Budget 2005

Budget 2005

"There are times in the progress of a people when fundamental challenges must be faced, fundamental choices made - a new course charted. For Canada, this is one of those times.

Our resolve, our values, our very way of life as Canadians are being tested. The choice is clear.

We can take the path - too well-trodden - of minimal change, of least resistance, of leadership lost. Or we can set out on a new road of fundamental reform, of renewal - of hope restored.

Today, we have made our choice. Today, we take action."

The Honourable Paul Martin, P.C., M.P.

Minister of Finance

February 27, 1995

Looking Back

These are words that were heard ten years ago, which were spoken by our Prime Minister, the honourable Paul Martin. At that time, Paul Martin was our Minister of Finance, and he was introducing the 1995 budget for Canadians. Though his words may be ten years old, and they addressed a budget ten years ago, I believe we can easily see how that budget has affected us today, and how since then we have continued to have strong economic growth, and an ever-decreasing net debt.

Each and every year in Canada, usually in February, the federal government in control introduces its proposed budget. Ten years ago, Paul Martin brought Canadians a budget in a year that 433,000 new jobs had been created, our economic growth was the highest of any G7 country, and even though the underlying deficit was $35.3 billion, it had been decreasing, and Paul Martin had a plan to keep it shrinking. The budget proposed decreasing program spending from $120 billion to $108 billion, with savings of $15.6 billion over the next two fiscal years. It projected bringing the 1996-97 deficit down to $24.3 billion. The budget contained 3 year cumulative savings of $29 billion. Although the budget contained measures to increases fairness and tighten the tax system, for the most part, the 1995 budget focused primarily on reducing government expenditures. The impacts of the budget's measures would be a reduction in government expenditures of $25.3 billion in the next 3 fiscal years, as well as a $3.7 billion increase in revenue due to the small number of tax measures within the budget. The 3 year deficit reductions also demonstrated a reduction of the net debt by the end of the 1997-98 fiscal year. So, what actually happened in those 3 years?

Well, apparently what Paul Martin says, Paul Martin does. In February of 1998, Paul Martin brought Canadians the first balanced budget in almost 30 years. It also proposed balanced budgets in the two following fiscal years, something that hadn't happened in over 50 years. As well, 1997 had been another strong year for job creation, a year in which another 372,000 new jobs were created, and the unemployment rate stood at only 9%, down from the 11.2% in 1993. This budget projected a $7 billion tax relief for Canadians over the next 3 years. It also promised on a plan to keep lowering the government's debt burden. The debt-to-GDP ratio was expected to drop from 72% to 63%. The budget also included new spending initiatives of which 80% were to health and education and access to knowledge and skills. This would provide a better future standard of living for the 21st century. Also, a further increase in the Canada Child Tax Benefit was to be phased in over the next two years. Finally, the budget contained a contingency reserve of $3 billion that, if not used, would go directly to paying down the debt. The government's plan seemed to be working flawlessly, but as I like to say, expect the unexpected.

In 2001, unusual circumstances presented themselves that brought about significant economic uncertainty. The September 11th terrorist attacks added to a global economic slowdown, and this triggered panic and fear in people's thoughts on the state of the economy. Even during the tough times, the 2001 budget was again a balanced one, and the next two budgets were also proposed to be balanced as well. Not only was the budget balanced, the surplus for 2000-01 was $17.1 billion, which was the largest annual surplus since confederation. The debt-to-GDP ratio had fallen to 58.1%. One of the measures in this budget was to provide $7.7 billion over the next 5 years to enhance Canadians' security. The budget also contained planned investments in health initiatives, skills, learning, and research, strategic infastructure and the environment, and many more initiatives. Canada’s surplus reached 3.2% during 2000, compared to the average of the other G-7 countries, which was a 0.1% deficit. As well, Canada had the greatest improvement in its financial balance of all