ongoing review of the program by federal and The measures in the bill affect the provinces and territories and thus provincial officials, which makes sure that the differences in fiscal their residents who depend upon them for public services. Not only capacity are measured as accurately as possible. is additional funding for health part of the federal government's ongoing commitment to health care, it is being provided within a The second mechanism, and the one central to today's debate, is framework of balanced budgets which will ensure its sustainability that renewal legislation must be introduced every five years over the long run. following federal-provincial consultations. The last renewal was in 1999. The current legislation is set to expire on March 31 of this As hon. members know, the Prime Minister intends to meet with year, as I indicated earlier. The renewal legislation will guarantee his counterparts in the summer to discuss long term sustainability of that the program remains up to date and that the best possible our publicly funded health care system. In the meantime, the bill calculations and data are used to determine equalization payments. would ensure that our health care system continues to be a proud example of our national values at work, as recently described by the The renewal legislation will also guarantee that the integrity and Prime Minister. fundamental objectives of the program are preserved. The govern- ment must be able to assure provinces that they will continue to Further, the equalization provisions in the bill underscore the receive equalization payments even if the renewal legislation is not priority that the government places on this federal transfer and passed by the end of the fiscal year. ensure uninterrupted funding to the provinces until the renewed legislation can be finalized. Bill C-18 addresses this problem by enabling the continuation of payments for up to a year while the renewal legislation is being Through our federal system of transfer payments, all Canadians finalized. Passage of the bill would ensure that the public services are guaranteed equal access to health care, a safety net to support which provinces fund through the equalization program will those most in need, freedom to move throughout the country to seek continue to be protected for the benefit of their citizens.