Budget 1999
Building a Strong Economy through Knowledge and Innovation - 1
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Archived - Highlights of the 1999 Budget

Creating Knowledge

  Canada Foundation for Innovation

$200 million to help meet the demand for research infrastructure in the areas of health, the environment, science and engineering.

  Natural Sciences and Engineering Research Council (NSERC)

$75 million over three years to build on Canada's support for basic research and advanced studies funded by NSERC.

  Social Sciences and Humanities Research Council

$15 million in additional funding over three years for new research in the social sciences and humanities.

  National Research Council

$16 million in 1998-99 to invest in leading-edge equipment, plus $15 million over three years in support of national and regional research objectives.

  Biotechnology Research and Development

$55 million over three years for biotechnology research and development by federal science-based departments and agencies.

Disseminating Knowledge

  Smart Communities

$60 million over three years to establish demonstration projects to promote the effective use of information technology in such areas as education and lifelong learning, health, government services, business and industry, employment, library and information services, transportation and culture.

  GeoConnections

$60 million over five years to make available -- through the information highway -- comprehensive and integrated data about Canada's geography, environment, people and resources.

Commercializing Knowledge

  Networks of Centres of Excellence

$90 million over three years to support partnerships among world-class researchers and the private sector across Canada.

  Technology Partnerships Canada (TPC)

$150 million over three years to help keep Canada at the forefront of technological innovation. TPC makes strategic investments with companies to commercialize innovative products and processes.

  Business Development Bank of Canada (BDC)

A $50-million equity injection to help the BDC expand financing for small- and medium-sized knowledge-based and export-oriented businesses.

  Canadian Space Agency (CSA)

$430 million over three years, and ongoing stable funding of $300 million annually thereafter, for the CSA to make strategic investments in space projects, science and technology.

Supporting Employment

  Youth Employment Strategy

$465 million over three years -- a 50-per-cent increase over the preceding three-year period.

  Canada Jobs Fund

$110 million per year to create sustainable jobs in high-unemployment regions of Canada.

The 1999 budget will invest more than $1.8 billion over the remainder of this fiscal year and the next three years in advanced research, the information highway, innovation, and in support of employment.

Introduction

Powerful forces are reshaping the global economy. Rapid technological innovation is transforming the skills and knowledge required for competing domestically and abroad. At the same time, the world is becoming smaller as goods, services and workers move much more swiftly and freely across borders.

In the modern economy, individuals and businesses must move quickly to seize the opportunities created by globalization and advances in technology. Competitiveness is becoming more dependent on the ability to create new products and put innovative technologies to work. Developing a highly skilled workforce is therefore crucial.

The federal government has a key role to play in this process by promoting access to knowledge and skills, and by expanding the capacity of businesses to innovate.

This booklet describes measures in the 1999 budget that build on the 1998 budget's Canadian Opportunities Strategy and on other knowledge and innovation investments introduced in previous budgets. The measures are designed to assist in the creation, dissemination and commercialization of knowledge. They also provide direct support to employment, particularly for youth.

The Challenge

A key goal of the federal government is to build a strong economy -- one that generates well-paying jobs and a higher standard of living for all Canadians.

Economists measure our standard of living using a statistic called real gross domestic product (GDP) per capita -- i.e., the amount of goods and services produced in a year for each person in Canada. In recent years, there has been an improvement in the growth rate of Canada's real GDP per capita. To continue this improvement over the longer term, we must increase our potential for economic growth.

Employment growth and productivity growth are the two factors that determine the potential growth rate of our economy. Employment growth means getting more people working, while productivity growth is about increasing the amount that each employed person produces.

Employment growth was an important source of the increase in living standards in the 1970s and 1980s, when the baby boom generation entered their working years, and women entered the workforce in unprecedented numbers. However, Canadians cannot count solely on employment growth to improve living standards over the long term. Indeed, as baby boomers retire, Canada's standard of living will become even more dependent on productivity growth.

Growth in productivity is the key to a better standard of living for all Canadians

This is the productivity challenge. Growth in productivity is the key to a better standard of living for all Canadians in the 21st century.

Building the Framework for a Better Standard of Living

Acting on several fronts to improve Canada's standard of living

Over the past five years, the federal government has taken meaningful steps towards improving the standard of living for all Canadians through strong productivity growth. There is no single policy measure that will guarantee stronger productivity performance in the future. This means that the federal government must continue to act on several fronts.

Restoring fiscal balance

By restoring balance to the country's fiscal situation, the government has reduced the burden of debt relative to the size of Canada's economy. The benefits of fiscal balance are low interest rates, low inflation and more confidence among consumers and businesses. This has created a healthy environment for business investment, which is a key ingredient for raising productivity growth and supporting job creation over the longer term.

  Strategic investments and tax relief

A lower debt burden gives the government more scope to make economic and social investments and provide tax relief. Since tax relief increases the reward from working, saving and investing, it must be a prominent part of any long-term strategy to advance productivity growth and job creation.

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