How Ottawa Governs: Minority Govt. & Fed. Agenda


How Ottawa Governs:
Minority Government and the Federal Agenda 
Budget 2005:  Social versus Economic Priorities”

Remarks by

John McKay, MP Scarborough-Guildwood

Parliamentary Secretary to the Minister of Finance

Public Policy Forum, Calgary

March 16, 2005

Good morning.

I’d like to begin by thanking the Public Policy Forum for hosting this event and for inviting me here to speak today. In recent years I’ve had a number of opportunities to visit Western Canada and I’m very happy, once again, to be here in one of the most dynamic regions of our country. Our topic today is whether Budget 2005 meets the economic and social needs of Western Canada.  I’m sure you won’t be surprised that my answer to that question is a resounding yes. During the last election campaign the Prime Minister made it clear our government recognized the reality of western alienation. He said we would work with the people of this great region to address the root causes of that alienation.

Have we made any progress? Yes, we have. Consider how strong Western Canada’s voice is at the highest levels of our government. The Minister of Industry is a proud Western Canadian, David Emerson from British Columbia.

The Deputy Prime Minister is a proud western Canadian, Anne McLellan from Alberta. The President of the Treasury Board is a proud western Canadian, Reg Alcock from Manitoba. The Minister of Finance is a proud, effective and very strong advocate of Western Canadian interests, Ralph Goodale from Saskatchewan.

Mr. Goodale has just delivered the Federal Government’s eighth consecutive balanced budget. That budget is based on a balanced approach that takes into account the needs and aspirations of every region of our country, including those of Western Canada.

Let’s take a closer look at that Budget.

Our Government’s balanced approach is founded on four key pillars:

·     A robust economy;

·     Secure social foundations;

·     A sustainable environment; and

·     A sound fiscal framework.

Since emerging from deficit in 1997, our Government has worked to create a “virtuous circle” in which these four pillars strengthen and mutually reinforce each other.

§ A robust economy creates well paying jobs for Canadians and is a key element to ongoing improvement in our standard of living. It also provides resources for increased investments to meet social and environmental objectives;

§ A secure society that invests in health and education provides the opportunities and the confidence for all Canadians to participate in the economy, contributing to a better standard of living;

§ An environmentally-sustainable economy improves the health of Canadians today, reduces costs for future generations, and provides innovative opportunities to enhance the competitiveness of business; and

§ Maintaining a sound fiscal framework supports the economy through lower interest rates, strong consumer and business confidence while still providing the Government with the resources to help address economic, social and environmental priorities of Canadians.

Ralph Goodale’s February 23rd Budget maintains this virtuous circle while keeping our budget balanced and supporting programs and services that are important to Western Canadians.

To illustrate this, I’d like to outline some of its key initiatives.  First, let’s look at our economy. Clearly, here in Western Canada, there is no bigger issue right now than the continued closure of the U.S. border to Canadian live cattle exports. Like all of you in this room, our Government was deeply disappointed by the latest court ruling in the U.S. that delayed the reopening of the border.

Let me be very clear on this point – we will continue to provide financial support to Canada’s beef farmers, while also using every means at our disposal to convince the Americans to rescind their decision.

Our Government has already committed substantial resources in support of Canada’s beef industry during this difficult period. In addition to the $1.1 billion in direct support provided to farmers through the Agriculture Policy Framework, we have allocated more than $1.8 billion to beef farmers across Canada to help them remain viable. This has included $1.6 billion in direct support to farmers, as well as more than $200 million for new surveillance, inspection and research measures. The vast bulk of this money is directed to farmers here in Western Canada. Just recently, we also announced a $50 million contribution to the Canadian Cattlemen’s Legacy Fund to help launch an aggressive marketing campaign to reclaim and expand markets for Canadian beef.

Budget 2005 also added $104 million over four years to extend cash advance and business risk management programs for Canada’s farmers. It also provided more money for environmental and resource management services for farmers. At the same time, acting on advice from the farm community, the Government agrees that producers should not be required to put funds on deposit annually to be eligible for the Canadian Agricultural Income Stabilization (CAIS) program. We are committed to working with our provincial partners and with stakeholders to find a better means of effectively engaging producers in joint management of business risk under this program.

Looking beyond the agricultural sector, Budget 2005 committed $186 million over the next five years through the Western Economic Development agency for new economic development projects on the Prairies. In addition, it proposed changes to capital cost allowance rates for oil and gas transmission pipelines and related pumping and compression equipment that will benefit companies engaged in pipeline projects in all parts of Canada, including Alberta, Saskatchewan and Manitoba. Similar changes for electricity assets will provide a significant boost for privately owned electrical utility companies here in Alberta.

Our government believes that one of the key components of a healthy national economy is a fair and competitive tax system. This is why we have reduced taxes in each and every year since we eliminated the deficit in 1997. In 2000, we introduced the five-year, $100 billion tax reduction plan, which significantly lowered both personal and corporate taxes. We have built on this package in subsequent budgets and Budget 2005 was no exception. It raised RRSP and RPP contribution limits. It proposed the elimination of the corporate surtax in 2008 and the reduction in the general corporate income tax rate to 19 per cent from 21 per cent by 2010. These corporate tax measures will allow our country to maintain its tax advantage over the United States.

Turning now to the second pillar of a secure society, I would submit that Budget 2005 is a key component of one of the most extensive commitments to Canada’s social programs put forward by any federal government in recent memory. Nowhere is this more evident than in our commitment to the number one priority of Canadians – health care. Last October, our government concluded a landmark deal with the provinces and territories which, over the next ten years, will see them receive an additional $41 billion in funding to help meet their health care needs.

For the Prairie provinces, this will mean $3 billion in new funding over the next five years. And remember, this is on top of the money that is already received through the Canada Health Transfer. Budget 2005 built on this commitment by providing $805 million in new funding for areas such as healthy living and chronic disease prevention, drug safety and environmental health. It also reaffirmed the Government’s commitment to invest $700 million in health programs for Canada’s aboriginal communities.

Our nation’s most important resource is our children. To ensure that they have the opportunities they need to achieve their dreams, we must ensure that they are equipped with the tools to succeed at as early an age as possible. Last fall, our government announced its intention to establish a national Child Care and Early Learning program, in cooperation with the provinces and territories. To demonstrate our commitment to this program, Budget 2005 committed $5 billion in funding over five years. My colleague, the Minister of Social Development, Ken Dryden, has already begun talks with provincial and territorial leaders on this issue and we expect further progress to be made on establishing a framework for a truly national program over the course of this year.

Budget 2005 also boosted the Government’s investment to support the most vulnerable members of our society. It increases tax assistance for persons with disabilities and their caregivers and provides additional funding to support efforts to integrate the disabled into the workforce. The budget will also raise benefits under the Guaranteed Income Supplement for low-income seniors and increase the amount of income that Canadians can earn tax-free to $10,000 – a move that will remove more than 860,000 low-income Canadians from the tax rolls, including a quarter of a million seniors.

A healthy environment is one of the key elements of a strong and sustainable economy. Budget 2005 made a number of investments in this crucial area, many of which directly benefit both large and small communities throughout Western Canada.  For example, the budget reaffirmed the government’s commitment to providing Canadian communities with a share of the federal gas tax revenues to the tune of $5 billion over the next five years. Communities in the three Prairie provinces will receive almost $800 million as a result of this measure. The funding will to be used to promote environmentally sustainable municipal infrastructure projects, such as public transit, water and wastewater disposal and community energy projects. Smaller communities will have greater flexibility in determining how they will spend the money they receive under this program.

As well, the Government added another $300 million in funding to Green Municipal Funds program, which is administered by the Federation of Canadian Municipalities. This program provides funding for environmentally sustainable projects in cities across the country. Here in Alberta, communities such as Medicine Hat, Lethbridge, Okotoks and Grande Prairie have all used funding to implement projects aimed at reducing pollution, lowering greenhouse gas emissions and improving the quality of life for local residents. In Calgary, money from the Green Municipal Funds has been used to study ways to recover energy from landfill sites and was also funded, in part, by money from private sector partners. At the same time, Budget 2005 increased funding for measures to promote the development of Canadian technology to reduce pollution and seek improved alternate sources of energy. Through the $1 billion Clean Fund and further tax write offs for producers of alternative energy, such as wind power and cogeneration, Canada will establish itself as a global leader in the field of environmental technology, develop a competitive advantage and become a more innovative economy. And, by the way, just in case there might still be some lingering notion in this part of the country about one particular environmental option which has been discussed over the years, there is no—and there will be no—carbon tax.  Period. The fourth pillar of a secure society is a commitment to fiscal discipline.  As Budget 2005 pointed out, Canada is now on track to post its eighth consecutive federal surplus budget – a record that is unmatched in our nation’s history.

We have reduced our federal debt by just over $61 billion since eliminating the deficit in 1997, and balanced budgets or better are forecast in each of the next five fiscal years. While government spending is increasing, it is concentrated in areas that directly benefit Canadians, such as increased funding for health care, notably for the reduction of waiting times, and more money provided to the provinces and territories for Equalization payments. To meet these commitments, our government embarked on an ambitious exercise to review all of its spending and programs. As the Minister of Finance announced in his budget speech, the expenditure review process has already identified $11 billion in savings over the next five years.

The Government will continue to maintain an annual Contingency Reserve of $3 billion to guard against unforeseen economic shocks. If this money is not needed, it will be used for debt reduction at the end of each fiscal year. Similarly, we will also continue to set aside an amount each year in economic prudence - $1 billion for the next fiscal year, rising to $4 billion by 2009-10. If it is not needed, it will be used to fund new spending initiatives or to provide more tax relief to Canadians. I want to make it perfectly clear that our government has no intention of abandoning the fiscal discipline that has gotten us to this point. Our G-7 colleagues look with envy at our fiscal record and we want to protect this very positive feature of our international reputation.

When all is said and done, I believe that Budget 2005 clearly meets the social and economic needs of Western Canada. It recognizes the interdependent relationship between a strong economy and solid, sustainable social programs and services.  It strengthens the four pillars of our unique and diverse Canadian society. I am confident it will continue to do so in the years to come.

Thank you