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© Copyright 2000 Rogers Media. The following article first appeared in the April 2000 edition of
BENEFITS CANADA magazine.
Opportunity knocked
Jean Chrétien owes your children a $3 billion explanation.
Take careful note of the federal budget handed down in February. Jean Chrétien--and to be sure the
fault lies ultimately with him--should go down in history as the prime minister who had an opportunity to
save Canada's social safety net, but chose not to do so.
Overall, this budget was more progressive than expected. The indexation of Canada's tax brackets and
credits to inflation came as a pleasant surprise. We're also impressed with the decision to up the foreign
content ceiling to 30% in 5% (rather than 2%) annual increments.
That all said, this budget misses an important mark. After two and a half terms of centrist, arguably
pragmatic, governing, the federal Liberals were positioned to finally tackle the $576.8 billion federal
debt. We're coming off back-to-back surpluses totaling $6.4 billion, and the economy is booming. Even with
the healthy tax breaks provided individuals and corporations, Canada's tax base is as strong as ever.
The decision to allocate a paltry $3 billion to the debt this year is an affront to the ideals of
responsible government.
What is most offensive is Chrétien's underlying assumption--that you and I will not re-elect him if
his government spends too much to reduce this country's crippling federal debt. Forget that we originally
voted him in, partly, on his promise to eliminate the deficit. Forget also that we re-elected him after
often painful spending cuts.
The message is clear. Yes to deficit elimination. No to real debt reduction. Our children will deal with
the mess.
Finance Minister Paul Martin has deflected criticisms on this count by presenting our relatively healthy
debt-to-gross domestic product (GDP) ratio. It has been coming down gradually since a high of 71.2% in the
mid-1990s. Martin predicts that ratio will drop below 50% by 2004-2005. I hope he's around to talk about
that ratio when GDP drops, as it surely will.
This was an absolute turning point in Canadian history. Deficit spending is behind us, at least for the
time being. The economy is in excellent health. Demographics are on our side.
How is it that the prime minister is so alarmingly out of touch with the political will that exists in this
country for debt reduction?
Thinking Canadians understand that the future of the nation's retirement income and healthcare systems
depend largely on responsible fiscal decision-making right now. They also understand demographics well
enough to know that this country is bound to go back to deficit spending as the baby boom grows older. The
best we can do in the mean time is bring the debt down to its lowest possible level.
It will be the next generation that pays for Ottawa's irresponsibility. One day your kids, or maybe your
grandkids, will ask you why the Canadian government spends money it doesn't have. They're going to want to
know why Ottawa didn't take more care to prevent the huge tears that, by then, will be all over our social
safety net.
Tell them about the 2000 budget.
*** ***
my mistake--the Canadian Pension and Benefits Institute's National Conference runs June 14 to 16 in Regina.
I had the wrong dates last month.
--Kevin Press
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