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C-30: Budget Implementation Bill, 2004

Honourable senators, I have the honour of presenting, at second reading stage, Bill C-30, the Budget Implementation Act, 2004.

Before discussing the specific measures included in this bill, I think it would be useful to step back and consider this budget in a broader strategic context.

In its Speech from the Throne delivered in February 2004, the Government of Canada put forward an ambitious program to improve the level and the quality of life of all Canadians.

This new agenda is incurred by the principle of government living within its means. It applies to the resources that are available to the goal of giving Canadians greater means to advance their well-being by taking important new steps in key areas such as communities, learning, health care and innovation.

The 2004 budget introduced important building blocks to support this critical national agenda. At the core of the 2004 budget is the recognition that to achieve the fundamental goal of better lives for all Canadians, our social and economic policy must be mutually reinforcing. Central to the budget is that these policies must also be buttressed with the prudence of a balanced budget — in other words, of government living within its means.

In this vein, Budget 2004 contains the prudent fiscal planning that has been the cornerstone of Canada's economic track record in recent years. For the 2003-04 fiscal year, the government will record its seventh consecutive surplus with Canada as the only G7 nation not to run a deficit. We have achieved this despite the series of economic shocks, such as SARS and BSE, that beleaguered the Canadian economy last year. This record underscores why the budget maintains the yearly $3 billion contingency reserve and rebuilds extra prudence for 2004-05 and 2005-06. We will continue to be ready to face the unexpected with fiscal confidence. Equally important, if the contingency reserve is not needed to cover any further unexpected fiscal shock, it will continue to go directly towards debt reduction.

I urge honourable senators to bear in mind that this approach has helped the government reduce the national debt by $52 billion since it balanced the budget in 1997-98, which in turn has delivered ongoing savings of $3 billion a year in interest charges. This is money freed up for investing in health care, infrastructure and other important national priorities. That is why Budget 2004 aims to go further on debt reduction by setting the objective of lowering the debt-to-GDP ratio to 25 per cent in 10 years.

This is no abstract accounting goal. It means real future benefits for Canadians because a stronger financial position today positions us to better meet the needs of tomorrow. That is more important than ever if we are to meet the fiscal challenges of a greying population with fewer working-age people to fund social programs but with more seniors placing greater demand on those programs.

Honourable senators, let me now pull back from the future and turn to today's legislation and the specific measures in Bill C-30, measures that address Canadians' priorities of community, health care, learning and the environment.

Let us start with the proposal to provide full relief from the goods and services tax and the federal component of the harmonized sales tax for municipalities of all sizes. Let me explain why this measure is necessary. As we know, Canada's communities are the social and economic foundation of the country. Whatever their size, the communities in which Canadians choose to live have a significant bearing on their quality of life and the social and economic opportunities open to them.

Municipal leaders have pointed to the financial challenges that they face in trying to maintain and improve their economic and social strength. They consistently identify infrastructure as their most pressing priority. However, the challenges facing municipalities extend beyond the provision of physical infrastructure. Also under strain are the social programs and services that help Canadians participate in their communities, find employment and benefit from the opportunities around them.

Clearly, municipalities are facing increasing pressure to maintain and renew their infrastructure and ensure that necessary social programs are available to their residents. However, there is a general understanding that there are limits on the extent to which the property tax base, the single most important source of revenue for municipalities, can finance these spending pressures. In recognition of these challenges, the federal government is committed to forging a new deal for communities. The new deal will be a sustained, long-term effort to improve the living standards and quality of life of Canadians in cities and communities of all sizes.

The government's new deal for communities is designed to ensure that Canada's municipalities have reliable and predictable long-term funding by working with provincial and territorial governments and municipalities to provide more effective program support for pressing infrastructure and social priorities in communities, to help communities to acquire the best tools to pursue local solutions for local problems, and to give municipalities a greater voice in shaping federal policies and programs that affect them.

Budget 2004 takes important first steps in building this new deal. A full rebate on the GST and the federal component of the HST paid by municipalities across Canada in providing municipal infrastructure and community services, will be granted effective February 1, 2004. Bill C-30 also includes an amendment to facilitate an orderly transition to the full rebate, protect the integrity of the tax system and enhance transparency.

This relief measure advances the objectives of the new deal in three ways. First, the higher rebate represents an additional source of growing, reliable, long-term funding for all municipalities. Second, the increased rebate benefits municipalities of all sizes across Canada. Third, it provides a significant contribution for the funding of critical infrastructure priorities such as roads, modern transit and clean water. This increased rebate will provide municipalities with an estimated $7 billion in additional revenues over the next 10 years. I repeat, $7 billion over the next 10 years, including $100 million for two months of 2003-04, $580 million in 2004-05, and $605 million in 2005-06. That, honourable senators, is real money for real needs in real time.

Next, Budget 2004 recognizes that investments in learning are also fundamental to a strong economy. We all recognize, I am sure, that learning produces a work force that is qualified to meet the demands of a growing economy and fosters advances in knowledge, the development of new technologies, new products and improved production processes. These, in turn, increase productivity, generate economic growth and promote our international competitiveness. In order to create, find and keep good jobs in the knowledge-based economy, Canadians will increasingly need to pursue learning opportunities both during their youth and as working adults later in life.

The federal government fully recognizes that support for learning starts with the birth of a child and extends well into adulthood. Over the years the government, in partnership with provincial and territorial governments, has developed a strong agenda in support of Canada's children. Budget 2004 builds on this commitment by increasing its support of early learning and child care, among other things. This national commitment is embodied in both the 2000 Early Childhood Development Agreement reached by first ministers and the 2003 Multilateral Framework on Early Learning and Child Care agreed to by federal, provincial and territorial ministers responsible for social services.

Bill C-30 accelerates implementation of this framework by increasing cash transfers to provinces and territories under the new Canada Social Transfer over the next two fiscal years by a total of $150 million. This will represent an increase of $75 million per year, this year and next, and bring total funding for early learning and child care to $375 million over those two years. These resources could provide up to 48,000 new child care spaces, or up to 70,000 fully subsidized spaces for children from low- income families.

Moving on, further action to help strengthen our publicly funded health care system is also a key component of the government's new agenda and the 2004 budget. As honourable senators know, the Prime Minister confirmed in January that provinces would receive $2 billion in additional funding for health, bringing to $36.8 billion federal funding provided in support of the 2003 first ministers accord on health care renewal. Events such as last year's SARS outbreak highlight the need for active responses to gaps in our public health system. The budget takes this action by providing funding to improve Canada's readiness to deal with public health emergencies and address immediate gaps.

Specifically, Bill C-30 authorizes $400 million in payment to a trust to be provided to provinces and territories over three years, of which $300 million is targeted for a national immunization strategy. This new funding will build on the $45 million over five years provided for immunization in the 2003 budget. The $300 million will support the introduction of new childhood and adolescent vaccines such as vaccines for chicken pox, meningitis, pneumonia and whooping cough proposed by the National Advisory Committee on Immunization.

The remaining $100 million will relieve stresses on provincial and territorial health care systems that were identified during the SARS outbreak and help the provinces and territories address immediate gaps in their public health capacities by supporting front-line activities, specific health protection and disease prevention programs, information systems, laboratory capacity, training and emergency response capacity. As well, the budget takes measures to ensure that Canada's public health system has the information technology systems needed to deal with future public health outbreaks or epidemics.

Bill C-30 authorizes the payment of $100 million to Canada Health Info Highway Inc. for its use to enable the provinces and territories to invest in software and hardware, with the goal of assessing, developing and implementing a high quality, real time public health surveillance system with a particular focus on infectious disease monitoring. Through the measures in Bill C-30, Canada's public health system will have greater capacity and surveillance, diagnostic and response capability, and improved information sharing, training and education and collaboration across jurisdictions.

Bill C-30 also addresses health care in learning through federal transfers made through the equalization program. Since its inception in 1957, the Canadian equalization program has played an important role in defining the Canadian federation.

Not all provinces in the federation are equally prosperous. The federal government makes equalization payments to the less prosperous provinces to allow them to provide their residents with public services that are reasonably comparable to those in other provinces at reasonably comparable levels of taxation. Provinces that receive these funds use them to help pay for the programs for which they have primary responsibility, including health care, education and social programs.

The program is reviewed and renewed every five years to ensure the integrity of the formula upon which payments are based. Bill C-30 renews the equalization program for five more years, from 2004-05 to 2008-09. As part of this renewal, the bill includes changes to maintain the integrity of the program and improve its operation. Such changes will provide more stable and predictable equalization payments and more accurate measures of fiscal capacity and tax bases. As a result of these changes, an estimated additional $1.5 billion will be transferred to the equalization- receiving provinces over the next five years. Moreover, year over year, fluctuations in equalization payments will be significantly reduced.

As well, the bill contains provisions related to the offshore accords that allow Nova Scotia and Newfoundland to manage and tax offshore energy resources as if they were under provincial jurisdiction. Nova Scotia will receive a payment that approximates what it could have received if the equalization offset provision had started in 2000-01. The bill extends the deadline for Newfoundland and Labrador to choose either a generic solution established under the equalization program or the benefits of the accord, whichever the province prefers.

So far, I have focused on budget measures that deal directly with people and institutions, but the budget also recognizes that a clean and safe environment is fundamental to a healthy society and its sustainable economic growth. The government remains committed to ongoing support for the development and commercialization of environmental technologies that hold the promise of improving economic efficiency while contributing to a cleaner and healthier environment, for example, through a more efficient use of energy. These technologies will be fundamental to meeting our environmental goals, such as reducing greenhouse gas emissions to address climate change.

To promote better environmental stewardship for the future, the budget, through Bill C-30, invests $200 million in the sustainable development technology foundation, bringing total federal funding to $550 million. An arm's length, not-for-profit foundation, SDTC, is to further the development and demonstration of technologies that reduce greenhouse gas emissions and improve air quality.

The bill also broadens the mandate to include support for clean water and soil technologies. This will allow the foundation to deliver innovation technology solutions for sustainable development issues like climate change and clean air, water and soil.

Another measure in the bill builds on Canada's existing efforts to bring research discoveries to the marketplace by enhancing access to venture capital financing. In 2002, Farm Credit Canada launched a new business line, FCC Ventures, to provide venture capital financing for the agriculture and agri-food sector. Building on last year's initial investment of $20 million over two years, this budget provides FCC with an additional $20 million over two years to specifically provide venture capital financing for promising agriculture and agri-food companies. Bill C-30 amends the Farm Credit Canada Act to increase the statutory limit on capital payments to allow for the future injection of capital in FCC.

I have covered a great deal of ground because this is important and far-reaching legislation. Before concluding, I should highlight the fact that Bill C-30 also includes several other measures of importance to Canadians. It clarifies the rules governing employers' contributions and refunds under CPP and reduces the burden of compliance on employers. When an employer is restructuring, employees are sometimes treated as if they had joined new employers, even though their jobs remain unchanged. In these cases, the successor employer has to make contributions for the same employees a second time in the same year. Now, through Bill C-30, employers who undergo a change in business structure will not have to pay contributions twice for the same employees.

To further reduce the burden of compliance on employers undergoing business restructuring, the bill also amends the Employment Insurance Act with respect to EI premiums in the event of business restructuring.

A third measure takes action to ensure that persons with disabilities are not penalized when they decide to re-enter the workforce. Currently, recipients of CPP disability benefits who attempt to return to work but abandon their efforts because of difficulties in overcoming their disability are required to reapply for disability benefits. The delays and uncertainty associated with the need to reapply can discourage individuals from returning to work. Accordingly, this bill allows for the reinstatement of disability benefits if a former recipient ceases working for reasons related to his or her disability within two years of returning to work.

A fourth measure gives the Governor in Council the authority to set the EI premium rate for 2005 to ensure against the risk that legislation implementing a new rate-setting mechanism is not passed in time to set the rate for next year.

Finally, in response to a Supreme Court of Canada decision, Bill C-30 establishes a 10-year limitation period for the collection of federal tax debt under the Air Travellers Security Charge Act, the Excise Act, the Excise Act 2001, and the Income Tax Act, effective March 4, 2004. The bill also provides that taxes that were unpaid on March 4, 2004, will be subject to a new 10-year limitation period as of that date, and taxes collected before March 4, 2004 but after the expiry of an application limitation period will not be reimbursed. These measures will prevent late payers from gaining a windfall benefit.

Honourable senators, it is clear from these measures that Budget 2004 delivers vital, sometimes visionary, action for tomorrow, while maintaining the government's commitment to prudent fiscal planning for balanced budgets. The measures in Bill C-30 ensure that we can help Canadians enhance the well-being of their families while still living within our means. Surely this is an objective that serves the fundamental purpose of this place and government overall, so I have no hesitation in urging all honourable senators to pass this bill without delay.