After years of playing Scrooge and cutting spending, finance minister Paul Martin last week transformed himself into Santa Claus with a federal budget that promised to spend billions of dollars more on medicare, the military, research and the provinces.
Part of the package will be an additional $11.5 billion in new transfers to provinces for health spending. Martin said it is the largest single financial commitment the Liberal government has made.
At the same time, he promised tax cuts worth $7.7 billion over three years, including an increase in the basic tax-free exemption and a 1999 end to the three percent surtax introduced by the Conservatives in 1986.
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Martin said he would do all that while still producing balanced budgets or surpluses for at least the next two years.
The promised four years of consecutive balanced budgets beginning last year will be the first time that feat has been accomplished since the early 1950s.
“It is a budget that acts strongly on the biggest priority Canadians have, strengthening their system of health care for today and tomorrow,” Martin said in his House of Commons budget speech Feb. 16.
“And it is a budget that for the first time in many years offers tax relief to every taxpayer and it does so without using borrowed money.”
The biggest spending item is health, a policy area in which the Liberals were under strong provincial and lobby attack for the billions they had cut from transfers to the provinces during the past five years.
Over the next five years, an additional $11.5 billion will be transferred to the provinces and territories, which have promised it will be spent on health.
It begins with a $3.5 billion fund that provinces and territories can “draw down” for their own health projects during the next three years.
In addition, federal health transfers to provinces will be increased $2 billion in 1999-2000 and 2000-01, and then by $2.5 billion per year for the next three years.
Although not welcomed by all health advocates as enough and denounced by opposition MPs as too little, most provinces praised Ottawa for restoring health funds it had cut in 1995.
Martin said the new money should be enough to shore up the medicare system and divert pressure for creation of private health facilities operating outside of medicare.
“Our health care system is blind to income so that its eyes can focus on need,” said the finance minister.
Reform leader Preston Manning and New Democratic Party leader Alexa McDonough scoffed at that claim, insisting the system is so underfunded that those who can afford it seek better care elsewhere.
Other federal spending promises
- A fulfilment of the $900 million two-year farm aid package promised in December.
- The provinces will receive billions more in equalization payments from Ottawa.
- A $300 million annual boost to the child tax benefit program.
- A commitment of a $1.8 billion investment over three years in industrial research
and technology.
- A total of $525 million over three years to boost military salaries and benefits.
- A three-year, $540 million commitment to spending on aboriginal programs.
