Budget 2006
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Archived - Chapter 1:
Introduction

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"This new government will take a new approach. 
It is committed to building a better federation in which governments come together to help Canadians realize their potential. To this end, the Government will respond to concerns about the fiscal imbalance and will work to ensure fiscal arrangements in which all governments have access to the resources they need to meet their responsibilities."


Speech from the Throne
April 4, 2006

Cooperation and collaboration between the Government of Canada and the provinces and territories have been critical to the development of the Canadian federation. Federal, provincial, territorial and municipal governments, working together, have created a network of programs covering health, education, social services, infrastructure, justice and a range of economic and social policies designed both to improve the quality of life of Canadians and to enhance the economic performance of the country.

Fiscal arrangements underpin the relationship between governments. They support the achievement of shared national objectives, reduce interprovincial disparities and provide territories with funding in recognition of the unique challenges of Canada’s North.

Debates over fiscal arrangements in Canada are not new. As discussed in Annex 1, many of the debates of the past focused on challenges that continue to this day—especially the need to continually adapt to changes in fiscal balance that result from evolving circumstances and the changes in the roles and responsibilities of governments that accompany them.

Key issues of past debates—the need to address fiscal disparities among provinces and territories; the need for accountability and transparency, as well as clarity in roles and responsibilities; the need for tax harmonization and other forms of intergovernmental collaboration—also continue to resonate today. In addition, new issues have arisen in recent years, including how to deal with substantial unplanned federal surpluses and the challenges facing municipalities.

Major Concerns

Chapters 2 to 5 set out four major sets of concerns that are the focus of the current debate:

The New Approach

Chapter 6 sets out the Government’s approach for following through on the commitment made in the Speech from the Throne on April 4, 2006, to address concerns over the fiscal imbalance. The Government’s approach is based on five principles:

Consistent with these five principles, the new government is proposing immediate actions in Budget 2006, and is committing to further action in the coming year after discussions with provinces and territories.

The Government is also proposing to consult Canadians, provinces and territories, academics and other stakeholders on additional ideas for further improving fiscal relations in Canada.

Moving Ahead

Chapter 7 lays out a process of consultations to follow through on the Government’s commitment to restore fiscal balance in Canada.

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