Budget in Brief 1999: 3
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Archived - Summary of Spending and Tax Actions

The fiscal outlook presented in Table 1 includes all of the spending and tax measures announced since the 1998 budget -- measures that will contribute to a stronger economy and a more secure society.

The net fiscal impact of the spending and tax actions proposed since the 1998 budget is summarized in Table 2. The cost of these proposed spending and tax initiatives amounts to $5.7 billion in 1998-99, $4.1 billion in 1999-2000, $5.6 billion in 2000-01 and $7.5 billion in 2001-02.

Table 1
Summary statement of transactions: fiscal outlook with budget measures

	1997-98	1998-99	1999-00	2000-01
	(billions of dollars)
Budgetary transactions
Budgetary revenues	153.2	156.5	156.7	159.5
Program expenditures	108.8	112.1	111.2	113.2
Operating balance	44.4	44.4	45.5	46.3
Public debt charges	40.9	41.4	42.5	43.3
Underlying balance	3.5	3.0	3.0	3.0
Contingency reserve		3.0	3.0	3.0
Budgetary balance	3.5	0.0	0.0	0.0
Net public debt	579.7	579.7	579.7	579.7
Non-budgetary transactions	9.3	11.5	5.0	7.0
Financial requirements/ surplus (excl. foreign exchange transactions)	12.7	11.5	5.0	7.0
Percentage of GDP
Budgetary revenues
Including budget measures	17.7	17.6	17.2	17.0
Excluding 1998 & 1999 budget measures/EI rate reductions	17.7	17.9	17.8	17.7
Program spending	12.6	12.6	12.2	12.0
Public debt charges	4.7	4.7	4.7	4.6
Budgetary balance	0.4	0.0	0.0	0.0
Financial requirements/ surplus	1.5	1.3	0.5	0.7
Net public debt	66.9	65.3	63.7	61.7
Note: Numbers may not add due to roundings

Over the four years 1998-99 to 2001-02 the cost of the spending and tax actions amount to $22.9 billion. Of this amount, $14.1 billion is for spending initiatives.

These include the $6.5-billion increase in the CHST, $1.4 billion for other health initiatives and $2.3 billion for "Building a Secure Society" initiatives, including increased funding for Aboriginal peoples, crime prevention, furthering international co-operation, renewing the Equalization program, official languages and for compensation and benefits in the Canadian military.

More than $1.8 billion is allocated to building on the Canadian Opportunities Strategy, for research and innovation and for employment programs.

Finally, funding has also been provided for economic adjustment in a number of sectors. These include the previously announced funding for the Canadian Fisheries Adjustment and Restructuring Program and the Agricultural Income Disaster Assistance Program.

The general tax relief and fairness measures, including the proposed increase to the Canada Child Tax Benefit, amount to $7.7 billion over the three years.

In addition, EI premium rates were lowered in 1999. For employees, the rate dropped from $2.70 in 1998 to $2.55 in 1999, with corresponding declines for employers. The premium cut will reduce the cost to Canadians of paying EI by $1.1 billion in 1999.

Since 1994 EI premium rates have been reduced by 52 cents. Together, employees and employers will pay about $3.5 billion less in 1999 than they would have if premium rates had remained at the 1994 levels.

Table 2
Spending and tax initiatives since the 1998 budget

	1998-99	1999-00	2000-01	2001-02	Cumulative total
	(millions of dollars)
Spending initiatives
Building a Secure Society
Strengthening health care for Canadians
Increased CHST cash transfers			1,000	2,000	3,000
CHST supplement1	3,500				3,500
Total CHST	3,500		1,000	2,000	6,500
Potential cash flow to provinces
Increased funding for health care Of which:		2,000	2,000	2,500	6,500
CHST			1,000	2,000	3,000
CHST supplement		2,000	1,000	500	3,500
Other health initiatives
Improving health information systems	95	28	85	120	328
Promoting health-related research and innovation2	160	50	115	225	550
First Nations and Inuit health services		20	60	110	190
Preventive and other health initiatives		49	104	134	287
Total	255	147	364	589	1,356
Other initiatives	247	510	710	804	2,271
Total -- Building a Secure Society	4,002	658	2,074	3,393	10,127
Building a Strong Economy
Building on the Canadian Opportunities Strategy
Creating knowledge
Canada Foundation for Innovation2	100				100
Support for advanced research	16	50	55	55	176
Disseminating knowledge		27	42	27	96
Commercializing knowledge		121	232	317	670
Supporting employment		265	265	265	795
Total	116	463	594	664	1,837
Economic adjustment	1,241	645	152	69	2,107
Total -- Building a Strong Economy	1,357	1,108	746	733	3,944
Total spending initiatives	5,358	1,766	2,820	4,126	14,070
General tax relief and fairness measures
General tax relief		1,530	2,555	2,965	7,050
Canada Child Tax Benefit			225	300	525
Tax fairness measures		15	25	100	140
Reduction in EI premiums	300	800			1,100
Total	300	2,345	2,805	3,365	8,815
Total spending and tax initiatives	5,658	4,111	5,625	7,491	22,885
1  CHST supplement in 1998-99 will be paid to a third-party trust in 1999-2000, on passage of authorizing legislation. 2  An additional $200 million is being allocated to the Canada Foundation for Innovation. It is expected that about half will be used to improve infrastructure for health research, and the other half in research infrastructure in the areas of the environment, science and engineering.

Tables 3 to 6 detail the 1999 budget health initiatives, the knowledge and innovation actions and the cost of providing tax relief and improving fairness.

Table 3
Canada Health and Social Transfer

	1999-00	2000-01	2001-02	2002-03	2003-04	5 years
	(billions of dollars)
Increased funding for health care	2.0	2.0	2.5	2.5	2.5	11.5
Of which:
CHST		1.0	2.0	2.5	2.5	8.0
CHST supplement1	2.0	1.0	0.5			3.5
Existing CHST cash	12.5	12.5	12.5	12.5	12.5	62.5
Total CHST cash	14.5	14.5	15.0	15.0	15.0	74.0
CHST tax transfers	13.9	14.4	15.0	15.6	16.4	75.3
Total CHST	28.4	28.9	30.0	30.6	31.4	149.3
1 The $3.5-billion CHST supplement will be accounted for in 1998-99 by the federal government. Payments will be made in a manner that treats all jurisdictions equitably, regardless of when they draw down funds.

Table 4
Other 1999 budget health initiatives

	1998-99	1999-00	2000-01	2001-02	Total
	(millions of dollars)
Improving health information systems
Canadian Institute for Health Information	95				95
Other health information initiatives		20	70	100	190
Accountability for federal health programs		8	15	20	43
Subtotal	95	28	85	120	328
Promoting health-related research and innovation
Canadian Institutes for Health Research			65	175	240
Increased health funding for research councils/organizations	35	50	50	50	185
Canada Foundation for Innovation1	100				100
NURSE Fund	25				25
Subtotal	160	50	115	225	550
First Nations health services		20	60	110	190
Preventive and other health initiatives
Prenatal nutrition		10	30	35	75
Food safety		15	20	30	65
Toxic substances		14	14	14	42
Innovations in rural and community health		5	20	25	50
Diabetes		5	20	30	55
Subtotal		49	104	134	287
Total	255	147	364	589	1,356
1 Funding will be increased by $200 million. Based on awards in 1998, it is expected that about  half this amount will be allocated to support health-related research infrastructure.

Table 5
Building on the Canadian Opportunities Strategy:
knowledge and innovation

	1998-99	1999-00	2000-01	2001-02	Cumulative total
	(millions of dollars)
Creating knowledge
Canada Foundation for Innovation1	100	--	--	--	100
NSERC		25	25	25	75
SSHRC		5	5	5	15
National Research Council	16	5	5	5	31
Biotechnology		15	20	20	55
Disseminating knowledge
Smart Communities		15	30	15	60
GeoConnections		12	12	12	36
Commercializing Knowledge
Business Development Bank of Canada2	50	--	--	--	50
Technology Partnerships Canada		50	50	50	150
Canadian Space Agency		41	152	237	430
Networks of Centres of Excellence		30	30	30	90
Supporting employment
Youth Employment Strategy renewal		155	155	155	465
Canada Jobs Fund		110	110	110	330
Total	166	463	594	664	1,887
1 Funding will be increased by $200 million. Based on actual awards in 1998, it is expected that about half this amount will support research infrastructure in areas other than health. 2 Federal support for the Business Development Bank of Canada is in the form of an equity injection -- i.e. the purchase of shares. As such, it is not counted as a budgetary expenditure.

Providing tax relief and improving tax fairness

Table 6
Impact on federal revenues

General tax relief and Canada Child Tax Benefit (CCTB)	1999-2000	2000-01	2001-02		3-year cumulative impact
	(millions of dollars)
Measures effective July 1, 1999
Extension of $500 supplement to all taxpayers	-665	-1,110		-1,290	-3,065
$175 increase in tax-free income	-270	-450		-525	-1,245
Elimination of 3% surtax	-595	-995		-1,150	-2,740
Total	-1,530	-2,555		-2,965	-7,050
Tax fairness measures	-15	-25		-100	-140
Increase to CCTB for middle-income families1	0	-225		-300	-525
Total-1999 budget	-1,545	-2,805		-3,365	-7,715
Memorandum item: 1998 budget
General and tax fairness measures	-2,070	-2,405		-2,425	-6,900
Increase to CCTB for low-income families2	-320	-750		-850	-1,920
Total-1998 budget	-2,390	-3,155		-3,275	-8,820
Total-1998 and 1999 budgets	-3,935	-5,960		-6,640	-16,535
1 Effective July 2000. The amount is in addition to the cumulative $1.7-billion increase in CCTB in the 1997 and 1998 budgets. 2 $425 million effective July 1999 and an additional $425 million effective July 2000.

Conclusion

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