Budget 97 Essay, Research Paper

Budget 97

Finance Minister Paul Martin unveiled the Liberal government’s 1997

budget recently. As most economic and political experts predicted there were

very few surprises, if any. This was a cautious and predicable budget that was

every bit political as it was economical. With the Liberal government set to

call an election in late May or early June the Party was very reluctant to rock

the boat further. This is what they have done in the 1997 budget and the

subsequent reactions to the new budget from both the business and political

communities.

In this no-surprises, pre-election budget, Martin said deficit cutting

is coming to an end and that Canadians, particularly the unemployed, will soon

reap the rewards of 40 months of strict financial management. With the Federal

deficit dropping over the last few years, the Liberals feel that they can

balance the budget in the next two years. This is important because it will

allow the government to halt their foreign borrowing to finance the deficit.

This greatly helps the credibility of Canada and puts the country’s destiny back

into domestic palms. With this said, Martin announced no new tax increases,

although the raise in the Pension Plan could be considered a hidden tax increase.

Martin announced no new spending cuts in this budget although cuts made in

previous budgets are set to slash 3 billion more dollars this year. There was

some extra spending sprinkled into various areas. For starters, a new tax

benefit will be created in co-operation with the provinces, costing the Federal

government $600 billion. This program is attempting to help the poor and this

can be effective economically because poor people tend to spend everything they

have, and they almost always spend it domestically. This program will be

introduced in two the stages, the first of which will begin this July with a

$195 million supplement. Instead of benefits being capped at $500 per family,

the maximum working income supplement benefit will be increased to $605 for the

first child, $405 for the second child and $330 for each additional child. Other

expenditures will be include; tax credits for students, $300 million in new

health care funding and tax credits for medical expenses of the disabled.

Depending on how you look at it, Martin is either spending more or just cutting

less.

There have been many contrary viewpoints that economic and political

leaders have thrown out and most are unsure. It appears that Martin has created

a no-brainer budget that doesn’t do anything to hurt but does not make Canadians

feel better either. Martin was expected to put money into job creation in order

to lower the unemployment rate and inject money into the economy. That didn’t

happen. Martin was expected to cut some taxes in order to take some of the

boulders off of the already burdened shoulders of the average Canadian. That

didn’t happen. On the plus side there were no new cuts or tax raises planed and

that could be used as leverage by the Liberals in the upcoming election. All in

all this was a very political budget filled with lots of rhetoric instead of

concrete answers about the future of Canada. From a political point of view

this budget and the results from previous budgets puts the Liberals on pretty

solid ground. The promises of balanced budgets and a flourishing economy will

ring in every Canadians ear as the election approaches. The promises of large

financial rewards will definitely give the Liberals an edge, and a much-deserved

edge. The Liberal party has begun to effectively clean up the mess that the

Tory’s left them and that should not be overlooked. From an economic standpoint

the 1997 budget left things pretty close to the status quo. The thing that was

lacking was the absence of a tax cut that could stimulate jobs and help working

Canadians. The addition of new funds for the poor is little but not nothing and

could potentially help to raise the GDP by injecting more local money. With all

of this said Paul Martin did not bail of job creation all together. The largest

amounts of new spending in Martin’s highly conservative budget are for

innovation, education and children. These are the kinds of things that will do

little to create jobs today, but will be crucial for the new jobs of tomorrow.

The presence of a well-educated work force is crucial in attracting job-creating

investment and that is what Martin is attempting to achieve with this budget.

It appears that the worst of the tax cuts is behind us and although there are

critics who criticized Martin’s assault on the deficit, it appears that it had

to be done in order to prevent Canada from hitting the debt wall.

The all out war on the deficit has almost been won, and Martin and the

Liberal government should take a bow for that. Martin’s budget, filled with

flowery phrases and dreams, did little to completely satisfy the average

Canadian. The fact is that Martin is doing what has to be done to make this

country viable into the 21st century and the voting public will likely not

forget that come election time. That was the mission of the Liberal government,

a mission that will likely continue for four more years.