June
28th, 2005
AN
OPEN LETTER TO THE EDITOR
Dear
Editor:
RE:
The 2005 Federal Budget and
Fiscal Responsibility
With
the passage of legislation to implement the main features 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 10 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.
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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 23rd.
He
held to it for close to two months. But
then, beginning on April 21st, 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 -- 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.
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The
government's books will stay solidly in the black.
Canadians have simply worked too hard and come too far, sowing and
reaping the fruits of fiscal responsibility, to have the nation's
hard-earned gains frittered away.
And
looking forward -- given a strong Canadian dollar, tough new global
competition from places like China, India and Brazil, the ageing and
imminent retirement of the Baby Boom generation, and a slower-growing
workforce to follow them -- we must build 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.C., M.P. (Wascana)
Minister
of Finance
For
More Information, Contact:
John
Embury
Minister
Goodale’s Office
613)
996-3457
