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MINISTER DION ADDRESSES THE FISCAL BALANCE OF OUR
FEDERATION
SAINT-LAURENT, QUEBEC, April 10, 2001 – Speaking to the
Saint-Laurent Chamber of Commerce, the Honourable Stéphane Dion, President of
the Privy Council and Minister of Intergovernmental Affairs, said today that,
"rather than fiscal imbalance, we need to talk about the collective
responsibility of our governments."
The Minister demonstrated that the slogan "the money is
in Ottawa, the needs are in the provinces" does not reflect reality.
The federal government, just like the provinces, "will need to
carefully manage the economic margin of safety that has been acquired through so
many sacrifices made by Canadians."
The Minister indicated that the major surpluses of the federal
budget apply to the year that just ended. This does not take into account the
effects of the substantial $100 billion tax cut over five years announced by
Finance Minister Paul Martin in his economic statement of October 18, 2000, or
the $26.6 billion in new spending over five years announced in that economic
statement.
The Minister pointed out that, in light of the economic slowdown
being felt in the United States, financial analysts are calling for the greatest
possible prudence from the federal government. As the federal government has a
heavier debt load than the provinces, and as its revenues and expenses are more
exposed to the effects of a potential economic slowdown, "it should not
be expected that the federal government will continue to run substantial
surpluses like those of the past two years."
That being said, the federal government has made financial
support to the provinces a priority, added the Minister, emphasizing that, since
reaching a balanced budget, 37.6% of new federal spending has been transferred
directly to the provincial governments.
Turning to the situation of the provinces, Mr. Dion noted that
eight out of ten provinces anticipate a balanced budget for this year, that all
have reduced their debt ratio and that most provinces are proceeding with tax
cuts.
The Minister also showed that provincial revenues are growing at
the same rate as federal ones. He said that "in short, we cannot talk
about an imbalance in a context in which the provinces have a lighter debt load
than the federal government and are running surpluses, cutting their taxes and
increasing their spending".
The Minister then addressed the crucial issue of the fiscal
pressure that growing health costs exert on provincial governments. While
stressing the importance of federal government reinvestment in that sector, Mr.
Dion indicated that the rapid growth in provincial health spending since 1999
has been a matter of catching up: "A little known fact is that during
the 1990s, provincial revenue grew more quickly than provincial health spending.
In point of fact, for the provinces as a whole, the share of revenue devoted to
health is smaller than it was ten years ago, dropping on average from 36.6% in
1992 to 32.7% in 2000. Similarly, provincial health spending, which represented
on average 6.8% of GDP in 1991, decreased to 6% of GDP in 2000."
"This debate on fiscal balance is not exclusively
Canada's" said Mr. Dion, recalling that, "in other
federations as well, the equivalents of our provincial governments believe that
their federal government should help them more."
He added that "what is specific to Quebec is that some
people depict these normal tensions between governments as a reason to separate
from Canada." The Minister said he hoped the Séguin commission "will
not fall into that rut."
Concluding that there is no fiscal imbalance, Minister Dion
finished by insisting on the necessity for the two levels of government to
manage public finances strictly and to continually improve their ways of working
together.
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For information:
André Lamarre
Special Assistant
Tel: (613) 943-1838
Fax: (613) 943-5553
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