Budget Speech 1996 - 1
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Securing the Future

Mr. Speaker, it is as clear today as it ever has been that Canadians do not want rhetoric from their governments. What they want is action. What they seek is real progress.

These are the standards that Canadians have set. These are the standards by which this government wants to be judged.

Seldom in our history have so many experienced such anxiety.

Canadians feel our very way of life is at risk.

They look at Medicare -- and feel it is threatened.

They look at the pension system and wonder if it will be there in the years to come.

They consider the economy and worry that the gale force winds of competition and change will carry away their jobs.

And Canadians think about their children, our youth and ask what kind of opportunities will be left for them.

If there is one obligation before government today, it is to do its part to address these deep concerns.

It is to do what we must so that confidence can overcome anxiety, and hope can replace despair.

In short, we must act now to help Canadians secure their future.

Canadians know this can't be done by government alone.

It will require the concerted efforts of individual citizens, their governments, business and others for our country to tackle these challenges effectively.

What Canadians want from their government is for it to set the goals, to have a plan and then to work as hard as it can -- and as long as it must to help get the job done. 

Securing our Financial Future

This budget is our third in a comprehensive and determined effort to restore fiscal health to this country.

In this budget, we are keeping on course. We are maintaining our pace. We are not letting up.

Indeed, this government will never let up. The attack on the deficit is irrevocable and irreversible. Let there be no doubt about that.

We will balance the books. Furthermore, we will put the debt-to-GDP ratio -- what we owe as a percentage of what we produce -- on a constant downward track, year after year after year.

Nothing -- I repeat nothing -- will cause this government's conviction to change.

We announced in November that we had bettered our deficit target for 1994-95.

It is now clear that our target for 1995-96 will be achieved -- or bettered -- and that we are on track for our 3-per-cent target for 1996-97. This is proof of the profound impact of the actions set in motion in our first two budgets.

Today, we will make it clear that our deficit target for 1997-98 -- $17 billion or 2 per cent of GDP -- is also secure.

We will hit the 3-per-cent deficit target. We will hit the 2-per-cent target announced last November. Indeed, we are announcing the actions today which will enable us to go beyond those targets, to keep us moving towards budget balance.

To that end, we are further cutting our own departmental spending by almost $2 billion to take effect in 1998-99. This is over and above the substantial savings secured in our first two budgets.

Most departments will have their budgets cut by at least a further 3.5 per cent in 1998-99; some are cut much more.

Spending on defence and international assistance will be further reduced. The growth of spending on Inuit and Indian programming will be restrained. The dairy subsidy will be phased out over five years and the postal subsidy program reduced.

This budget, together with our last two, will contribute $26.1 billion in savings to secure our 2-per-cent deficit target for 1997-98, and a further $28.9 billion of savings for the following year, 1998-99 -- to continue the downward deficit track, and to give the debt-to-GDP ratio the downward thrust it needs.

In 1993-94, government spending on programs, that is spending on everything but the debt, stood at $120 billion. By 1998-99 we will have reduced that to $105.5 billion. This will mean six consecutive years of absolute decline in program spending.

Measured relative to the size of the economy, the decline is even more dramatic. By 1998-99, program spending will have been reduced to 12 per cent of GDP, down from close to 20 per cent just over a decade ago. In fact, it will be at its lowest level in 50 years.

Because we are focusing on spending cuts, not tax increases, over the three budgets taken together, we will have cut seven dollars in spending for every one dollar in new revenues. In this budget, we are not raising personal taxes. We are not raising corporate taxes. We are not raising excise taxes. In fact, we are not raising taxes.

This government does not rely on tax increases to hit its deficit targets. Nor does it rely on rosy forecasts.

We are maintaining the prudent approach we have adopted from the very beginning. Our economic assumptions are once again deliberately more cautious than those of most private sector forecasters. As before, we are backing up our economic assumptions with substantial contingency reserves. These reserves do not exist to be spent on new programs. They are there to handle unforeseen changes in the economy. If we don't need them, they will not be spent. They will go to reducing the deficit even further.

As we have always said -- and as we have now proven -- meeting our targets is the least we can do. It is not the best we will do.

One of the pay-offs in hitting these deficit targets is the dramatic decline in the amount of new money the government must borrow on financial markets each year.

This measure, financial requirements, is the way most other major economies -- the United States, the United Kingdom, Italy, France and Germany -- calculate their deficits.

In 1993-94, the year we came into office, Canada's financial requirements stood at 4.2 per cent of GDP -- or $30 billion. By 1997-98, our financial requirements will drop to only .7 per cent of GDP -- or $6 billion.

Relative to the size of the economy, our borrowing requirements will be at their lowest level in almost 30 years. Measured on this basis, Canada will have the lowest fiscal shortfall projected for any G-7 central government.

Today's fiscal progress is much more than a federal effort. It is a national effort supported by Canadians across the country.

No matter their political stripe, every single province and territory has as a primary goal the return to fiscal health. In fact, eight are expected to report a balanced budget -- or even a surplus -- for the fiscal year ending this month and the results are striking.

For instance, in 1993, Canadian business and governments borrowed $29 billion abroad. That was reduced to $13 billion in 1995 and will be reduced again next year and the year after that. In short, Canadian economic sovereignty is being restored.

The fact is that in comparison with most other countries -- and in the arcane world of statistics -- we are doing quite well. However, that being said, in the real world where we all live, we know that despite the gains being made, Canadians continue to worry very deeply. The reason is not hard to identify. Because whatever the numbers might say, many do not see evidence of improvement in their own lives. What they do see is sacrifice. And what they want to know is whether their sacrifice will bring positive results -- and when it will end.

Therefore, the job before us is clear. It is to build on the progress we have made, to see it translated into good jobs, sustained growth and social programs suited to the millennium that lies ahead.

This budget is about consolidating the gains we have made. It is about addressing problems before they arise. It is about managing ahead, continuing to put in place new building blocks for security and prosperity.

It will show how we will sustain the federal government's commitment to healthcare and other social programs into the 21st century.

It will put forward a plan to restore confidence in the public pension system.

It will enhance the protection of the most vulnerable in our society.

And it will reallocate spending to invest in the economic future of the country.

In short, as all budgets must be, this is a budget about the present. However, it is also a budget for the future. 

Principles for Securing the Future

Canadians want to know that the principles guiding government are ones that they share.

Here are our principles.

First, governments created the deficit burden. And so governments must -- it by focusing first in their own backyards -- by getting spending down, not by putting taxes up.

Second, our fiscal strategy will be worth nothing if at the end of the day we have not provided hope for jobs and for growth. We must focus on getting growth up at the same time as we strive to get spending down.

Third, we must be frugal in everything we do. Waste in government is simply not tolerable.

Fourth, we must forever put aside the old notion that new government programs require additional spending. They don't. What they do require is the will to shut down what doesn't work and focus on what can. That is why a central thrust of our effort is reallocation. Whether on the spending side or on the revenue side, every initiative in this budget reflects a shift from lower to higher priority areas.

And finally, we must always be fair and compassionate. It is the most vulnerable whose voices are often the least strong. We must never let the need to be frugal become an excuse to stop being fair. 

A Measured, Responsible Pace

Let me address directly the issue of the pace of our efforts.

This pace has been constant from the outset. It was established deliberately. We will not alter it.

It is our view that chronic deficits constitute a clear and present danger to -- to our way of life, to our future.

Chronic deficits put the disadvantaged at risk, because it is they who suffer when the financial strength of government is so weak it can no longer reach out to those in need.

However, that does not mean we share the view of those who think we should be going to a zero deficit overnight.

The fact is, draconian budgets are not difficult to write. The arithmetic is painless. But the human consequences are not.

In our view, durable progress requires adaptation, adjustment and understanding. A measured strategy lets that happen.

A measured pace ensures that short-term savings will become long-term savings -- a downpayment towards restored fiscal health. Indiscriminate cutting, on the other hand, raises the real risk that short-term savings will become long-term costs.

Our goal is to get the deficit down permanently -- not temporarily. We want to solve the problem once and for all. This requires considered and careful reform.

We will balance the books. But we will do so in a way that is measured, deliberate, and responsible. That is our plan. That is our course.

This is a question of costs and consequences. But so too it is a question of values. We simply do not believe it is necessary to toss aside fairness in the quest for fiscal success. That has not been the hallmark of this country. And it will not be the legacy of this government.

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