March 4, 2010
“The Budget Strikes the Right Balance,” says Komarnicki
Ottawa (March 4, 2010)— On March 4th, Finance Minister Jim Flaherty tabled a budget outlining a plan that will advance Canada toward a strong recovery and prosperous future. Budget 2010 focuses on implementing Phase II of Canada’s Economic Action Plan to create jobs now, builds on Canada’s economic recovery with action to create jobs and stimulate growth into the future and charts the course towards balanced budgets.
“In my view the budget strikes the right balance between stimulus and fiscal restraint. The budget also contains a commitment not to increase taxes or cut transfers to persons or to provinces and territories,” said Komarnicki. “We will not balance the books on the backs of Canadians or municipalities like the previous Liberal Government did when they cut transfers to the provinces by $25 billion and increased income taxes.”
While Canada is weathering the current global economic challenges better than nearly every other industrialized country and it is seeing encouraging signs of the economy stabilizing, the recovery remains fragile.
“The number one priority of all Canadians remains the creation of jobs and economic growth,” said Komarnicki.
Budget 2010 lays out a plan to sustain Canada’s economic advantage now and for the future. The budget plan has three key objectives.
Delivering Year 2 of Canada’s Economic Action Plan- it confirms $19 billion in new federal stimulus to complete Year 2 of Canada’s Economic Action Plan. This stimulus includes personal income tax relief, funding to create and protect jobs, investment in infrastructure, funding to create the economy of tomorrow and investment to support industries and communities.
Creating Economic Growth and Jobs Through Innovation- it invests in specific and strategic new, targeted initiatives to build jobs and growth for the economy with a focus on harnessing Canadian innovation and making Canada a destination choice for new business investment.
Establishing a Three-Point Plan to Return to Budget Balance- it outlines a plan for returning to budget balance once the economy has recovered. First, the Government will wind down the temporary stimulus measures as planned. Second, the Government will restrain growth in spending through targeted measures as it proposes $17.6 billion in savings over five years. Third, the Government will undertake a comprehensive review of government administrative functions and overhead costs.
As a result of the expiration of the Economic Action Plan and the measures in this budget, the deficit is projected to decline by almost half over the next two years to $27.6 billion in 2011-12, and by two-thirds to $17.5 billion in 2012-13. In 2014-15, the deficit is projected to be $1.8 billion.
“Families cannot continue to spend beyond their means and neither can governments,” said Komarnicki. “Our government is taking prudent action to tackle the challenges of coming out of deficit in a measured period of time.”
Starting this year, the government will freeze the total amount spent on salaries, administration and overhead in government departments including the budgets of minister’s offices. Legislation will be introduced to freeze the salaries of the Prime Minister, Ministers, Members of Parliament and Senators. In addition, a review of administrative services will be launched to improve efficiency and eliminate duplication and all department spending will be aggressively reviewed to ensure value for money and tangible results.
To place everything into perspective, it is important to note that at present Canada has the lowest debt to GDP ratio in the G-7. During the good years the Government paid down $38 billion of debt. In 2010, the International Monetary Fund estimates that Canada’s debt to GDP ratio will be approximately 31 per cent. In the United States the ratio will be almost 67 per cent. In the United Kingdom it will be 75 per cent, and in Japan, 115 per cent. Their ratios will continue to climb, while Canada’s will begin falling in 2011.
“The past year has certainly posed its challenges, but in the big picture Canada is performing relatively well,” said Komarnicki. “The work is by no means completed, but by remaining focused and committed to the plan we have laid out, we are positioning ourselves to come out of this economic downturn in a position of strength and as a world leader.”
For further information on how Canada’s
Economic Action and Budget 2010, please visit www.budget.gc.ca.
