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December 2, 1999
(Finance)

Finance ministers release details of plan to improve competitiveness and Canadians' standard of living

On behalf of the provincial and territorial Ministers of Finance, the Deputy Prime Minister and Minister of State for the Economy and Finance of Quebec, Bernard Landry, has sent today to his federal colleague, Paul Martin, a document entitled "Improving the competitiveness and standard of living of Canadians". Mr. Landry indicated that this document "will provide a solid basis for discussion with Mr. Martin at the federal-provincial-territorial Finance ministers Conference next week in Ottawa". That meeting will be held on December 8 and 9, 1999.

THE CHALLENGE OF COMPETITIVENESS

The document notes that Canada must become more competitive to create lasting jobs, improve our standard of living and maintain our social safety net.

The document points out that the contribution of governments to improving competitiveness must reflect a fair balance between tax reductions and improving social programs. It must also respect the division of responsibilities as provided for in the Constitution, and reflect governments' financial leeway.

Accordingly, the document notes that social programs, especially health and education, are key factors for improved competitiveness and that they are the responsibility of the provinces and territories. It observes that the many intrusions in areas of provincial and territorial jurisdiction announced in the last federal Speech from the Throne (home care, prescription drug insurance, etc.) would contribute to an inefficient allocation of resources that should instead be directed towards reducing taxes and strengthening front-line social programs administered by the provinces and territories.

The document also points out that the federal government is projecting a cumulative surplus of $95.5 billion over the next five years. It mentions that because of massive cuts in transfers to the provinces and territories and relentless pressure on their spending, the provinces and territories have no such leeway. This situation reflects the "fiscal imbalance" in the Canadian federation where the provinces and territories must deal with the greatest pressures while, paradoxically, the federal government enjoys substantial surpluses.

The document notes that, even with of the partial restoration announced in the last federal budget, the federal contribution under the Canada Health and Social Transfer (CHST) to funding for provincial and territorial health, education and income security programs will still be $3.7 billion less in 2004-2005 that it was in 1994-1995. Hence, there has been no recognition of the significant cost pressures which provinces and territories have faced since 1994-1995 and will continue to face over time. The document also notes that some parameters of the equalization program may limit its ability to achieve its Constitutional objectives, in particular the presence of a ceiling on payments.

ACTION PLAN OF THE MINISTERS OF FINANCE

In this context, the Provincial and Territorial Finance Ministers stressed the need for tax competitiveness; and the immediate full restoration of Canada Health and Social Transfer funding (CHST) with an appropriate escalator in concert with the removal of the ceiling on Equalization payments. Therefore, the upcoming federal budget should focus on:

  • reducing the tax burden and introduce significant personal income tax reductions;

  • designing those tax cuts in a way that respects the fiscal autonomy of the provinces and territories and, above all, maintains their ability to finance and improve social programs;

  • restoring CHST cash funding to its 1994-95 level of $18.7 billion by 2000-01, with an appropriate escalator in concert with a strengthening of the federal government's commitment to Equalization by the removal of the ceiling on Equalization payments.

Finally, given the importance of maintaining and developing a strong infrastructure base for a competitive economy, the federal government and the provinces and territories should immediately undertake discussions on a new infrastructure program with the objective of announcing the broad outlines of this program in the upcoming federal budget.

In closing, Minister Landry pointed out that this is a "common sense" plan that is in the "best interests" of taxpayers. He also emphasized the "full and close" cooperation of all ministers in formulating the document and the action plan it contains.

Media contacts:

Newfoundland and Labrador
Paula Dyke
Newfoundland Finance
(709) 729-0329
www.gov.nl.ca/

Saskatchewan
Sandra Lodoen
Saskatchewan Finance
(306) 787-6578
www.gov.sk.ca/finance

Prince Edward Island
Annette Ryan
Prince Edward Island Treasury Department
(902) 368 4032
www.gov.pe.ca

Alberta
Shannon Larkins
Alberta Treasury
(780) 427-5364
www.treas.gov.ab.ca/comm/newsrel/index.html

Nova Scotia
Dan Troke
Nova Scotia Finance
(902) 424-2411
www.gov.ns.ca/finance

British Columbia
Karen Johnston
British Columbia Finance
(250) 356-9869
www.fin.gov.bc.ca

New Brunswick
Marie-Josee Groulx
New Brunswick Finance
(506) 453-4138
www.gov.nb.ca/finance/index.htm

Northwest Territories
Chris Forbes
Northwest Territories Department of Finance
(867) 920-6436

Quebec
Andree Corriveau
Ministere des Finances du Quebec
(418) 643-5270
www.finances.gouv.qc.ca

Yukon
Leo Chasse
Yukon Finance
(867) 667-5821
www.gov.yk.ca

Ontario
Christian Bode
Ontario Ministry of Finance
(416) 325-0328
www.fin.gov.on.ca (under "documents")

Nunavut
Geoff Hughes
Nunavut Department of Finance & Administration
(867) 975-5808
www.gov.nu.ca

Manitoba
Ewald Boschmann
Manitoba Finance
(204) 945-1480
www.gov.mb.ca/finance

Source : Andree Corriveau
Directrice de cabinet adjointe
Responsable des communications
Cabinet du vice-premier ministre
T l. : (418) 643-5270 ou (514) 499-2551
www.finances.gouv.qc.ca

Improving the Competitiveness and Standard of Living of Canadians:
Common Position of Provincial and Territorial Finance Ministers

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1999 12 02                       5:05 p.m.


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