Balanced Budgets and Reducing the Cost of Government
Click here to see what Prime Minister Harper & Michelle Rempel have done to balance the budget and reduce the cost of government
In an uncertain global economic environment, it is essential that governments remain on solid fiscal ground. Our Conservative Government understands the importance of balancing the budget and paying down the national debt to ensure Canada’s long-term economic prosperity.
That is why in the lead-up to the global recession, from 2006-2008, we paid down over $37 billion in debt. This significantly contributed to Canada’s low net-to-debt ratio and helped better position Canada to navigate through the global economic and financial storm. And, when the global economic recession hit, our Government took decisive action to meet the challenge of the global recession head-on with our Economic Action Plan.
Our Economic Action Plan is a plan for jobs, growth and long-term prosperity.
Our Economic Action Plan introduced timely, temporary and targeted stimulus spending to help create jobs and economic growth. Our plan worked. Canada recovered more jobs than were lost and is the only G7 country to have more than fully recovered business investment lost during the recession. Canada weathered the worst global economic downturn since the Second World War and, with the help of our Economic Action Plan, emerged in a position of fiscal strength.
Stimulus spending was necessary in the short-term to protect Canadian jobs and to encourage economic growth. Knowing the importance of managing tax dollars in a sustainable and responsible manner, our Conservative Government had a plan from the start to return to balanced budgets in the medium-term. Our Government focused on winding down temporary measures in our Economic Action Plan, restraining growth in spending and undertaking a comprehensive review of government operations and costs to identify opportunities for additional savings and to improve the delivery of service.
Our Conservative Government delivered on our commitment to eliminate the deficit and return to balanced budgets by 2015-2016. Economic Action Plan 2015 projects a surplus of $1.4 billion for 2015-2016, from a $55.6 billion deficit at the height of the global recession.
To achieve our goal, we focused on improving the efficiency and effectiveness of government operations. We have:
- taken steps to help ensure that overall employee compensation is affordable and in line with
what is offered by other public and private sector employers
- We are committed to working with public sector bargaining agents to identify further steps
towards this objective and to examine its human resources management practices.
- introduced common sense improvements to government administration and service delivery
including the use of telepresence, expanding access to e-publications, streamlining and
consolidating government procurement of information technology devices, etc.
We are controlling direct program spending by federal departments without cutting transfers to persons or to other levels of government. In fact, federal transfers to individuals that provide important income support, such as Old Age Security and Employment Insurance (EI), and major transfers to the provinces and territories in support of health care and social programs will continue to grow.
We have eliminated the deficit, while continuing to enhance the integrity and fairness of the tax system and without raising taxes.
To help keep taxes low and enhance the integrity of the tax system, Economic Action Plan 2013 introduced a number of measures to close tax loopholes, address aggressive tax planning, clarify tax rules, reduce international aggressive tax avoidance and tax evasion, and improve tax fairness.
Balancing the budget is not merely an end in itself. Our Government is also focused on reducing the national debt to help pave the way for Canada’s long-term economic prosperity. This will provide a host of benefits including:
- keeping interest rates low, signalling economic stability to consumers and investors, whose dollars create economic growth and job creation
- freeing up taxpayer dollars that would otherwise be spent on interest costs, to lower taxes and
invest in the priorities of Canadians
- strengthening Canada’s ability to respond to long-term challenges, such as an aging population or unexpected global economic crises
- ensuring the sustainability of Canada’s social program for future generations
The federal debt-to-GDP (gross domestic product) ratio is expected to fall to 27.9% in 2017-18, below its pre-recession low, putting our Government on track to meeting our target of 25% by 2021.
The International Monetary Fund (IMF) expects that Canada will be one of only two G7 countries to return to a balanced budget by 2016, and considers Canada’s fiscal prospects to be among the best in the G20.
The IMF projects that by 2016, Canada’s total government net debt-to-GDP ratio will remain at about one-third of the G7 average and more than 20 percentage points of GDP below that of Germany, the G7 country with the next-lowest ratio.