Budget 2006

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Archived - The Budget Speech 2006

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The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
Tuesday, May 2, 2006

Check Against Delivery

Focusing on Priorities

Mr. Speaker, the budget is balanced, our spending is focused, and taxes will go down for all Canadians.

Budgets say something about your motivations and your goals. They say something about your priorities.

Mr. Speaker, this government is focused. And nowhere are we more focused than in the area of tax relief. For years, Ottawa has been overtaxing Canadians. In this budget, we deliver real tax relief for Canadians.

Tax relief people can see. Tax relief that makes a difference. Tax relief they can count on.

Mr. Speaker, that’s the bottom line of this budget.

The GST and Personal Income Taxes

Mr. Speaker, this budget will make a real difference to Canadians.

Small Business Taxes

There is more.

Mr. Speaker, small businesses are crucial to the Canadian economy.

Approximately 97 per cent of all Canadian businesses are small businesses. They are responsible for almost half of all new jobs created in this country.

In this budget, we are taking action to help small businesses to grow.

Corporate Taxes

Mr. Speaker, to excel in the global economy, Canada needs a competitive business tax system. We need to create a climate that encourages capital investment and innovation.

Canadian companies have already shown they can compete with the best. Now we have to let them go for the gold.

Real Results

Mr. Speaker, I’ve presented a lot of big numbers. What’s most important about them is what they mean for Canadians in their daily lives.

For many Canadian families, right now the bottom line is that they still have to struggle to make ends meet.

Canadians pay too much in tax. It’s holding families back. It makes it harder for small businesses to create jobs and opportunities. It discourages innovation and investment. It is limiting our productivity.

Mr. Speaker, as I will explain in a moment, the budget surplus is larger than projected in the 2005 Economic and Fiscal Update.

This government could have chosen to spend all of the extra money collected from taxpayers. But that would not have been responsible. That money will be put to best use if we return it to the pockets of Canadians.

Providing immediate and substantial tax relief for all Canadians is a priority for this government. Today we are delivering results.

In this budget we are providing 29 separate tax reductions in every area where the government collects revenue.

From consumption taxes, to income taxes, to business taxes, to corporate taxes—in every way the Government takes money from Canadians, this government will take less of it.

And as for the money we do collect, we’ll use it more effectively, by focusing on priorities.

Apprentices and Tradespeople

One of those priorities, Mr. Speaker, is to encourage the skilled trades.

Canada is facing a serious shortage of tradespeople. So this government is taking action to encourage apprenticeships and to support apprentices in their training.

Mr. Speaker, the cost of tools can be a barrier to Canadians interested in a career in the trades.


Mr. Speaker, a good education is the key to a great future for our young Canadians. It will also provide this country with a workforce ready to work hard and get ahead.

To encourage Canadians to pursue post-secondary education, this budget provides $370 million in new investments to foster excellence and accessibility in our colleges and universities.

New Canadians

Mr. Speaker, this country was built by people seeking a better life for themselves and their families. They come here for opportunity, and contribute their culture, skills and energy in return.

This government will provide more help to new Canadians to get started.

Fishing and Forestry Workers

Mr. Speaker, this government is committed to supporting Canada’s resource industries.

Last week, Mr. Speaker, under the leadership of our Prime Minister, this government successfully negotiated an historic softwood lumber deal with the United States.

We will continue to support our Canadian forestry industry.

Older Workers

Mr. Speaker, this budget will help make Canada more competitive in the global market.

But we will also help ensure that Canadians affected by global economic adjustments receive support—especially older workers. With access to opportunity, these Canadians can keep contributing their talent and experience to our economy.

Families and Communities

Mr. Speaker, families and communities are a priority for this government.

Families are the building block of society. Communities are what bind us together. But parents are finding it harder to balance work and family commitments. And some individuals and groups in our society need greater support.

For this government, supporting families means providing choice in child care for all Canadian families. It means helping everyone in our communities to live a good life and achieve their potential.

The benefit to Canadians will be that parents will have more choice in meeting their children’s needs. People facing special challenges will not be left out. Groups with special needs will not be forgotten.

Child Care

Mr. Speaker, our government recognizes that no two families are exactly alike. But all Canadian parents struggle to balance work and family commitments, and to meet their children’s individual needs.

Whether the answer is regulated child care, a parent at home, a grandparent or a trusted neighbour, we are committed to supporting all Canadian parents in their choices.

Children With Disabilities

Mr. Speaker, every child is unique. Parents know each child is brilliant in his or her own way. They also know that sometimes children need special help to achieve their potential.

But obtaining that special help can be very costly.

Also Mr. Speaker, parents and grandparents of a child with severe disabilities face an important consideration. They need to find a way to secure their child’s long-term financial security when they are no longer able to provide support.


Mr. Speaker, there is more we can do to help children and families.

For so many Canadians, loading up the minivan for hockey practice or carpooling to the soccer field is a familiar routine. For many children, it is a crucial part of their development. But it often means an added expense—sometimes a significant one—in the family budget.


Mr. Speaker, our seniors have made this country great. We owe them our support, to allow them to enjoy their later years and to provide extra security after a lifetime of contributing to our society.

Aboriginal Canadians

Mr. Speaker, people from many nations have built a good life in this country and contributed to its strength. But our First Nations, the first people to live here, face special challenges.

We must support our Canadian Aboriginal communities in addressing their particular needs.

Affordable Housing

Mr. Speaker, not enough affordable housing has been built to accommodate individuals and families who need it. Some are homeless. We need to do more to address these pressures now.

Arts, Culture and Charities

Mr. Speaker, community support is essential to Canada’s arts and cultural life. Encouraging more charitable giving from within the community will mean more financial support for these projects.


Mr. Speaker, investing in infrastructure—bridges, roads and transit—is a priority for this government. A great trading country like Canada must have the best in highway and border infrastructure.

Delays in moving goods to market lead to increased costs and decreased competitiveness for our Canadian businesses.

As a result, Mr. Speaker, this government has decided to increase our country’s investment in new highways and border infrastructure. This is a long-term commitment of unprecedented new investment.

Transit and the Environment

Mr. Speaker, as Minister Responsible for the Greater Toronto Area, I appreciate the importance of good transit infrastructure in maintaining a high quality of life.

Canadians in cities are concerned about traffic congestion and the harmful emissions that come with it. This government appreciates the fact that investing in public transit infrastructure can help preserve our environment.


Mr. Speaker, farmers feed our cities, our country and the world. They keep our rural communities strong. But falling prices and trade disputes are causing real financial hardship. Current insurance and income support programs are inadequate.

Despite showing true resilience in the face of all these pressures, Canadian farmers need even more of our support. This year is a particularly difficult year, and we know it.


Mr. Speaker, security is a priority for this government.

Canadians want to know that we can do our part to build peace and security around the world. But our men and women in uniform have not been given the tools they need to do their job.

Canadian Forces

Mr. Speaker, the men and women of the Canadian Forces dedicate their lives to serving this country.

These soldiers exemplify the character and dedication of our Canadian Forces, and all our men and women in uniform deserve our gratitude and full support.


Mr. Speaker, increased global security concerns present a special challenge for Canada. We must strengthen the security of our borders, while ensuring they remain open for business.

For the good of the country, we must act.


Mr. Speaker, our government is committed to ensuring Canadians are safe in their homes and in their communities. Safe streets are a defining characteristic of the Canadian way of life and must be preserved.

In this budget, we are taking decisive action to crack down on crime.

Economic and Fiscal Update

Mr. Speaker, Canadians have reached a level of accomplishment few other countries can rival. Our economy has shown great resilience, and in spite of a heavy tax burden, Canadian workers and business people have shown the world what talent and hard work can do.

Regarding our fiscal outlook, Mr. Speaker, the federal surplus in 2005–06 is projected to be $8 billion. As a result, the projected planning surpluses set out in this budget are significantly higher than what was presented in the 2005 Economic and Fiscal Update.

This government will direct these surpluses to providing significant tax relief for all Canadians.


Mr. Speaker, accountability is a priority for this government.

Canadians need to be able to trust their government and know their tax dollars are being well spent.

For this government, accountability means being open. It means the numbers must be presented clearly. It means we have to be frank about where we stand financially. And that will mean at times we will show unallocated surpluses, as we have for this year and next, which will be used to address future priorities.

Canadians will benefit from greater accountability in their government. They will be able to tell whether their government is being straightforward with them. They will be able to make informed judgements about what our priorities should be.

Federal Accountability Act

Mr. Speaker, accountability requires new checks and balances. We need to ensure the Government will be answerable to Canadians. We need to take action so taxpayers can open our books and find the bottom line.

As our first piece of legislation, this government introduced Canada’s first Federal Accountability Act. This act holds the government, from the Prime Minister on down, to a standard never contemplated before.

Today we are providing the funds needed to get these new measures up and running.

Expenditure Management

Mr. Speaker, our government intends to be open and straightforward with Canadians regarding the finances of Canada. To that end:

Being accountable also requires fiscal responsibility. Canadians deserve to know their money is being used efficiently, effectively and on priorities that are important to them.

That has not always been the case.

Over the past five years, total program spending has grown by an average of 8.2 per cent annually. In 2004–05 growth in spending increased by 14.4 per cent. This growth is neither sustainable nor desirable.

Instead, our government is taking decisive action to get runaway spending under control. Our government’s approach to spending control is based on the following three principles:

With those principles in mind, the Government is launching a review of its expenditure management system. In addition, the President of the Treasury Board will be identifying savings of $1 billion for 2006–07 and 2007–08. Reports on both initiatives will be completed by the fall.

Fiscal Balance

Mr. Speaker, restoring fiscal balance for our Canadian federation is a priority for this government.

Canadians want to keep our country strong and united. But our federation could and should work better. The federal government has been underestimating surpluses and overtaxing Canadians, while the provinces and territories have found it difficult to fund crucial services like health care and education.

For this government, fiscal balance means that the federal government and the provincial governments have to be able to focus on their core responsibilities. They have to have the resources they need to meet those responsibilities.

Achieving fiscal balance will help ensure Canadians receive the services they have paid for. And it will help ensure our federation continues to work for the good of all Canadians.

Health Care

Mr. Speaker, there is one especially important concern this government shares with the provinces and territories and with all Canadians.

Canadians cherish top-quality, publicly funded, universal health care. While funding for health care has increased, wait times for treatment are also increasing.

Equalization and Territorial Formula Financing

Mr. Speaker, the Equalization and Territorial Formula Financing programs help ensure Canadians in all regions of the country enjoy an acceptable standard of living and share in the benefits of living in this great country. But the past couple of years have shown that these programs are not working as well as they should. They need to be made more effective.

We will renew these programs, taking into account reports by the Council of the Federation as well as the forthcoming report of the Expert Panel on Equalization.

In the spirit of working cooperatively with provinces and territories, this government has decided to improve the Equalization and Territorial Formula Financing programs on a one-time basis for this year.

We will allocate money to provinces and territories based on a more current set of estimates than what was proposed by the previous government. This will not only result in six provinces and one territory receiving more money than what they would have been getting. It will also ensure that no province or territory will lose funding, as they would have if we had not made this decision.

We will provide a one-time adjustment of $255 million this year for this decision.

Discussion Paper on Restoring Fiscal Balance

Mr. Speaker, this government is determined to keep Canada strong and united.

Our founders built a flexible, federal system of government. Each generation of Canadians has done its part to respond to the hopes and challenges of their time.

This government will show leadership to ensure our federal system continues to work for the good of all Canadians.

Our approach will be based on the five fundamental principles set out in the budget companion document, Restoring Fiscal Balance in Canada. Those principles are:

Extensive consultations will be conducted on this paper. We encourage Canadians to give us their views. We will involve Parliament in this national dialogue. I will meet with provincial-territorial Finance Ministers later this spring to begin our discussions. A First Ministers Meeting will be held in the fall. Budget 2007 will bring forward funding and legislation required to implement our proposals.

Productivity and Competitiveness

Mr. Speaker, of all the priorities I have mentioned today, the common denominator is prosperity. A better life for all Canadians is the highest priority for this government.

To ensure our long-term prosperity, we need to increase our productivity.

Canadians have built a great country with many advantages. Canadians are hard workers and great innovators. But we are facing increasing competition from countries like India and China. Our workforce is aging. Government tax policies have discouraged investment and job creation.

The benefit to Canadians will be a higher standard of living, and a greater quality of life.

Canadians will have access to more and better jobs. We will be able to pay for the things we want—the things we want for our families, and the things we want for our communities and our country, like health care and education.

Mr. Speaker, I have mentioned in my remarks today many measures this government is taking to help build a better life for all Canadians including:

The Government will pursue a broad approach over the coming year—building on the targeted measures proposed in this budget—to develop a strong, results-focused agenda to promote a more competitive, productive Canada for the benefit of all Canadians.

Turning a New Leaf

In this budget, Mr. Speaker, Canada’s new government is focusing on priorities, and getting results on issues that matter to Canadians.

We are doing it in a way that will benefit Canadians now, and enable us all to keep reaching higher, to build an even greater country.

We are doing it according to our fundamental principles: strong fiscal discipline, tax relief and a clear focus on the core areas of federal responsibility.

Mr. Speaker, when we asked Canadians for their support in the election campaign just past, we made some firm commitments. In the context of a comprehensive plan, we laid out some immediate priorities.

Today we are delivering on those priorities, and more.

In this budget, Canada’s new government is taking action on our broader plan.

We are providing significant tax relief for all Canadians. We are taking steps to ensure tax dollars will be spent responsibly.

We are investing in families, education, industries, security and infrastructure. And we are working to ensure the federation works for the good of every part of the country.

The results of our acting on these priorities will be a stronger Canada, and a better life for all Canadians.

This government knows how important it is for every family to be able to meet immediate needs and to plan ahead, so our children can make the most of living in a great country like Canada.

Mr. Speaker, this government is dedicated to that cause, in the service of all Canadians.

In this budget we are focusing on priorities—immediate and long-term—and we are delivering results.

Mr. Speaker, as I said upon rising in this House, the budget is balanced, spending is focused, and taxes will go down for all Canadians.

We have a plan. Let us move forward to build a stronger and even better Canada.