Budget in Brief 1999: 2
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Archived - Investing in Key Economic and Social Priorities

Over three-quarters of the spending initiatives announced in the 1998 and 1999 budgets reflect two of the highest priorities of Canadians -- increased funding for health care and access to knowledge and innovation.

Strengthening Health Care for Canadians

Renewing federal transfers to provinces and territories

The budget makes significant investments to help provinces and territories deal with Canadians' immediate concerns about health care -- waiting lists, crowded emergency rooms and diagnostic services.

It also helps to build a stronger health care system that reflects the changing needs of Canadians and provides timely access to high quality health care.

Medicare: this government's largest investment ever

• The budget invests in medicare by increasing transfers to provinces and territories. Over the next five years they will receive an additional $11.5 billion specifically for health care. This represents the largest single new investment this government has ever made.

-- Of this amount, $8 billion will be provided through future-year increases in the Canada Health and Social Transfer (CHST) and $3.5 billion as an immediate one-time supplement to the CHST from funds available this fiscal year.

-- Allowing for a gradual and orderly drawdown of the supplement over the next three years by the provinces and territories means that total support for health care would increase by $2 billion in 1999-2000 and in 2000-01 and by $2.5 billion in each of the following three years of the five-year commitment.

-- However, individual provinces and territories could draw down the supplement over the next three years in a pattern which best meets the needs of their health care systems.

• The $2.5 billion increases CHST cash from $12.5 billion to $15 billion and takes what is regarded as the health component of the CHST as high as it was before the period of expenditure restraint of the mid-1990s.
• Together with the growing value of CHST tax transfers, federal support is expected to reach a new high by 2001-02, surpassing where transfers stood prior to restraint.

Increasing Equalization

• Significant increases in Equalization will also make more resources available to most of the less prosperous provinces for public services, including health care.
• Payments this year are expected to reach $10.7 billion -- up $2.2 billion from the 1998 budget estimate.
• Legislation is now before Parliament to renew the Equalization program for the next five years. It is projected that payments will be $5 billion higher than over the previous five years, including technical improvements totalling an estimated $700 million over that period.

Eliminating disparities

• The disparities in the way the CHST is allocated across provinces would, under current legislation, have been reduced by half over the next four years.
• The 1999 budget completely eliminates these disparities over the next three years. All provinces will then receive identical per capita CHST entitlements, providing equal support for health and other social services to all Canadians.

Further health investments

The budget also strengthens the federal government's contribution to Canada's health system and the health of Canadians by investing close to $1.4 billion over the remainder of this fiscal year and the next three years through several initiatives.

Improving information systems

• Health information systems will be improved to better meet the information needs of health care providers and patients and to foster greater accountability to the public on how the health care system is serving them, consistent with the new Social Union Framework.

Promoting research and innovation

• New funds will promote health-related research and innovation to improve diagnosis and treatment of diseases, promote best practices in health care delivery and enhance the health and well-being of Canadians.

Improving First Nation and Inuit services

• First Nations and Inuit health services will be improved by strengthening community and home care in particular.

Preventing health problems

• More will be done to prevent health problems from occurring by building on efforts to improve prenatal nutrition, food safety, and the control of toxic substances. Steps will also be taken to foster innovation in rural and community health, in partnership with the provinces, and to combat diabetes, the incidence of which is particularly high in Aboriginal communities.

Summary

• Combined with the $6.5-billion cash increase in the CHST over the next three years, the $1.4 billion invested in these activities means a total of $7.9 billion in new resources for health over the remainder of this fiscal year and the next three years.

Building a Strong Economy Through Knowledge and Innovation

The 1999 budget includes measures totalling more than $1.8 billion over the remainder of 1998-99 and the next three years to build on the Canadian Opportunities Strategy and on other knowledge and innovation investments introduced in previous budgets.

The measures are designed to support the creation, dissemination and commercialization of knowledge by strengthening Canada's research facilities, providing more opportunities for advanced research, developing new and better uses of the information highway and strengthening federal programs that invest with companies to transform new ideas into products and services.

These measures also directly support employment, particularly for youth.

Creating knowledge

• The 1999 budget provides an additional $200 million in 1998-99 to the Canada Foundation for Innovation. Based on awards in 1998, it is expected that about $100 million will support research in the areas of environment, science and engineering.
• The budget also provides $176 million in additional funding over the remainder of this year and the next three years to the Natural Sciences and Engineering Research Council (NSERC), the Social Sciences and Humanities Research Council (SSHRC) and the National Research Council, and provides support for biotechnology related research and development.

Disseminating knowledge

• As part of the government's plan to make Canada one of the most connected countries in the world by the year 2000, this budget provides $96 million over the next three years to support the GeoConnections initiative, which makes geographic-related information more accessible, and the establishment of one "Smart Community" within each province, the North and in an Aboriginal community.

Commercializing knowledge

For innovation to remain the driving force behind improving productivity and living standards, knowledge must be applied to creating new products and production processes, thereby leading to economic growth and generating job opportunities.

• Over the next three years an additional $150 million will be provided to the Technology Partnerships Canada (TPC) program, to help companies bring to market innovative products and processes.
• The Networks of Centres of Excellence program, which facilitates the transfer of knowledge among world-class researchers and the private sector within Canada, will be provided with an additional $90 million over the next three years.
• Funding for the Canadian Space Agency is being increased by $430 million over the next three years and stabilized at $300 million per year thereafter.
• The government will also inject a further $50 million as equity into the Business Development Bank of Canada, increasing its ability to provide financing to knowledge-based and export-oriented companies.

Supporting employment

• Two recently-announced initiatives will provide a total of $795 million for the Youth Employment Strategy and the Canadian Jobs Fund.

Providing Tax Relief and Improving Tax Fairness

The 1999 Budget Builds on the 1998 Budget

Raising tax-free earning levels

• The 1998 budget provided a $500 increase in the amount low-income Canadians can receive tax-free. The 1999 budget increases this amount to $675 and extends this tax relief to all taxpayers.
• The $675 increase more than offsets the effect of inflation since 1992 on the value of this amount.

Eliminating the 3-per-cent surtax

• The 1998 budget began the process of eliminating the 3-per-cent surtax by providing complete relief for taxpayers with incomes up to about $50,000 and reductions for those with incomes between $50,000 and $65,000. The 1999 budget completes this process by eliminating the 3-per-cent surtax for all remaining taxpayers.

Improving the Canada Child Tax Benefit

• The 1998 budget, on top of the $850 million provided in the 1997 budget, committed an additional $850 million to the Canada Child Tax Benefit (CCTB) targeted exclusively at low-income families.
• The 1999 budget sets out the design of this increased assistance, agreed to by federal, provincial and territorial governments, and also commits an additional $300 million to increase CCTB payments for modest- and middle-income families.

Substantial tax relief

• The 1998 budget actions will provide Canadians with $2.4 billion of tax relief in 1999-2000, $3.2 billion in 2000-01 and $3.3 billion in 2001-02 for a cumulative total of $8.8 billion over the three fiscal years.
• The 1999 budget actions will provide an additional $1.5 billion of tax relief in 1999-2000, $2.8 billion in 2000-01 and $3.4 billion in 2001-02. Cumulative tax relief from the 1999 budget totals $7.7 billion over the three fiscal years.
• The 1998 and 1999 budgets together provide tax relief of $3.9 billion in 1999-2000, $6 billion in 2000-01 and $6.6 billion in 2001-02, for a total of $16.5 billion over three years.
• In combination, the 1998 and 1999 budget actions, and the $800-million employment insurance (EI) premium rate reduction for 1999-2000, provide tax relief of $17.3 billion over the next three years.

Improving fairness

• Together, the 1998 and 1999 budgets provide the largest proportionate federal income tax reductions to the lowest income levels.
• As a result of the 1998 budget 400,000 low-income Canadians will no longer pay any federal income tax. The 1999 budget removes an additional 200,000 from the tax rolls for a total of 600,000.
• Single taxpayers earning $20,000 and less will have their federal income taxes reduced by at least 10 per cent.
• A typical Canadian one-earner family of four that receives income of $30,000 or less will pay no net federal income tax.
• Families with incomes of $45,000 or less will have their federal income taxes reduced by a minimum of 10 per cent and some will receive much larger reductions.

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