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CHAIRMAN'S FOREWORD

Canada stands on the threshold of a new century. In just over a year, our country will enter a new era - the 21st century, the new millennium.

Canadians look toward that new era with confidence. Over the past two months, the House of Commons Finance Committee has listened to Canadians as they expressed their hopes for the future. This report, "Facing the Future,'' is a reflection of our Committee's dialogue with the people of Canada.

No one can predict what the future holds, but one thing is certain: the decisions we make in the next few years will have tremendous consequences for decades to come. Through our decisions, and our actions, we can shape the future.

Fortunately, we arrive at this critical juncture in a position of strength. After more than a generation of federal budget deficits, the books have finally been balanced. Last year, for the first time in 28 years, Canada actually paid down its national debt.

Of course, several crucial steps were taken to reach this objective. First, the government restored sound management of the nation's finances, putting them on track to reach a balanced budget. It also set about reducing the debt-to-GDP ratio, both by getting the debt down, and, by improving the productivity of our economy, getting the GDP up. And finally, the scope of government itself was revolutionized. The government has adopted a new philosophy - one embodied in the principles of "Program Review'' - a philosophy which states that government must focus its efforts in those areas where it can do the most good for the people of Canada.

At all times, as it pursued its fight against the deficit, the government has kept in mind that eliminating the deficit was not an end in itself, but rather was a means to a far greater end: that of improving the quality of life of Canadians. That is why the government has continued to make strategic investments to support social and economic priorities. That is also why it has moved quickly to begin providing tax relief to hardworking Canadian taxpayers.

The results of this balanced approach are plain to see. The government has eliminated a $42 billion deficit, while maintaining our world-renowned system of social programs.

This historic achievement belongs to all Canadians. It is thanks to the efforts made by every citizen from coast to coast to coast that, together, we were able to reach this impressive goal.

And yet, we must be ever mindful of one thing: while a balanced budget is an important milestone, it is not a final destination.

Eliminating the deficit has restored our freedom of action. While caution remains important, we are nonetheless faced with new choices, and the decisions we make today will help shape our collective future. Asking Canadians for their views on the choices that lie before us was one of the primary goals of this year's pre-budget consultation.

Our Committee held hearings in every province across the country. We met with Canadian men and women, business people, social activists, seniors and university students. We learned about their concerns, as well as their hope for the future. The people who appeared before the Committee or who sent us written submissions provided us with a very clear idea of the priorities they expect to see in the next federal budget.

A large number of them want to see resources dedicated to reducing the federal debt. Canadians understand that the national debt consumes too high a percentage of our public finances, and want it under control.

The Finance Committee also heard many voices speak out strongly for continued tax relief. After sacrificing to eliminate the deficit, taxpayers expect to reap the rewards of their efforts.

And, just as importantly, Canadians want their government to begin reinvesting in social programs, especially the health care system. The people the Committee spoke with recognized that the spending levels of the past were unsustainable. But they also insisted on the importance of ensuring that our health care system has the resources to meet current demands, as well as those of an aging and growing population.

Canadians also continue to support the other components of a strong social safety net. They have told the government many times that their priorities include ensuring greater access to knowledge for all Canadians, providing support for children, low-income families, and helping other vulnerable groups, such as youth at risk and aboriginal Canadians.

However, while Canadians are ready to use the budget surplus to fund these priorities, they have one pre-condition: the government must never abandon its balanced approach. People want a balanced budget as the solid foundation upon which they can build a prosperous future.

Of course, future prosperity will require improved productivity. We live in a world that is changing very rapidly. Technological innovation is giving rise to new industries, and is leading to new applications in older industries, requiring a highly skilled labour force.

Worldwide trade liberalization has led to a new global marketplace, where financial capital and manufacturing processes can be moved to offshore locations to take advantage of the most favourable business environments. Nations are discovering that their populations are also highly mobile.

Unless we take active measures to improve our productivity, Canada will slip behind citizens of other industrialized countries.

Of course, government has an important role to play in fostering greater productivity. The "Productivity Covenant" is a proposal for effective government action to foster greater productivity.

The Productivity Covenant outlines a set of key principles that should guide government action. These include: embrace change; keep government regulation flexible; adapt to the high degree of mobility in the new global economy; and recognize that there is a legitimate role for government, in producing an educated workforce, investing in human capital, and in the creation of scientific knowledge.

Based on these principles and others, the Productivity Covenant also presents a series of goals to be pursued by governments. These include: establishing a healthy fiscal, monetary and social climate; getting government right; taking advantage of the market's strengths; and Investing in the infrastructure of a productive economy.

Greater productivity requires targeted investments to support research and development, as well as post-secondary education. As we heard during this consultation, Canadians want public finances to be managed in a responsible manner, but they still expect the government to take concrete steps to improve the Canadian standard of living.

Canadians recognize that government can be a force for good in our society. While no one supports the bureaucratic excess we saw in past decades, people appearing before our Committee expect the government to fulfill its responsibilities in the areas of fiscal management and social policy. The citizens of this country recognize that our national government has helped to make Canada prosperous, and they expect to play a role in helping them build the future.

On behalf of the Committee, I would like to thank the many individuals and organizations who took part in this year's pre-budget consultation. Canadians raised many different viewpoints at our roundtable meetings, at the townhall meetings organized in various ridings and in written submissions sent to the Committee. Our work would not be possible without your contribution.

On a more personal note, I would like to express my gratitude to my fellow Committee members for the many hours they have invested in this consultative process. While some of us may differ on various points of public policy, I know that we share a commitment to giving Canadians a voice in the decision-making process. Once again, thanks to the efforts of every Committee member, we have succeeded in making this public consultation a forum for the free exchange of ideas between Canadians.

Of course, the success of such an important endeavour as the pre-budget consultation requires the support of many other people who work behind the scenes. The Committee would like to thank our clerks, Jacques Lahaie and Roxanne Enman, for their contributions. We also thank Denise Croteau and Lise Tierney from the Committees Branch, as well as the interpreters, sound technicians and other members of the House of Commons staff.

The members of the Committee and I also wish to thank the members of the Research Branch, Marion Wrobel and Richard Domingue, without whom this report would not have been possible. We thank Robert Kermode and Joseph Mayer for their editorial services. And we are grateful to the production team, Julie Cusson, the translators and everyone else who worked to ensure the quality of our report.

Finally, I wish to thank my Special Assistant, Jennifer Demers, for her tireless efforts over the past few months.