CHAPTER 8: THE 1998 BUDGET AND KEEPING THE BALANCE

The House of Commons Standing Committee on Finance held its first series of pre-budget consultations in the fall of 1994. This innovation was designed to provide Canadians with a formal mechanism by which they could make suggestions as to the contents of the next budget. The annual reports of the Committee have had a great influence in shaping the direction of subsequent budgets. Last year's Report, Keeping the Balance, was no different.

The context of last year's report differed from that of previous reports. It was written in a fiscal environment where the government's books were on the verge of being balanced. This presented the Committee with a new set of opportunities and challenges, different from those that were present when the government was struggling with massive deficits.

The Committee recommended that the budget-making process continue to focus on short-term targets and use prudent economic assumptions. The Committee provided the Minister of Finance the ability to use greater prudence when circumstances warranted it. The Minister did this. Any unused portion of the $3 billion contingency reserve was, in the Committee's view, to be used for debt reduction; this was also accepted.

As the budgetary position of the government was close to balanced, the Committee saw an opportunity to start to address some of the longer-term needs that could not be dealt with in previous budgets. We recommended reinvestment in research and development and the high-technology sector. We offered several recommendations to make post-secondary education more accessible and to address the challenges faced by young Canadians, especially youth at risk. Furthermore, we thought it was time to consider general tax relief for Canadians.

These, and other recommendations, were all enacted in the 1998 federal budget. Details are provided in the following table.