The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Dear Editor: re: The 2005 Federal Budget and Fiscal Responsibility With the passing of legislation to implement the main feature of the 2005 federal budget, there are some in Parliament (and beyond) who have offered erroneous commentaries about the country's finances. A response is necessary. Critics have implied that Canada's fiscal situation is weak. Nothing could be further from the truth. After 27 years of chronic deficits and rising debt, it was our government that reasserted the principles of fiscal responsibility and then balanced the nation's books in 1997. We are now working on our eighth consecutive budgetary surplus. We have reduced the federal debt by more than $60 billion so far, on-track to bring Canada's debt-to-GDP ratio down from 68 percent (which we inherited from a previous Conservative government) to no more than 25 percent within ten years. The nation's credit rating has been restored to Triple-A. Our fiscal track record is the best among world-leading G-7 economies and the best of any Canadian government since 1867. Inflation and interest rates remain low and stable. Domestic demand and overall economic growth have been consistently encouraging. Despite a rising Canadian dollar, even export sales have shown remarkable resilience. Our labour force participation rate and Canada's job creation performance continue to demonstrate great strength. This is the positive context within which the 2005 budget legislation has made its way through the House of Commons. Initially, it enjoyed the stated support of the Official Conservative Opposition. In fact, Stephen Harper declared that support before I had even finished delivering the Budget Speech on February 23. He held to it for close to two months. But then, beginning on April 21, in the wake of a pro-Conservative blip in the public opinion polls, everything changed. The blip didn't last long and it didn't amount to much, but it was enough to cause The Leader of the Opposition to reverse himself completely. From benign support for the Budget he shifted to vicious condemnations - vowing to kill the Budget and bring down the government at every turn. Given that state of affairs, the government was faced with a stark choice. Either copy Joe Clark's experience and drive this minority Parliament quickly over the cliff. Or find some other support to make the minority work and give the Budget a decent chance. Thus negotiations with the NDP were necessary because of the Conservative flip-flop. But those negotiations were only successful due to strict adherence to four principles of crucial importance to the government: 1. No deficits. The Government of Canada must remain in a surplus position. 2. Debt reduction must continue, to bring down the heavy mortgage that past spending has placed on the futures of our children. 3. Tax reductions will proceed. Certain proposed tax measures relating only to large corporations and scheduled to come into effect only in 2008 can be dealt with in separate, stand-alone legislation. But these measures will proceed as promised and on time Ñ to safeguard Canadian tax rate competitiveness and Canadian jobs. 4. Any new spending must be consistent with existing government priorities and it must fit realistically within existing fiscal flexibility. This is, in fact, the case. The priorities include housing, education, the environment and foreign aid. And all together, there is a variation from our original planning of only one percent. Indeed, if you look at the track record of the last Conservative government, their program spending - as a share of GDP - was as high as 18.5 percent and never less than 15 percent. By contrast, our ratio remains around 12 percent. A big improvement! Indeed, this government has delivered the most modest levels of federal spending in relation to the size of the economy, since the period of demobilization after World War II. The government's books will stay solidly in the black. Canadians have simply worked too hard to come too far, sowing and reaping the fruits of fiscal responsibility, to have the nation's hard-earned gains frittered away. And looking forward Ñ given a strong Canadian dollar, tough new global competition from places like China, India and Brazil, the aging and imminent retirement of the Baby Boom generation, and a slower-growing workforce to follow them Ñ we must built on Canada's impressive fiscal performance with an equally impressive improvement in our productivity and competitiveness. Our future will depend upon it. Yours sincerely, Ralph Goodale, P.D., M.P. (Wascana) Minister of Finance
