Budget Deals Effectively with Essentials but Proves that New Challenges Lie Ahead, says Canadian Council of Chief Executives

December 10, 2001

The federal budget unveiled today deals effectively with the immediate challenges to the economic and personal security of Canadians, but sets the stage for difficult fiscal choices in the years ahead, says the Canadian Council of Chief Executives (CCCE).

“Finance Minister Paul Martin has succeeded in funding essential new measures in areas such as policing, security and border management, and he has done it without plunging the government back into deficit,” said Council President and Chief Executive Thomas d’Aquino. The CCCE, formerly the Business Council on National Issues, is a non-partisan and not-for-profit organization composed of the chief executive officers of 150 leading Canadian corporations.

“In particular, I am pleased with the government’s determination to create a border with the United States that is ‘open for business but closed to terror’. The real challenge for all of us is to make sure that these excellent proposals are put in place as quickly as possible. Canada’s business leaders will do everything we can to speed the process,” Mr. d’Aquino said.

The economic slowdown that was compounded by the effects of the terrorist attacks of September 11 has forced the government to cut its prudence and contingency reserves in half over the next two years. But the Council agrees with the consensus of private sector economists that barring any major surprises, the Canadian economy should return to stronger growth by the end of next year and ensure that the government continues to run balanced budgets or surpluses.

However, the overall trend in total government spending is worrying, Mr. d’Aquino added. “Total program spending will rise by 14.5 percent over the next two years. This pace of growth is clearly unsustainable.”

As the budget notes, it is important to stay the course in terms of long-term strategy in addressing national challenges such as the need to accelerate innovation, improve the knowledge and skills of all Canadians and enable Canada to compete effectively for investment and jobs within a highly integrated North American and global economy.

“As the Council has suggested repeatedly since the tragic events of September 11, there are many ways for the government to demonstrate its commitment to the longer-term agenda that do not involve net new expenditures,” Mr. d’Aquino said. “There are plenty of opportunities to reinvent, redesign and redirect existing programs in ways that will produce better outcomes for Canadians. As a country, we can and must do better with what we have.”

Among other such measures, the Council has suggested fundamental reform of Canada’s tax structure, of its regulatory regime and of the Employment Insurance System. In addition, it has recommended rigorous and regular reviews of all government programs in order to identify less effective spending that can be redirected toward emerging priorities and innovative approaches.

The Canadian Council of Chief Executives is an association of business leaders committed to the shaping of sound public policy in Canada, North America and the world. Its member chief executives head companies that administer in excess of $2.1 trillion in assets, have annual revenues of more than $500 billion and account for a significant majority of Canada’s private sector investment, exports, training and research and development.