Federal liberals break 50-50 budget promise

Gil McGowan, AFL Staff

OTTAWA – During both the 1997 and 2000 federal election campaigns, Prime Minister Jean Chretien and the federal Liberals promised that future budget surpluses would be spent in a balanced "50-50" manner – with half being re-invested in social priorities such as health care, education, and poverty reduction, and the other half going jointly to tax cuts and debt reduction.

Since then, Chretien and both his successive Finance Ministers, Paul Martin and John Manley, have continued to claim that this "balanced approach" has guided the government in its budget decisions.

But based on a new and detailed analysis conducted by the Canadian Centre for Policy Alternatives, it is clear that the Chretien government’s allocation of its fiscal surpluses has been anything but balanced.

In fact, the CCPA study shows that during the five fiscal years since the federal deficit was eliminated, fully 90 percent of newly-available resources have been dedicated to tax cuts and debt repayment, and barely 10 percent to new spending initiatives.

Titled "A Funny Way of Sharing," the CCPA paper was prepared by CAW economist Jim Stanford, who chairs the CCPA’s Alternative Federal Budget macroeconomic committee. He concludes that the government’s tax cuts alone now are consuming over 60 percent of the surpluses, with the benefits going mainly to Canada’s wealthiest citizens.

"Even the recent federal-provincial deal on Medicare funding will not do much to alter this lopsided division of the federal government’s surpluses," says Stanford. "So much has been committed to tax cuts that it will be impossible for the government to reach its avowed 50-50 target without reversing some of those tax cuts, or, even less likely, going into deficit again."

Stanford says the Liberals have broken their 50-50 promise by "a huge and ongoing margin."

"Their pattern of underinvestment in public programs and services is so consistent that it can only reflect their true priorities," he adds. "While they continue to talk about a fair and balanced budget approach, their actions indicate clearly that the 50-50 promise will remain just that – a promise that is politically convenient but never achieved."