Madam Speaker, it is a pleasure to rise today to speak to Bill C-54, an act to amend the federal-provincial fiscal arrangements with regard to equalization payments.
From the debate in the House today, we all know that the equalization program is an essential component of fiscal arrangements in Canada and it needs to be strengthened to fulfill its constitutional mandate.
The growing fiscal imbalance between the federal government and the provinces and territories raises concerns over the adequacy of fiscal arrangements between the different levels of government.
The equalization program enables all regions to offer more comparable levels of public services and narrows the differences in tax burdens for Canadians across the country. It is certainly not simply the NDP that believes this. In fact, this is entrenched in the Constitution.
The importance of equalization has been acknowledged in subsection 36(2) of the Constitution Act, 1982. It stipulates:
Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.
This is a critical part of our Constitution. It is certainly a critical part that regions like the one I come from, Atlantic Canada, hold onto and believe in deeply.
In its current structure, the equalization program is becoming more inadequate in its ability to achieve these constitutional commitments. Since the beginning of the nineties, equalization entitlements have been declining as a proportion of GDP while fiscal disparities in Canada have not been significantly reduced.
I would like to focus on the concept of adequacy and equity in this program of equalization.
I had a chance to look at the Finance Canada website recently, under transfers to provinces. I worked with the figures that were posted, showing total major transfers by provinces for the years 2000-01 to 2003-04.
Numbers are not necessarily my forte, but I do have access to a Radio Shack calculator. After crunching a few numbers from the Finance Canada website, I found some pretty disturbing things.
The website starts off telling us that between 2000-01 and 2003-04, total major transfers from the federal government to the provinces, mainly equalization and CHST, increased from $42.8 billion to $49.2 billion. That is an increase of almost 15% in just three years. That sounds good. The trouble is that not every province managed to get a seat on the gravy train.
For New Brunswick, total major transfers over the three year period increased, not 15% but a mere 3.6%. For Prince Edward Island, the increase was only 1.6%.
However, even those two provinces were better off than Newfoundland and Labrador and Nova Scotia. Unlike P.E.I. and New Brunswick, Nova Scotia and Newfoundland and Labrador have some revenue from offshore oil and gas. Instead of getting a minor increase in major transfers, they got a major decrease in major transfers. Nova Scotia's transfers dropped 1.3%. Newfoundland and Labrador's dropped more than 10 times that, at 14%.
For the Atlantic region, overall total major transfers from the federal government dropped by 3.3%, from 2001 to 2004, for a total decrease of $200 million. For the country as a whole, total major transfers from the federal government to the provinces increased by 15%, or more than $5 billion.
The Atlantic region is the poorest part of the country. It has the highest rates of unemployment, taxation, and post-secondary tuition, and the lowest per capita rate of expenditure on social programs. For this region, major federal transfers dropped by 3.3%, or about $200 million. There is something wrong with this picture.
If the purpose of these federal transfer programs is to provide a level playing field for Canadians from coast to coast to coast, why are the poorest provinces being cut back before they get anywhere near that level playing field?
Under our Constitution, Canadians have the right to reasonably comparable levels of public services at reasonably comparable levels of taxation. It is time the government started taking the constitutional obligations seriously.
The NDP is calling on the government not only to forgive the census related costs it has calculated in the recent census measurements but to accept a great deal of the responsibility for those losses. We are asking the government to work with Nova Scotians to make the province again a place that will sustain families and their hope for a better life.
We found out recently, this week in fact, that another funding crisis is hitting Nova Scotia's health care system. It is in the form of the largest health care district, the capital district health authority, being forced to cancel overtime for nurses.
Despite the difficulties our province is having in paying for our health care services, education services and what I have just been talking about, the Liberal government is threatening to claw back over $80 million in equalization payments based on the recent census figures.
It took the federal government nearly seven years to realize that its failed economic development programs were forcing young Atlantic Canadians to leave. Its first response was not to determine what went wrong. Its first response was to demand money back. That is an astounding thing to me.
Changes in the employment insurance program meant fewer people could earn a living in Nova Scotia through seasonal employment. The federal government could have fixed that. Instead, it chose not to. A lot of people went down the road.
Cuts to funding for education and health care through the CHST have sent more people down the road. The incredible cost of post-secondary education in my part of the country has made it impossible for young people to carry those debts. Again, we have seen a decrease in our population due to the government's punitive economic measures. We are now being asked to pay back money that in fact is not coming our way.
The offshore oil and gas industry was supposed to be a saviour for Atlantic Canadians, a cash cow like the one Albertans have enjoyed for many years. However, the promise of increased revenue from our offshore has not come true and there are no signs that it will ever be a viable industry that will provide a great deal of revenue for our province.
The Nova Scotia offshore accord, signed by the province and the federal government, was supposed to provide an equalization holiday for Nova Scotia once oil and gas started flowing.
Unfortunately, the accord was signed and came into effect before the member for LaSalle—Émard brought in his infamous 1995 budget which dropped the Canada assistance plan for the new Canada health and social transfer and put in a new set of rules for the provinces. In addition, the transition period for offshore revenues was only set for 10 years. It runs out this year. I know our colleagues from Newfoundland and Labrador also face difficulties with revenue earned from the offshore and its impact on equalization payments.
Although it is not actually a part of equalization, under the CHST brought in by the member for LaSalle—Émard, health care funding to provinces is inequitable. It is based only on population, not on need.
The provinces with the lowest overall levels of health get the same level of money for health care per person as provinces with much healthier populations. For the Atlantic provinces, it is a double edged sword. Failed economic policies mean younger, healthier people are leaving our region, as I already mentioned. The result is an aging population in poor health which means we have higher health care costs per person.
Everyone in the House should be aware that a low socio-economic standing poorly affects health outcomes. Poorer provinces automatically have higher health care needs to offset that. The current Canada health and social transfer does not reflect that reality and the new separate transfer for health is based on previous spending. Again, it is not on need.
In conclusion, I want to emphasize that we need to review how equalization payments are calculated so that they can truly be a tool for poorer provinces to provide a comparable level of care to that of our wealthier neighbours. We should not wait for another year and force provinces to scramble around to meet their budget priorities with such a flawed agreement.
We need an equalization program that treats provinces equally, that treats all citizens across this country equally, and that does not punish a province for the results of the federal programs that have been very hard on many of our provinces.