The 1999 Budget: Maintaining Sound Economic and Fiscal Management

Ever since taking office in 1993, our government has had one overriding priority: 

• building a strong economy and a secure society, with a rising standard of living and an enhanced quality of life.

Restoring order to the public finances has been a lynchpin in a remarkable Canadian economic turnaround. Thanks to their courage and sacrifice, Canadians are seeing the results that come from rock solid fiscal discipline.

Balanced Budgets or Better

Unswerving fiscal discipline has helped get Canada in a position to focus once again on the priorities that matter to Canadians -- like health care. And it is what will keep us on the right track.

When we first took office, the federal deficit stood at an all-time high of $42 billion, and no federal government had delivered a balanced budget in almost a generation.

In 1998-99 we will balance the books or better -- the first time since 1951-52 that the Government of Canada has been deficit-free for two consecutive years.

We are committed to further balanced budgets or better in both 1999-2000 and 2000-01. This will mark only the third time since Confederation that the Government of Canada has recorded four consecutive balanced budgets.

By the accounting standards used in most other major industrialized countries we will post a financial surplus for the third consecutive year in 1998-99 -- the only G-7 nation to do so.

Program spending will continue to decline as a share of our economy -- from 16.6% of GDP in 1993-94, to 12.6% in 1998-99, to an estimated 12.0% in 2000-01 -- the lowest level in 50 years!

The Debt Repayment Plan: New Economic Freedom for Canada

A falling debt burden is all about giving Canadians new economic freedom -- freeing up resources to:

• strengthen our universal health care system;
• provide tax relief;
• fight child poverty; 
• and, invest a more productive economy and a higher standard of living by promoting access to knowledge, research and innovation.

In 1995-96 when Canada's debt-to GDP ration reached it peak, 36 cents out of every federal revenue dollar when to paying interest on the debt. Last year that had fallen to 27 cents.

Thanks to continued strong economic growth and The Debt Repayment Plan we outlined in the 1998 Budget, Canada's debt-to GDP ratio is on a permanent downward path. The Plan:

• two-year fiscal plans based on prudent economic planning assumptions;
• providing a $3 billion Contingency Reserve as a buffer against unexpected financial pressures; 
• and, using that reserve to pay down the debt when it is not needed.

Last year the debt-to-GDP ratio saw its single largest decline since 1956-57 -- from 70.3% to 66.9%.

In 1998-99 it should fall to 65.3% and by 2000-01 it should be just under 62%.

A Strong Economy

Even as global financial turmoil has hit us hard -– especially Western Canada -- the underlying soundness of the Canadian economy kept us on an upward jobs and growth track.

1998 saw 453,000 new jobs created -– the best annual job creation performance in the 1990's. And our rate of job growth last year -- 3.2% -- led the G-7.

Forty percent -- (202,000) -- of the new jobs created in the past twelve months -- have gone to young Canadians -- the best annual youth employment gain in over 25 years.

The unemployment rate fell to 7.8% in January -- the lowest level since June 1990.

The IMF and the OECD both forecast that Canada will be among the top economies in the G-7 in 1999 -- and will lead the G-7 in job growth.

The 1999 Budget