Comments by David Stewart-Patterson on Today’s Federal Budget by Finance Minister Ralph Goodale

February 23, 2005

The following are comments by David Stewart-Patterson, Executive Vice-President of the Canadian Council of Chief Executives (CCCE), on the 2005 Federal Budget tabled today in the House of Commons by Finance Minister Ralph Goodale:

“The biggest concern for business leaders is the overall rate of spending growth.  Much of the new spending is going to meet very important priorities, from improving health care to strengthening our armed forces.  But overall program spending is up by 12 percent this year and has grown 44 percent over the past five years.  I doubt that many Canadians have seen their paycheques rise that fast, and unless Canada continues to enjoy strong economic growth, I am worried that the government may not be able to sustain the many commitments it has made to improving social programs.

“I am encouraged that the government has recognized the importance of a competitive tax regime, and in particular of keeping Canadian corporate incomes tax rates significantly below those in the United States in order to attract more investment and jobs.  The elimination of the corporate surtax and the further reduction of two percentage points in the corporate income tax rate, starting in 2008, are important steps forward.  These improvements, however, offer little comfort in the short term to Canadian exporters who are trying to cope with the rapid rise of the Canadian dollar over the past two years and who need to make major investments now in order to stay competitive and continue growing from a Canadian base.

“The Canadian Council of Chief Executives has strongly supported the government’s efforts to review existing spending and reallocate money to more effective uses.  The spending review launched in 2004 has identified $11 billion in potential savings over the next five years, and these savings are critical in enabling the government to meet its social spending commitments.  What is most important is the commitment by Finance Minister Ralph Goodale to making expenditure review an ongoing exercise, one that should be an integral part of the annual budget cycle.

“While business leaders are worried about the sustainability of the government’s commitments to social spending, we are reassured by the Finance Minister’s continued bedrock commitment to balanced budgets, prudence in fiscal forecasting and the dedication of unused contingency funds to debt reduction.”