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The Reform Party Dissenting Opinion


Standing Committee of Finance Roundtable on Budgetary Matters

Over the past months, the Standing Committee has heard from a large number of witnesses. These witnesses, with notable exceptions, felt that the deficit continues to be a serious problem that deserves greater government attention.

The economist roundtable strongly recommended that the government move beyond its present targets and aim for a balanced budget. While there was no consensus on a time-frame, most felt that a zero deficit by the end of the current mandate was desirable.

Setting the Stage

One of the problems with the committee hearings was that, unlike last year, the committee did not hear from the Minister of Finance until the hearings were nearly over. This meant that the consultation did not have an adequate "reference point" on which to consult. There were no "goal posts" to which witnesses could reference their comments. Last year, the minister clearly laid out priorities and asked the committee to answer a very detailed list of questions. This resulted in committee hearings that had clear guidelines and meant that members of the committee felt that the consultations were providing answers to crucial questions from the Minster. In matters as important as the fiscal health of Canada, and to ensure that future budget consultations are done in an atmosphere with clear reference points and goal posts, we recommend that all future budget consultations be kicked off by an appearance of the Minister of Finance who will clearly define the terms of reference and provide specific questions to be investigated by the Standing Committee on Finance.

Budgetary Targets

Press reports detailing so called "secret" International Monetary Fund papers on Canada's fiscal situation suggest that Canada's fiscal progress has been "unduly slow" (Toronto Star, Dec. 5, 1995). The economist roundtable also confirmed that while the government has taken some positive steps, it is far from finished. There are at least three compelling reasons why the government must balance its budget before the end of their current mandate:

Losing Resolve

The Finance Minister announced that the target for 1997-98 would be 2% of GDP (or $17 billion). While some may think that this represents important reductions, most analysts now suggest that this target can be met with as little as $1 billion in additional spending reductions. This target does nothing to address the aforementioned concerns regarding the business and political cycle or the dangers of compounding interest. By refusing to announce a date for balancing the budget, the minister has delivered the worst of all worlds: painful spending reductions but no prospect for interest rate or tax reductions that would come with a firm plan to balance the budget.

Reform Alternatives

We feel that the Minister of Finance, after taking tentative first steps, has lost his resolve. We implore the government to step up the pace of deficit reduction and announce a target of 1.5% of GDP in 1997-98 and a balanced budget in 1998-99. In addition, we suggest that the Minister offer Canadians hope with the promise that budget surpluses generated by economic growth in the following years be used to reduce taxes and lower the national debt. Finally we would urge the Minster to initiate plans for the introduction of a simplified, transparent, equitable and more efficient system of taxation that also brings to an end the nightmare of the GST.


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