Budget 2003

Overview

February 18, 2003
Ottawa, Ontario

Budget 2003 is built on the strong foundation of the Liberal government’s prudent, balanced approach to fiscal planning, sound financial management and responsible stewardship of Canada’s resources. But it also is rooted in our shared values and seeks to give Canadians the tools they need to realize their potential.

Our nation led the G-7 in growth last year and is expected to do the same in 2003. Today Canada is enjoying the benefits of a thriving economy.

Budget 2003 builds the society Canadians value by making investments in individuals, families, and communities. It builds the economy Canadians need by promoting productivity and innovation while staying fiscally prudent. It makes government more accountable to Canadians by making government spending and reporting more transparent.

Budget 2003 remains committed to maintaining balanced budgets and restoring the full Contingency Reserve and economic prudence while making major investments in health care, families and communities, the needs of First Nations peoples and Canada’s cultural programs and institutions.

Following through on the 2003 Health Care Accord agreed to by the Prime Minister and Canada’s provincial premiers earlier this month, this budget invests $34.8 billion over the next five years to renew Canada’s health care system to ensure Canadians have better and timely access to quality, universal health care in every part of the country.

Budget 2003 provides an $965-million-per-year increase to the National Child Benefit supplement of the Canada Child Tax Benefit by 2007. This brings the maximum annual benefit for a first child provided through the CCTB to $3,243.

We are providing $935 million over five years to help provinces, territories, and First Nations provide greater access to quality child care and early learning opportunities.

We are introducing a new Child Disability Benefit with funding of $50 million per year. This will provide up to $1,600 per year to low- and modest- income families with a disabled child.

We will combat homelessness in Canada’s cities with an investment of $135 million each year for three years. And we will address housing issues with $320 million over five years to enhance existing affordable housing agreements with the provinces and territories. We are also extending the government’s housing renovation program with $384 million over three years.

To improve the quality of life of our communities we are building on previous investments in infrastructure with another $3 billion to support strategic and municipal infrastructure over the next 10 years.

Budget 2003 increases support for Canada’s armed forces by $800 million per year. There will be an immediate one-year allocation of $270 million to address urgent needs.

We are increasing our international assistance to $1.4 billion over this and the next two fiscal years – an increase of 8 per cent per year – with a view to doubling our level of assistance by 2010.

We are reducing the Air Travellers Security Charge to $7 from $12 each way for domestic flights – a reduction of more than 40 per cent.

Knowledge and Skills

Budget 2003 invests $1.7 billion over three years to create a more innovative Canada. This includes the creation of the a Canada Graduate Scholarships program, increased support to the three research-granting councils, and funding for the indirect costs of research at universities, colleges and hospitals, increased support to the Canada Foundation for Innovation, and help for students managing heavy debt loads.

Budget 2003 builds on our five-year, $100-billion tax reduction plan to improve our tax system and provide incentives to work, save, and invest. Budget 2003 encourages Canadians to save for their retirement by increasing the limits to registered retirement savings plans and registered pension plans to $18,000 over four years. These new limits will be indexed.

Other initiatives include:

1. raising the small business deduction limit to $300,000 from $200,000 over four years;
2. eliminating the federal capital tax over five years with medium-sized businesses benefitting first;
3. improving the taxation of resource income in Canada by reducing the sector’s corporate tax rate to 21 per cent over the next five years and making changes to the tax structure of this sector.

With an investment of $3 billion, we will promote sustainable development and a healthier environment. New investments will address the challenge of climate change; upgrade water and sewer systems on First Nations’ reserves; improve air quality; clean-up contaminated sites; and create new national parks and marine conservation areas.

Budget 2003 will lower the Employment Insurance employee premium rate to $1.98 in 2004 from $2.10 currently. The Government will also consult with Canadians on a new permanent process for setting EI rates for 2005. The new system will be transparent, based on independent expert advice, and will generate premium revenues that are in line with expected program costs.

Government financial statements will be more comprehensive and transparent by presenting them on a full accrual basis of accounting, as recommended by the Auditor General of Canada and the Canadian Institute of Chartered Accountants.

Budget 2003 commits federal departments and agencies to identify a total of $1 billion in savings from their budgets by eliminating or scaling back lower priority activities or by improving the way programs are currently developed. These savings will fund close to 15 per cent of the cost of the new initiatives in Budget 2003 over the next two years.

We will launch an ongoing review of non-statutory government programs to determine if programs are still relevant, effective, and affordable.

We are improving the accountability and governance arrangements of arm’s-length foundations such as the Canadian Foundation for Innovation and Genome Canada.