Budget Speech 1999: 1
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Archived - Introduction

Mr. Speaker, let me begin, on behalf of the government, by expressing our appreciation to the Standing Committee of Finance and the many committees of caucus for the valuable work they have done in the lead-up to this budget.

Let me also express our gratitude to the great number of Canadians who have come forward to present their views. The sense of civic responsibility they have shown now falls to us to respect -- to balance the sound perspectives they have advanced, as we prepare together for a new century.

It is an inescapable fact of life that a budget always brings its own special vocabulary. We talk in the language of rates and ratios, of percentages and decimals, of accounting methods and measures.

What all of this obscures is what budgets should be about.

It is to make the lives of Canadians better. It is to improve their standard of living.

It is to build today for a better tomorrow. For budgets are about more than entries in the books of a government; they are chapters in the progress of a people.

Canadians have always understood that the turnaround from the excesses, the high indebtedness of the recent past would not be as fast as any of us would like; that the challenges posed by rapid change are substantial, and that the bar set by globalization is very high. Canadians knew, therefore, that a long-term plan was needed.

Five years ago, we put that plan in place.

Today, it is working. And thus our responsibility is clear. It is to build on the success of previous years. And with this budget, we are.

This budget demonstrates that the finances of the nation are now in better shape than they have been in a generation -- and that further progress lies ahead.

It is a budget that acts strongly on the highest priority Canadians have -- strengthening their system of health care for today and tomorrow.

It is a budget that continues to equip Canadians to succeed in the 21^st century.

And it is a budget that for the first time in many years offers tax relief to every taxpayer and it does so without using borrowed money.

Fostering a Growing Economy

Mr. Speaker, the past year has been one of extraordinary economic uncertainty, a volatility that has demonstrated that no country today can shield itself fully from global turmoil.

However, the past year has proven as well that the steps that Canada has taken to strengthen its finances and economy are paying off.

There is no doubt we have felt the effect of the storm. As a result of the Asian crisis and its repercussions, our growth slowed from the robust pace of 1997 and early 1998.

Canada's West, particularly our forestry, energy and farming sectors, has suffered.

Yet it must also be recognized that, overall, the damage has not been as severe as it might have been -- as severe as it would have been only a few years ago.

For example, job creation has been very strong. More than 450,000 new jobs were created last year, the large majority full-time and in the private sector, exceeding even the impressive pace set the year before. No other G-7 country -- not even the United States -- has matched our record.

This strong job performance has continued in 1999, with 87,000 jobs created in January alone. This pushed the unemployment rate down to 7.8 per cent still too high -- but its lowest level in almost nine years.

Job prospects for young people have improved significantly. Over the past 12 months, youth employment grew by 10 per cent -- over 200,000 jobs -- the best performance in over 25 years.

This year, in terms of economic growth, both the IMF and OECD expect Canada to be among the top performers of the G-7.

This is not to say there are no risks. Very clearly, there are.

The world is a long way from having the kind of architecture that will prevent or minimize economic crises in the future. We may have a global market. But we don't have a global framework to make it work for people. For Canada, putting this framework in place is a priority.

At home, the priority is also clear. We must equip Canadians to succeed in what remains an insecure world.

Mr. Speaker, as we continue to implement our plan, it is important to reconfirm the principles that underlie it, the values we seek to sustain and strengthen.

First, the government's deficit may be eliminated but we must never eliminate frugality from government.

There will be no rewind to the reckless spending of other people's money.

We must -- and we will -- govern as if every dollar counts -- because every dollar does.

This budget demonstrates that. Program spending as a percentage of the economy will decline from 12.6 per cent this year to 12 per cent by 2000-01 -- its lowest level in 50 years.

Second, we must never lose sight of the need to be balanced in our approach.

A successful society does not run on one cylinder. We must respond to the reality that success on one front requires action on several.

Third, we must never shy away from the need to make choices. A government with too many priorities is a government that has none.

That is why, for example, health care, knowledge and innovation constitute fully three-quarters of the new spending announced in this year's and last year's budgets, the first two in the era of balanced books.

Fourth, we must set aside any notion that acting in isolation is a sign of strength. It is not. In today's world, power lies in partnership. Canadians have a right to expect that their governments will work together.

Therein lies the importance of the Social Union Framework signed by the Prime Minister and premiers two weeks ago.

Fifth, we must focus on the longer term. Some of the greatest problems of the past arose when governments gave in to short-term pressures that threw them off course. If we are not to lose our way, we can never lose sight of the far horizon.

Finally, and most importantly, we must always be fair. If, at the end of the day, it is said that the books of Canada are better, but the lives of Canadians are not, we will not have succeeded.

The test of good government is not to protect privilege for the few. It is to provide opportunity for the many.

Maintaining Sound Financial Management

Mr. Speaker, our country has finally left the era of deficit financing behind.

Last fiscal year, the federal government recorded its first budgetary surplus in 28 years.

As this fiscal year draws to a close, this March 31, it is clear we will again balance the books or better.

This will mark the first time in almost half a century that the federal government will have recorded two balanced budgets or surpluses, back to back.

Moreover, this budget confirms that we will balance the books -- or better -- next fiscal year and let me announce today that we will also balance the books -- or better -- in the year 2000-01.

This means four consecutive years of budgets in the black -- only the third time this has happened since Confederation.

Of even greater significance, we will enter the new millennium as a country no longer saddling generations to come with a legacy of ever-increasing debt.

For well over a generation, Canada's debt-to-GDP ratio rose relentlessly. However, two years ago, as a result both of our action on the deficit and an economy that was growing, it began to fall meaningfully.

Last year, Canada's debt-to-GDP ratio recorded the largest single improvement in over 40 years, falling from 70.3 to 66.9 per cent.

This year and next year, we expect it will fall still further and by the year 2000-01, it will be under 62 per cent.

Looking beyond that, our commitment is to keep the debt ratio on a steady downward track, year after year.

Now, all of this may well sound arcane -- some statistical addiction of economists -- or Finance Ministers -- far removed from the day-to-day concerns of Canadians.

But nothing could be further from the truth.

For it is Canadians who pay the price when government is forced to spend so much of each tax dollar simply to pay the interest on the national debt that it's unable to respond to their needs.

Three years ago, when the debt-to-GDP ratio was at its peak, 36 cents out of every revenue dollar -- more than one third -- went to debt interest.

This was money Canadians could not use to prepare for the future because their governments were too busy paying for the past.

Last year, with the debt ratio dropping, the portion of each revenue dollar servicing the debt also dropped -- to 27 cents.

This means the beginning of a new flexibility, a new freedom to strengthen health care, to provide needed tax relief, to fight child poverty, to protect the environment and to invest in a more productive economy.

In short, balancing the books means a new strength to build today for a better tomorrow.

But it means, as well, that we can't stop the debt fight now. For there is something deeply wrong when the largest program the federal government has is paying interest on its debt -- more than $41 billion this year alone. To put this in perspective, that is almost twice the size of our next largest expenditure -- pensions for Canada's seniors.

Therefore, the Debt Repayment Plan we announced in the last budget will remain in place.

First, we will, as we have done again today, present two-year fiscal plans based on prudent economic assumptions.

Second, we will continue to build into our financial plans a Contingency Reserve -- a buffer against the unexpected.

And third, if the Contingency Reserve is not needed, it will continue to go directly to paying down the debt.

Mr. Speaker, following this course, not only have Canadians secured a financial victory that is remarkable by domestic standards. They have secured a victory that is remarkable by international standards as well.

The accounting method Canada uses to calculate its debt repayment is considered among the most rigorous in the world.

Many other major economies measure only the debt that is owed to markets.

On that basis, last year, we paid down $9.6 billion in market debt. This year, we expect to pay down a similar amount, for a total of almost $20 billion in just two years.

We are one of the few countries in the world that is actually paying down its debt.

Mr. Speaker, does this mean the challenges are all behind us? The answer is NO! The deficit may be eliminated but our debt ratio still remains the second highest of the G-7.

Furthermore, the Asian crisis remains with us and events in Brazil highlight the fragility of the world's economic recovery. We are weathering the storm much better than most. However, Canada's economists have cut their growth projections substantially from where they were at this time last year.

Despite these realities, as we prepared this budget, there were those who said we should take the risk that things will turn out vastly better than anticipated -- that we should spend more, or that we should reduce taxes more; in other words, that it was time to cease being cautious with the finances of the nation, that we should now revert to the habits of the past.

Here is our response to those who hold those views.

We have always believed that the odds of reaching our goals must be better than a mere flip of a coin.

The very reason we are still on track to balance the budget or better in each of the next two years, the very reason we are not back into deficit despite a degree of global economic turmoil that literally no one foresaw a little over a year ago -- all of this is the result of the cautious approach we have applied to our finances from the very beginning.

Furthermore, our careful approach has also ensured that we have the resources to respond to other unanticipated events -- while at the same time safeguarding our financial health.

In 1996 and 1997, it gave us the capacity to provide assistance to those who suffered from the Saguenay and Red River floods.

In 1998, it allowed us to respond to the Ice Storm.

This year, it has enabled us to support Canada's farmers who are in difficulty.

To those who believe we can play Russian roulette with the nation's finances, let me simply say: No! We will not squander the opportunity Canadians have before them.

Mr. Speaker, that speaks to our nation's finances.

However, it does not, by itself, speak to our nation's future.

Taking care of the needs of our people does not end with taking care of the books.

A nation is not a corporation.

Markets do many things -- and they do them well.

But there are many things they cannot do.

Markets cannot provide quality health care to all of us when we are sick.

They cannot prevent the gap between rich and poor from becoming an unbridgeable gulf.

They cannot deal with the root causes of homelessness or of violence against women.

Markets deal, as they should, in services and goods. They do not, however, deal with the common good. Therefore, we must.

We are not here to sit back and simply build up surpluses or pay down debt. Our purpose is not just to build a better bottom line. It is to build a stronger nation.

That is why, among other initiatives, we have provided new money for the Youth Employment Strategy, expanding it by 50 per cent, an initiative that has helped more than 100,000 young people each year gain valuable work experience.

That is why we are following through on our commitment to implement Gathering Strength -- Canada's action plan for and with Aboriginal peoples.

That is why we are devoting new resources to Overseas Development Assistance and why we are taking a leadership role in the international community to deal with the issue of crippling debt in developing countries.

That is why we are devoting significant new resources to youth justice -- replacing the Young Offenders Act, protecting the public from the most violent and introducing new community-based programs to help others change their behaviour.

That is why we are improving the compensation and benefits of the men and women of the Armed Forces -- Canadians who put their lives at risk every day around the world, and who have demonstrated uncommon dedication here at home helping their country cope with a series of natural disasters.

And that is why in this budget we are making the largest single expenditure we have made in any area since taking office -- strengthening health care for the future.

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