MINISTER DION REAFFIRMS THE GOVERNMENT OF CANADA'S INTENTION TO COOPERATE WITH THE PROVINCES TO PROVIDE A BETTER QUALITY OF LIFE FOR CANADIANS

TROIS-RIVIÈRES, QUEBEC, February 4, 2000 – Speaking to the members of the Trois-Rivières Chamber of Commerce, the Honourable Stéphane Dion, President of the Privy Council and Minister of Intergovernmental Affairs, stated today that despite the inevitable discussions about money, the Government of Canada and the provinces need to work together efficiently, while respecting their own jurisdictions.

"The question we must ask is: 'How can we work together to improve the quality of life of our fellow citizens in priority areas such as health?'," said the Minister.

He reminded his audience of how far the Government of Canada had come in restoring its financial health. He noted that our country was almost bankrupt just a few years ago, but that the situation has improved radically since then, quoting a study released by the Royal Bank in September 1999 which predicted that our federal and provincial governments can look forward to a growing degree of fiscal flexibility in the years to come.

Mr. Dion highlighted his government's initiatives to take into account the interests of the provinces while putting its fiscal house in order, including the fact that the federal government consolidated its main transfers in the areas of health, social assistance and post secondary education into a single envelope, allowing each provincial government to decide how it would allocate funding in these areas. Furthermore, the federal government made it a priority to help the provincial governments once its own financial situation had improved. The provinces received 41.6% of new spending in the last two federal budgets.

The provincial governments have themselves made enormous strides towards putting their fiscal houses in order, he noted. In 1993, they were all running deficits. According to the latest estimates, six provinces had a balanced budget or a surplus in 1998-1999.

The Minister then noted that the total Social Transfer funding in 2001-2002, $31 billion, will exceed the $29.4 billion provided in 1994-1995. The provinces, he said, neglect to take into account the increase in the value of tax points in the calculation of the transfers.

"For example, if the tax points were not taken into account and only cash transfers were allocated in proportion to population, the government of Quebec would have received $200 million less in last year's budget," Mr. Dion explained.

He then said that the equalization payments have continued to grow even during the struggle to bring down the deficit, specifying that the provincial governments can use them as they see fit. For example, the Quebec government received $4.5 billion in 1999-2000, compared to $4 billion in 1994-1995.

The Minister emphasized that we must keep reducing our debt load if we want to avoid falling "back into an era of deficits". Noting that the federal debt is more than double the total provincial debt, he explained that reducing our debt-servicing burden contributes to giving the country greater fiscal flexibility, allowing it to face up to the many financial needs, such as the inflated costs of our pension plan and health care system, brought about by the greying of our population. To this we must add other needs including helping the homeless and families, investment in research, support for regional development and Canada's contribution to our planet's sustainable development.

On the fiscal front, the Minister said, "Prime Minister Jean Chrétien has promised Canadians he would maintain a proper balance between reinvestments and tax cuts. An easing of the tax burden will be announced as part of the upcoming budget: both the Prime Minister and the Minister of Finance have said so on numerous occasions."

There are no areas where both orders of government, federal and provincial, play a useful role if they ignore each other, said the Minister. "There is no doubt in my mind that the upcoming budget will offer some form of additional assistance to our constitutional partners: the provincial governments. That budget will improve Canadians' quality of life while enabling their federation to function better. By showing Canadians what they can accomplish together, the budget will strengthen our country's unity," concluded the Minister.

-30-

For information:
André Lamarre
Special Assistant
(613) 943-1838

Return to regular web page:
http://www.pco-bcp.gc.ca/aia/default.asp?Language=E&Page=pressroom&Sub=PressRelease&Doc=20000204_e.htm