Budget 1998
Budget Speech - 1
- Table of Contents - Next -

Introduction

Mr. Speaker, at the outset, let me express, on behalf of the Prime Minister and Cabinet, our gratitude to the Standing Committee on Finance and the various committees of caucus. Their hard work has been invaluable.

Let me also thank the many who have taken the time from their day-to-day obligations to come forward and present their proposals on the shape this budget should take. Yet again, they have proven the benefits brought to budget making by simply listening to the common sense of Canadians.

Mr. Speaker, this is the first budget of a new mandate.

But if the mandate is new, our mission is not.

Our goals today remain what they were when Canadians placed their trust in us in 1993: first, to build a country of opportunity -- of jobs and growth -- one where every Canadian has equal access to the avenues of success; and second, to safeguard and strengthen a caring and compassionate society.

Canadians have always known that securing these goals would not be easy.

Canadians understood that fundamental problems require fundamental change. They wanted clear priorities established. And they wanted a long-term plan to achieve them.

In 1994, that plan was put in place. We have pursued it for more than four years. It is paying off today.

This budget marks a further stage in that plan. It makes it very clear -- our resolve will not weaken.

This budget will demonstrate that we have left the era of chronic deficits behind, that we are now on an irrevocable course to reduce the debt.

It is a budget that will expand opportunity for all Canadians by making access to knowledge and skills more affordable.

It is a budget that begins to reduce taxes, starting with those who need it most -- middle- and low-income Canadians.

And it is a budget that ensures that the balance of actions we take reflects the balance of priorities Canadians share -- that the values we heed are the values Canadians hold.

That is our commitment.

A Sound Economy and Sound Finances

When we came into office, the country's economy was in disarray.

The turnaround today is very evident.

Job creation is accelerating. Over the last four years, the number of jobs has grown by over one million. In 1997 alone, 372,000 new jobs -- all full time and in the private sector -- were created.

In 1993, the unemployment rate stood at 11.2 per cent. It has fallen since then and is now below 9 per cent. While not satisfactory, the trend is clear.

Consumer confidence has rebounded. The economic recovery is now supported by strong domestic demand.

Business confidence is at record levels. Investment is surging.

Stimulated by lower interest rates and renewed confidence, economic growth reached a level in excess of 3.5 per cent last year. This year, continued strength is projected. This would mean the best back-to-back economic performance for Canada in over 10 years, the strongest performance of any G-7 nation.

Mr. Speaker, we live in a volatile world. Clearly, the events in Asia will have an impact.

Nonetheless, let me simply say to Canadian business, consumers, employers and workers: there has not been a time in the last 25 years when our prospects have been better.

Furthermore, economic growth is helping to push the deficit down dramatically.

What I am about to say is something no Canadian government has been able to say for almost 50 years.

We will balance the budget next year.

We will balance the budget the year after that.

And, Mr. Speaker, we will balance the budget this year.

This achievement is the accomplishment of Canadians, not of government.

From the outset, it was Canadians who knew the dangers posed by financial mismanagement, who called for firm action. It was Canadians who united in a strong consensus that government simply had to get on with the job.

And it was Canadians who have shown great forbearance in shouldering the consequences of actions that have been very difficult.

Canadians can be very proud today. This is their victory.

Building a Strong Economy and a Secure Society: Our Principles and Our Plan

Mr. Speaker, it is clear that a new era lies ahead. And because of that, we owe it to Canadians to repeat what our principles will be as we go forward.

First, we will stay the course that brought us here. We will be frugal. The battle to root out waste and inefficiency can never end.

Never again will we allow the spectre of overspending to haunt this land.

Never again will we let old habits return -- of defining bigger government as better government, of believing that every problem requires another program.

And never again will we see Canadians undergo round after round of painful cuts in order to dig us out of yet another hole.

Canadians have paid to see the movie ‘The Deficit'. They don't want to pay to see the sequel.

Second, we will be focused in everything we do. The core priority of government must be to set the national agenda. It can never again fall into the old trap of trying to be all things to all people, of having so many priorities that in fact it has none.

Third, we must be steadfast. The challenges facing the country are deeply rooted. They are not the stuff of quick fixes.

That is why, as before, each budget will build on steps taken previously, so that what may seem like small steps at the time, will in the end, become larger strides. We must look to the long-term needs of the nation.

Fourth, we must work in partnership. Acting alone, in isolation, is no longer on. Working together respects the reality that we each have a role to play -- whether as governments, business, labour or the voluntary sector.

And finally, fifth, we must be balanced and we must be fair.

Canadians know that there is more to taking care of the nation than simply taking care of the books.

Canada is not just a marketplace. It is a community.

Our country is anchored in shared risk and shared benefits, in lending a hand knowing that, some day, we too may be in need. That is the spirit that built this land.

It was that spirit we saw when the country came together to help those devastated by the Saguenay flood. It was there again when the Red River struck. And it was there as hands reached out from across Canada to offer assistance in the aftermath of the ice storm last month.

The Canadian spirit of coming together is not something that only appears now and then in response to great natural disasters or disruptions. It abides. It is there in every community, in every corner of the country, every day. And it is there in the great national programs that have come to define who we are, and what we want to become.

That is why this budget provides resources for the National AIDS Strategy.

That is why we established a Healing Fund to address the terrible legacy of abuse suffered by so many aboriginal young people in residential schools.

And that is why we are committed without reservation to sustaining and strengthening the Canadian system of health care. In 1995, when the country's fiscal back was to the wall, we took some very difficult decisions. We recognize this.

That is why the very first action we took when our progress on the deficit became clear was to increase the floor under cash transfers to the provinces in support of health and other programs from $11 billion to $12.5 billion annually.

This is the single largest expenditure accounted for in this budget. Going beyond today's projections, between now and the year 2002, the provinces will receive an additional $7 billion in transfer payments from the federal government for health and other programs.

Mr. Speaker. Frugality. Focus. Steadfastness. Looking to the long term. Partnership. Fairness. These are the principles that underlie our plan.

Providing Sound Financial Management

Let me now demonstrate how these principles will be applied to sound economic management for the country.

First, we have said right from the beginning that one of the central economic priorities of government must be to ensure that monetary and fiscal policy work hand in hand -- so that they reinforce, rather than run up against, one another.

To that end, upon coming into office, the government and the Bank of Canada agreed to hold inflation inside a range of 1 per cent to 3 per cent to the end of 1998. That policy has worked. Inflation is under firm control. It will remain so in the future.

That is why we are announcing today that we will extend the current agreement for a further three years.

Canada has now established a reputation as a low inflation country. It is a reputation and a reality we will protect.

Next, let me turn to the issue of the debt.

We have won a major battle. We have not yet won the war. Twenty-five years of deficits have left us with a debt burden that is far too high.

Every dollar that goes to service the debt is a dollar that cannot go to health care or tax relief.

The debt burden must be brought down.

In fact, that has already begun to occur.

The best measure of the debt burden is to consider the size of the debt in relation to the size of the economy that supports it. This measure is called the debt-to-GDP ratio -- what we owe in relation to what we produce. The lower the ratio, the more manageable the debt.

In 1996-97, the debt-to-GDP ratio fell meaningfully for the first time in more than 20 years. It will fall again this year even more. Over the next two years, the pace of improvement will continue. Our commitment is to keep the debt burden coming down -- steadily, permanently, irrevocably.

It will be brought down through the implementation of a two-track strategy.

First, we will continue to follow policies that will pay off in better economic growth.

Second, we will bring down the absolute level of debt itself.

Mr. Speaker, this is our debt repayment plan.

First, we will continue, as before, to present two-year fiscal plans based on prudent economic assumptions.

We will continue to be consistently more cautious than are private sector forecasters. In the first two years of this plan, we are committed to back-to-back balanced budgets.

Second, we will continue to build into our financial plans a buffer, a $3 billion Contingency Reserve.

And third, if, as in each of the last three years, the Contingency Reserve is not needed, it will go directly to paying down the debt.

This is how, since coming into office, we have brought the deficit down -- year after year after year.

This is how, in the future, we will bring the debt down -- year after year after year.

Indeed, Mr. Speaker, that process is already underway.

There are two principal ways to calculate the deficit. The first -- the method we use in Canada -- is considered to be one of the most rigorous in the world because it includes all the liabilities the government incurs over the course of a year.

The second measure -- used by other countries like the United States, the United Kingdom and Japan -- includes only the borrowings that the government makes in financial markets.

According to this measure, Canada recorded a financial surplus last year.

And according to this international comparison, Canada is in the best fiscal health of the G-7.

Of even greater significance, as shown in the monthly numbers being released today, is the fact that, so far this year, we have actually paid down debt previously borrowed in financial markets by almost $13 billion.

Equality of Opportunity

Mr. Speaker, ours is a country of great opportunity.

What we must do is strive to be a country of equal opportunity as well.

All Canadians do not begin life at the same starting line. For some, the race is virtually won before it's begun. For many others, it clearly is not.

Circumstance and privilege can create a playing field that is very uneven.

When individual Canadians are deprived of the opportunity of reaching their full potential, the country is deprived of the opportunity of reaching its full potential.

Now, some seem to believe there is nothing government can do. That there is nothing government should do. That we should just unleash the market, let loose the forces of change -- and abandon those whom opportunity has passed by.

Well, that view is not ours.

A rising economic tide does not lift all boats.

There are Canadians who, for many reasons, do not enjoy the opportunities others do -- but who would grasp them immediately, and lift themselves up, if only given the chance.

That is why, in this and previous budgets, we have enhanced assistance to those with disabilities -- Canadians who do not seek special rights but simply equal citizenship.

That is why we have increased support for charitable groups, given the enormous role played by the voluntary sector in helping Canadians and enriching our communities.

- Table of Contents - Next -