Budget in Brief 1999: 1
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Archived - Building Today for a Better Tomorrow

The 1999 budget extends the government's plan to build a strong economy and secure society -- one which generates a higher standard of living for all Canadians and builds today for a better tomorrow.

To achieve this goal, the government has consistently followed a strategy designed to advance living standards by promoting well-paying jobs, productivity growth and equal opportunities for all, and by providing a safety net for those in need.

This is the strategy that was first set out by the Prime Minister in Québec City on September 18, 1994.

It was outlined in the 1994 document entitled A New Framework for Economic Policy and it is the strategy behind the actions in each of the last five budgets and again in the 1999 budget.

The strategy acts on three fronts.

Maintaining Sound Economic and Financial Management

• Strong economic growth and a reduced debt burden better enable the government to make key investments and provide tax relief.

Investing in Key Economic and Social Priorities

• Investments in health care, in access to knowledge and skills training and in other important areas improve Canadians' quality of life and ability to work.

Providing Tax Relief and Improving Tax Fairness

• Lower taxes mean higher disposable income and therefore increased living standards. Lower taxes also provide increased rewards for work, saving and investment.

All three elements of this plan work together to improve Canadians' standard of living and quality of life.

Maintaining Sound Economic and Financial Management

Canada's economic fundamentals are strong and have helped it weather the recent global economic turbulence.

Interest rates remain low, despite the volatility in financial markets caused by the fallout from the Asian crisis.

Employment has soared, gaining 453,000 jobs in 1998 on the heels of the already impressive gain of 368,000 jobs in 1997. This marks the best annual performance of the decade and outpaces the job performance of any other G-7 country.

The strong job performance has continued in January 1999, with 87,000 new jobs created.

Almost 40 per cent of the new jobs created in the last 12 months went to Canada's youth, who posted their strongest yearly employment growth in over 25 years. This strong job performance pushed the unemployment rate down to 7.8 per cent in January 1999, its lowest level since June 1990.

This year, in terms of economic growth, both the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD) expect Canada to be among the top performers of the G-7 nations. And they expect Canada to be second to none in the creation of jobs.

The deficit has been eliminated much faster than anyone expected. The budgetary deficit, which stood at $42.0 billion in 1993-94, was eliminated in just four years. In fact, a surplus of $3.5 billion, the first surplus in 28 years, was recorded in 1997-98 and went to pay down the debt.

The 1999 budget builds on the record of maintaining sound economic and fiscal management.

The 1999 Budget Delivers

Balanced budgets or better

• A balanced budget or better is expected for 1998-99 -- the second consecutive year in which the budget has been deficit-free. The last time this occurred was almost half a century ago, in 1951-52.
• The government is committed to balanced budgets or better in both 1999-2000 and 2000-01, marking four consecutive years in which the budget will be in balance or surplus. This has happened only twice since Confederation, 132 years ago.

Reducing the debt

• To the extent that the Contingency Reserve is not required for 1998-99, it will be used to reduce the public debt.
• The Debt Repayment Plan and continued economic growth will ensure that the debt-to-GDP ratio -- the debt in relation to the total income generated in the economy -- remains on a permanent downward track.
• The debt-to-GDP ratio is expected to be 65.3 per cent in 1998-99, and then fall to just under 62 per cent by 2000-01. This compares to 71.2 per cent in 1995-96.
• The cost of paying interest on the debt has dropped from a high of 36 cents of every federal revenue dollar to the current low of 27 cents.
• Market debt -- the debt outstanding and held by investors -- is expected to fall even faster than the public debt. Market debt is expected to decline to about $457 billion in 1998-99, down about $20 billion from its peak of $476.9 billion in 1996-97.
• By the accounting standards used in most other countries, the federal government will post a financial surplus for the third consecutive year in 1998-99 -- the only G-7 country to do so.

Spending share continues to fall

• Program spending as a share of gross domestic product (GDP) is expected to decline from 12.6 per cent this year to 12 per cent in 2000-01, the lowest level in 50 years.

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