Ottawa — On November 10, 2001, Canadian Finance Minister Paul Martin delivered a budget outlining massive spending to improve Canada’s security and to help stimulate the country’s slow economy.
The focal-point of the document was $7.7-billion over five years dedicated to air security, the country’s military and initiatives designed create a more secure and efficient border in the wake of September’s terrorist attacks in U.S.
Budget 2001 – Economic Stimulus
By The Hon. Paul Martin, P.C., M.P.
OTTAWA, December 10, 2001 – There is no doubt that the Canadian economy is feeling the effects of a slowing world economy. However, thanks to our government’s sound fiscal management over the last eight years, Canada is in excellent position to weather the current slowdown.
In fact, Budget 2001 confirms that Canada will be the only G7 country to balance its books this year.
Moreover, the targeted spending measures in Budget 2001, coupled with the tax cuts now flowing through the economy, are providing $26 billion – or 2.4% of GDP – in economic stimulus to the Canadian economy this year. Next year, total stimulus will reach $31 billion.
This means that, relative to the size of the economy, our fiscal stimulus next year will be larger than the stimulus provided in the United States, including the new measures that are still being debated in the U.S. Senate.
This includes allowing small and medium-sized businesses to defer their corporate tax instalments of the next three months – that is, January, February and March 2002 – for a period of six months. This measure is designed to help businesses with their cash flow and will defer without interest or penalty $2 billion in taxes for small businesses.
It also includes strategic federal spending worth $9 billion this year – and $11 billion next year – to provide additional stimulus to our economy. These investments include:
$7.7 billion over the next five years to enhance personal and economic security for Canadians, including initiatives to improve the efficiency and security of our borders;
$2 billion for strategic infrastructure projects to stimulate job creation and improve long-term economic productivity; and
$1.1 billion over three years to support skills, learning and research.
Included in this stimulus are also tax cuts worth $17 billion this year, rising to $20 billion next year. These tax cuts are working their way through the economy as they put more money in the pockets of Canadians . For example:
A two-earner family of four with a combined income of $60,000 will save $1,000 in federal taxes this year – a reduction of 18%. And in less than three years, their taxes will fall by 34%.
A one-earner family of four earning $40,000 will pay about $1,100 less in taxes this year – a saving of 32%. By 2004, this family will pay almost $2,000 less in tax, for a 59% reduction.
Our economy will also benefit from the positive effects of the 3.5% decline in short-term interest rates announced by the Bank of Canada since the beginning of 2001, and that was made possible by our government’s sound fiscal management. Savings from these low lending rates could look like this:
To a family seeking a mortgage of $100,000, it means that annual mortgage payments are $2,200 less than they were a year ago.
To a small business with a $250,000 bank loan tied to the prime lending rate, it means that annual payments are about $9,000 less than they were a year ago.
All this was made possible by our record of sound fiscal and economic management, through which:
We have ended 28 years of deficits.
We have brought down five consecutive balanced budgets or better – a first for the federal government in 50 years.
Paid down almost $36 billion of Canada’s national debt, freeing up $2.5 billion a year for other priorities.
Budget 2001 – The Big Picture
Today, the Government brought down Budget 2001 – a budget of balance and confidence that addresses pressing security concerns while carrying forward our long-term agenda for building a more prosperous and inclusive Canada.
Budget 2001 carries forward our long-standing commitment to sound fiscal and economic management. As a result, we are bringing down our fifth balanced budget or better in a row – a first in 50 years. And we are forecasting balanced budgets or better for the two following years through 2004.
It is worth noting that Canada will be the only G7 nation to balance its books this year.
In addition, thanks to our balanced budgets and our $36 billion payment on the national debt, the debt-to-GDP ratio – the measure of the size of the debt relative to the size of the economy – will fall below 50% next year for the first time in 17 years.
While balancing the books is a source of great pride for Canadians, we can all take very real satisfaction from the fact that we will do it while:
delivering a proportionately larger economic stimulus package than the U.S. – $26 billion this year in targeted spending and tax cuts, rising to $31 billion next year, to help us through these difficult times;
investing in the security needs of Canadians; and
continuing to make targeted investments that will ensure a better future for all Canadians.
Investing in our Collective Security
In total, Budget 2001 provides more than $7.7 billion over the next five years to enhance security for Canadians. More specifically, we are investing:
$6.5 billion for security, including the creation of a new air security authority, additional funding for intelligence and policing, and funding for Canada’s military;
more than $1.2 billion for initiatives designed to make Canada’s border more secure, open and efficient.
Making Strategic Investments
Our government’s fundamental goal and commitment is to build a strong economy, a secure society and improve the quality of life of all Canadians. Budget 2001 delivers on these commitments by making strategic investments that will make a difference now, and for the future.
Budget 2001 announces nearly $3 billion in targeted investments to support strategic infrastructure and the environment. It commits a minimum of $2 billion to the creation of the Strategic Infrastructure Foundation, confirms $680 million in funding for affordable housing and doubles funding for the Green Municipal Enabling Fund and the Green Municipal Investment Fund.
Budget 2001 confirms that the $23.4 billion agreement on health care and early childhood development is fully protected. This ensures that the federal contribution to health care is now and will remain at an all-time high.
Budget 2001 provides $95 million to the Canadian Institute for Health Information, and increases annual funding by $75 million for the Canadian Institutes of Health Research.
Budget 20001 invests more than $1.1 billion over three years to support skills, learning and research, including better support for people with disabilities who pursue higher education, helping universities offset indirect research costs, supporting leading-edge technology and extending funding for Internet initiatives.
Budget 2001 invest $185 million over the next two years to enhance and expand programs designed to help aboriginal children, such as Head Start, and reduce the incidence and effects of Fetal Alcohol Syndrome.
Budget 2001 increases Canada’s international assistance by $1 billion over three years. It commits $500 million to a fund promoting sustainable development in Africa and provides additional funds for Afghanistan and other international assistance projects.
New Investments in Health Initiatives
Our public health care system is a defining element in who we are. Canadians have worked hard to build it and we have the responsibility to preserve it for the future.
In September 2000, Canada’s first ministers reached a historic agreement on a shared approach and action plan for renewing health care services and reporting to Canadians on progress made. An agreement was also reached on increased support for early childhood development.
Budget 2001 confirms that, notwithstanding the current economic instability, the federal funding of $23.4 billion in support of these agreements is fully protected.
Re-investing in health care has been the number one priority of our government since balancing the budget. And with the September 2000 funding confirmed, the federal contribution to health care will remain at an all-time high.
With the money resulting from the September 2000 agreement factored in, the Canada Health and Social Transfer (CHST) now reaches the all-time high of $34.1 billion a year. Of this amount, $18.3 billion is a cash transfer, and $15.8 billion comes from tax points.
Provinces are receiving $2.8 billion more in CHST cash this year. Next year, the increase rises to $3.6 billion. And these amounts keep growing.
By 2005-06, CHST cash will have been increased by $5.5 billion to $21 billion. This is a 35% increase over the 2000-01 levels. By then, total CHST transfers to the provinces will reach $40 billion.
Federal involvement in health care includes not only health services, but also health information systems and health-related research and innovation.
Budget 2001 invests substantial additional funds in these areas, and more specifically for the Canadian Institute for Health Information, the Canadian Institutes of Health Research and Genomic Science.
Canadian Institute for Health Information (CIHI)
The CIHI was established in 1994. It is playing an increasingly central role in providing Canadians, health care providers and policy-makers with quality information on the health of Canadians and the health care system.
Budget 2001 renews CIHI’s $95 million funding for an additional four years. It also provides $5 million over two years to Health Canada so that it can produce health data on First Nations’ people on reserve.
Canadian Institutes of Health Research (CIHR)
Budget 2001 provides a $75 million increase in the annual budget of the CIHR. This brings the annual budget of the CIHR to over $560 million, more than double the funding provided four years ago.
This will further support the CIHR’s innovative and integrative approach to leading-edge research and its translation into economic benefits for Canadians.
Genome Science Research
Genomic Science – the study of the genetic code in people, plants and all other living things – is key to the advancement of biotechnology, a driving force in the new economy.
Budget 2001 builds on the $300 million our government has invested in Genome Canada since Budget 2000 with a contribution of $10 million to the BC Cancer Foundation in recognition of the seminal work of the late Dr. Michael Smith.
A Secure, Open and Efficient Border
The terrible events of September 11 have reaffirmed the long-standing bonds of friendship between Canada and the United States. They have also highlighted our common interest in continuing to work together to make our border not only more secure, but more efficient for the purposes of trade.
Every day, close to $2 billion worth of goods and services crosses the Canada-U.S. border. And in the days since the attacks, President Bush and the Prime Minister have both placed a very high priority on ensuring the flow of goods, services and people across the border.
Budget 2001 addresses this key priority by providing more than $1.2 billion to keep the border open, secure and efficient. Roughly half of this amount will go to border security and facilitation, while the other $600 million will go to a program designed to improve border infrastructure.
Border Security and Facilitation
Budget 2001 invests $646 million over five years to enhance border operations. This includes:
$58 million over five years for initiatives to speed passage of pre-approved travelers at land border crossings and for frequent air travelers. This would involve rigorous pre-approval processes involving background and security checks on all applicants.
$67 million over five years to equip Customs officers with better tools for risk-assessment and detection.
$107 million over five years for the Canada Customs and Revenue Agency to acquire additional detection equipment such as X-ray machines and ion scanners to better intercept dangerous shipments such as firearms and explosives without delaying legitimate commerce or tourism.
$135 million over five years to establish new multi-agency Integrated Border Enforcement Teams led by the RCMP.
$14 million to create two new programs that will facilitate trade for small business importers.
Border Infrastructure
With the increasingly high volume and velocity of trade that is characteristic of the Canada-U.S. border, the time has come for both of us, jointly, to make strategic investments to help eliminate bottlenecks in key trade corridors. This was necessary before September 11th, and it has become even more important since.
Budget 2001 provides $600 million over five years for a new border infrastructure program. Under this program, we will seek to partner with the provinces, municipalities and the private sector. We also intend to work with the U.S. to ensure a coordinated approach towards border infrastructure.
Projects supported by the program could include:
new or improved highway access for border crossings;
processing centres for commercial vehicles to speed up clearance times; and
“soft infrastructure” such as intelligent transportation systems, which facilitate the electronic exchange of information between government agencies and trucks and trains crossing the border.
Enhancing Security for Canadians
For most of our history, we in North America have been fortunate to live in peace, untouched by attack. That has changed.
One of the most significant consequences of the September 11, 2001 attacks on the United States is a sense of insecurity – both personal and economic. And the key to rebuilding confidence is ensuring that people are safe and that borders are secure, yet open and efficient.
We must also remember that the ultimate goal of terrorists is not to capture us by the force of arms, but by the force of terror. Their goal is to shut us down. And neither this government, nor Canadians, will let them.
Since September 11, our government has announced a number of initiatives that respond to the need for increased security while preserving the rights and freedoms that Canadians hold so dear.
Budget 2001 builds on these initiatives by investing $6.5 billion in a comprehensive set of measures designed to keep Canadians safe and terrorists out; to prevent terrorist attacks in Canada and prevent terrorists from using Canada as a staging ground.
Our plan is based on increased resources for intelligence and policing, enhanced screening of arrivals in Canada and better emergency preparedness and support for Canada’s military.
Air Security – A New Approach
Canada has one of the safest aviation systems in the world. Still, the events of September 11 have had a significant impact on the security needs of air travellers.
Budget 2001 is allocating $2.2 billion over five years to make air travel more secure in accordance with rigorous new national Transport Canada standards.
To ensure that these standards are met, we will create a new air security authority. The new measures will include:
armed undercover police officers on Canadian aircrafts;
better-trained personnel to screen passengers and carry-on baggage;
new state-of-the-art explosive detection systems at Canada’s airports;
enhanced policing in airports;
replacement of aircraft cockpit doors to make them more secure;
enhanced security zones at aircraft handling facilities and on tarmacs.
These measures will be funded by a new Air Travelers Security Charge to be paid by air travellers starting April 1, 2002, for travel in Canada. The total cost of the charge will be $12 each way.
Screening of Entrants to Canada
Canada welcomes visitors, as well as immigrants and refugees who want to live peacefully in this country. That will not change.
But our government recognizes that authorities must have a better ability to identify and exclude those who pose a risk to Canada and the rest of the world.
Budget 2001 invests $1 billion over five years to improve the screening of immigrants, refugee claimants and visitors. These initiatives will include:
better and more accurate screening;
more resources for detention and removals;
quicker determination of refugee claims, including the elimination of backlog;
new fraud-resistant Permanent Resident Cards; and
enhanced security features for the Canadian passport.
Enhancing Security for Canadians
For most of our history, we in North America have been fortunate to live in peace, untouched by attack. That has changed.
One of the most significant consequences of the September 11, 2001 attacks on the United States is a sense of insecurity – both personal and economic. And the key to rebuilding confidence is ensuring that people are safe and that borders are secure, yet open and efficient.
We must also remember that the ultimate goal of terrorists is not to capture us by the force of arms, but by the force of terror. Their goal is to shut us down. And neither this government, nor Canadians, will let them.
Budget 2001 invests $6.5 billion in a comprehensive set of measures designed to keep Canadians safe and terrorists out; to prevent terrorist attacks in Canada and prevent terrorists from using Canada as a staging ground.
Our plan is based on increased resources for intelligence and policing, enhanced screening of arrivals in Canada and better emergency preparedness and support for Canada’s military.
Emergency Preparedness and Support for the Military
Security measures in Budget 2001 aim to minimize the potential for terrorism. But the government must ensure that, if a terrorist act does occur, it can respond quickly and effectively.
Budget 2001 puts more than $1.6 billion over five years towards emergency preparedness and the military. These measures include :
Doubling the capacity of Joint Task Force Two – our elite anti-terrorist unit.
Military funding, including support for our participation in the international war against terrorism.
Enhancing laboratory networks and buying specialized equipment for responding to chemical, biological and nuclear threats.
Improving Canada’s ability to protect critical infrastructure – such as water and energy utilities, as well as transportation and communication systems.
These new resources will have the added effect of improving our ability to respond to other types of emergencies, such as floods and other natural disasters.
Intelligence and Policing
Budget 2001 provides Canada’s intelligence and policing agencies with more than $1.6 billion over the next five years to detect, prosecute and deal with terrorists. This includes:
Approximately $1.2 billion over five years to the RCMP, the Canadian Security Intelligence Service (CSIS) and other security-related federal departments to train, equip and deploy more personnel. In particular, CSIS will receive its biggest annual funding increase since its inception.
$76 million over five years to improve coordination among law enforcement, intelligence and national security agencies.
$60 million over five years boost marine security through greater funding for coastal surveillance.
$53 million over five years to strengthen the role of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) in cutting off terrorist financing.
