Budget 1998
Budget Speech - 3
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Planning Ahead for a Secure Society

Mr. Speaker, we have just been discussing the role of education in assuring equality of opportunity. But let us be very clear. The capacity to learn does not begin in school. It is dependent on the caring and nurturing provided the smallest infant. The fact is, equality of opportunity means a good start in life.

That is why, over the past year, the federal, provincial and territorial governments have begun to build a National Child Benefit System that will play a key role in fighting child poverty so as to help provide that good start.

As a first step, in our last budget, we allocated $850 million to increase federal child benefits. This funding begins to flow in July of this year through the new Canada Child Tax Benefit. This will increase support to over one million children and their families.

Last spring, we said that as soon as we could afford to do more, we would. Today, we are.

As part of the National Child Benefit System, we are allocating a further $850 million to enrich the Canada Child Tax Benefit over the next two years -- $425 million as of July 1999 and $425 million as of July in the year 2000. Details of these improvements will be announced after discussion with the provincial and territorial governments.

Mr. Speaker, we believe that government must recognize and support all Canadian families in their desire to provide quality care for their children. We know that the vast majority of working Canadians belong to two-earner families, and that while those parents are away at work, they want the very best care for their children.

We also know that the costs of child care can be high -- and that they are increasing. Therefore, in this budget, we are increasing the limit on the child care expense deduction from $5,000 to $7,000 for children under age 7, and from $3,000 to $4,000 for children age 7 to 16.

For a parent earning $45,000 and paying $14,000 for the care of two pre-school children, this measure will reduce their costs by $1,600 a year. The increased child care expense deduction will provide needed assistance to 65,000 Canadian families with children.

Mr. Speaker, one of the defining features of a secure society is its will and capacity to provide a secure retirement income for its senior citizens. One of the most important policy initiatives ever undertaken in Canada was the decision over three decades ago to establish the Canada Pension Plan.

The CPP is about our values as a nation. It is about the sharing of risk and the security of benefits.

Last year, we and the provinces, as joint stewards, came together and agreed on a package of reforms to preserve the CPP and enabling legislation was passed by this Parliament. The CPP is now secure.

We can now say to every Canadian who is 60 years old: the CPP will be there for you. We can say to every Canadian who is 40: the CPP will be there for you. And we can say with confidence to every young Canadian, many of whom have not believed public pensions would survive: the CPP will also be there for you.

In the months ahead, we will move on to the next stage in preserving our pension system. Legislation will be introduced to put in place the Seniors Benefit which, in the early years of the next century, will replace the current system of Old Age Security and the Guaranteed Income Supplement, the second pillar of our retirement income system.

The Seniors Benefit will fully protect the pensions of all current seniors and near seniors. It will ensure that all those in need receive as much, if not more, than they would under the current system. We have consulted with seniors and other interested groups on the detail of this reform. They have raised some very important points concerning the package that was first put forward in 1996. We have listened very carefully. These are being given every consideration.

Taxation

Let me now turn to the question of taxation and let me begin by reaffirming our goal.

It is to reduce taxes. It is to leave more money in the pockets of hard-working Canadians.

A government's tax policy must be an essential element of its overall social and economic policy. Our tax policy is crystal clear.

First, our financial resources are limited. Therefore, targeted tax reductions aimed at critical social and economic concerns must be the first priority.

Second, as financial resources permit, general tax relief will be provided, the priority being personal income taxes for middle- and low-income Canadians.

Third, the tax system must be fair. This means Canadians should pay taxes consistent with their capacity to pay -- and that we must ensure that all taxes owing are indeed paid.

Mr. Speaker, from the beginning, we have provided targeted tax relief where the need is greatest and the impact the largest.

In past budgets, for example, we have increased tax assistance for students, for charities, for persons with disabilities, and for the children of working parents with low incomes.

In this budget, the process of targeted assistance is being continued.

Many of the measures we have announced as part of the Canadian Opportunities Strategy will, in fact, be delivered through the tax system, as will the new support for families under the Canada Child Tax Benefit and the child care expense deduction.

In addition, we are announcing the following targeted tax measures.

First, the number of self-employed Canadians is growing daily. Many operate through unincorporated businesses. However, unlike those businesses that are incorporated, they cannot deduct the premiums they pay for their supplemental health and dental plans. This is unfair. Starting this year, self-employed Canadians will be able to deduct these premiums from their business income.

Mr. Speaker, we recognize as well there are an unprecedented number of Canadians -- mostly women -- who are today providing care for family members at home -- very often an elderly parent or a disabled child. The support they provide is irreplaceable. In recognition of this, the government is introducing a new federal tax credit of up to $400. This will increase or extend assistance to well over 400,000 caregivers. Together with the GST/HST exemption proposed in this budget for respite care, our goal is to enhance federal support for Canadians striving to meet the growing demands of caring for family members with an infirmity or disability.

Finally, as witnessed over the past year in floods and the ice storm, it is important to recognize the extraordinary service provided by the thousands of Canadians who register as volunteers in our communities, mostly rural, and who provide essential emergency services such as fire-fighting and first aid. They give concrete meaning to the concept of good citizenship.

To support them, the tax-free allowance for volunteer firefighters will be doubled -- from $500 to $1,000 -- and this allowance will be extended to all other emergency service volunteers, effective January 1st of this year.

Mr. Speaker, with the books balanced, it is now possible to consider broader tax measures.

Very clearly, at the outset, these measures must be modest, for the financial dividend that makes them possible is modest as well. We cannot put in jeopardy either Canada's regained fiscal health or the country's priorities such as health care, education and public pensions.

Equally clearly, as a matter of fundamental fairness, our first focus must be on low- and middle-income Canadians.

The place to start, therefore, is with those least able to pay taxes.

First, personal tax credits serve the purpose of greater tax fairness by ensuring that no tax is paid on a basic amount of income. As of July 1 this year, we are raising the amount of income that can be earned by low-income single Canadians by $500 and by $1,000 for a family before they pay one penny of tax. As a result, 400,000 people will be removed from the tax rolls completely.

Second, in 1986, the previous government subjected all Canadians to a 3-per-cent general surtax -- a tax on tax -- which they said would help bring the deficit down. The deficit went up. The surtax remained on.

Today, we are announcing the elimination of the deficit. And today, for 13 million middle-income Canadians, we are eliminating the surtax.

Effective July 1, taxpayers earning between $50,000 and $65,000 will see the surtax reduced, and 83 per cent of all tax-payers, those earning up to $50,000, will see it eliminated in its entirety.

Taken together, Mr. Speaker, the last two measures will provide tax relief to 14 million Canadians -- 90 per cent of all taxpayers. In total, the general tax relief and targeted tax measures we are announcing today -- primarily to low- and middle-income Canadians -- amount to $7 billion over the next three years.

These tax measures are first steps. Looking ahead, we will build upon them as we can. We will do so with the nation's economic and social needs very much at the forefront of our consideration. We will do so in a measured and responsible way. Let there be no doubt -- as soon as we can afford it, taxes will be further reduced.

Conclusion

Mr. Speaker, this then is our budget. It represents the second stage of the plan we put in place in 1994. It has three parts.

First, in previous budgets, we reduced the deficit. With this budget, we have balanced the books and have begun the process of debt reduction. In future budgets, we will stay the course.

Second, we have invested in the future. Over 80 per cent of our new spending initiatives reflect the highest priorities of Canadians -- access to knowledge and skills, support for health and education through increased transfers to the provinces.

Furthermore, we will accomplish this while at the same time maintaining a tight control on our expenditures. In fact, in this budget, Canada's program spending as a share of GDP, will fall to its lowest level in 50 years.

Third, we have reduced taxes initially in a targeted way and, as soon as the country's resources permit, we will broaden and deepen the process.

Mr. Speaker, this plan is not simply a theme for one budget or one year. It has defined our approach from the beginning. It will define our approach in the future.

However, as I draw to a close, let me conclude not by summarizing the measures contained in this budget, but by describing the challenges those measures are designed to meet.

Today, we cannot pretend that our task is over. It is not.

If Canadians have accomplished a great financial turnaround, there are greater things still that need to be done.

We dare not coast now. We cannot let go.

The fact is, in this age of globalization and technological change, we hear constantly about barriers being brought down, about new markets being opened up -- and this is true and it is tremendously exciting.

But the fact is, as well, that Canadians have come to fear that our capacity to shape our own destiny is disappearing, that their country has become like a small boat sailing on rough and uncharted seas.

In an era of restructuring and downsizing, Canadians have come to wonder whatever happened to the once solid link between growth in the economy and growth in their incomes.

After decades of runaway deficits, Canadians have feared that their health care, their pensions, their system of education risked becoming mere shadows of their former selves -- frail and fading, no longer strong and secure.

Well, there is a new destiny we must design for ourselves.

Mr. Speaker, globalization and technological change are a reality. They are not a religion. They are a fact. They are not a faith.

We commit a very serious mistake if we ever come to believe that the global economy abroad means there is no role, no responsibility on the part of government to provide opportunity and security at home.

In the era of great change, our core programs, our core institutions, our core values are more important than ever. They hold us together. They give Canadians the security and confidence they deserve. They equip the country to succeed and succeed we will.

We believe that the strength of a nation's agenda lies in its balance, not in its extremes. The fact is, we have not balanced the budget in spite of having taken a balanced approach. We have done so precisely because we have taken a balanced approach.

This is not about compromise, not about trying to be all things to all people.

It is about meeting the diverse needs of a modern nation.

It is about managing the present, while at the same time preparing for the future.

We do not believe our society and our economy should be left to twist in the winds of globalization.

We must make change work for us -- or else we will end up working for it. That frames our challenge.

Some countries have great natural resources, others have impressive technological capacity, still others have vast human resources. We have all three.

That is why our goal must be to make Canada, not just a participant in the modern economy, but a world leader. A country which provides its citizens with access to the highest standard of living and the widest scope of opportunities possible.

Our responsibility as we go forward is very clear.

It is to balance the budget. But it is also to bring forth budgets that are balanced.

It is to work to build not simply an economy of growth, but also to safeguard a society that is fair.

Our challenge today is to put our values to work in new ways for a new century.

It is to turn opportunity for some into opportunity for all.

Mr. Speaker, that is what this budget seeks. That is what we will strive for in each and every year that lies ahead. For that is the foundation on which a great nation is built.

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