Essay/Term paper: Budget 97

Essay, term paper, research paper:  Economics

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.