Finance minister Paul Martin last week announced the smallest federal deficit in two decades, promised balanced books this year and then warned against any frenzy of spending.
In an economic statement to the House of Commons finance committee Oct. 15, Martin said the 1996-97 deficit was $8.9 billion, $20 billion less than predicted in last winter’s budget.
And early indications are that the deficit continued to fall during the first five months of this fiscal year, which started April 1.
To the end of August, the deficit this year was $218 million compared to $1.8 billion last year.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Agriculture contributed by seeing its subsidies and transfers spending fall 40 percent to $145 million.
But Martin warned against a rising expectation among Canadians that balanced books this fiscal year will quickly turn into large surpluses and money to be spent.
“The books are not yet in balance. They remain to be balanced,” he said. “Second, the dividend, when it arrives, will be small and it will grow slowly in the first few years. There will not be any instant windfall.”
But he said a surplus will allow the government to start investing in priority areas, including child poverty and those left behind by the technology revolution.
“A rising economic tide does not lift all boats,” Martin said. “There are things the market cannot and will not do. There are things government can and must do.”
The Reform party seized on that as an indication that the Liberal government will return to spending patterns of the past.
“Paul Martin has lost the battle to the spenders in the Liberal caucus,” said a Reform statement issued after Martin’s economic update. “The finance minister realizes he can’t become Liberal leader by cutting spending.”
