• No tax relief despite $16.3-billion three year cumulative surpluses
• Program spending will increase by $12.7-billion over the next 2 years
• At this rate spending will have risen by 31.5% since 2000
• No action on promise to share federal gas tax revenue with Cities

Ottawa: The Canadian Taxpayers Federation (CTF) reacted to the 2004 federal budget, which was tabled in the House of Commons by Finance Minister Ralph Goodale this afternoon.

"For many years, the governing Liberals have told Canadians that they are prudent fiscal managers, but the Auditor-General's recent report on waste and almost daily revelations of other spending scandals has left this assertion in tatters," said CTF federal director John Williamson. "What was tabled today in Parliament was not a budget, but an exercise in damage control. The Finance Minister attempted to make accountability the major theme of the day. Yet it is not possible to insert accountability and good management into a budget as such practices are either part of a government's culture or they are not."

The federal government will attempt to improve accountability by (1) re-establishing the Office of the Comptroller General of Canada; (2) appointing comptrollers to approve new spending; (3) improving the government's audit function; (4) providing tools to track spending; and (5) introducing new rules for Crown corporations and allowing the Auditor-General to conduct five-year audits, which will be tabled in Parliament.

"Isn't this akin to closing the floodgates after hundreds of million of tax dollars were misappropriated and poorly spend by the current government," asked Mr. Williamson. "Canadian taxpayers will demand an answer to a very simple question: Why weren't these basic accounting practices in place before now "

Spending Set to Shoot Up (Again) and No Tax Relief for Canadians Despite Growing Surpluses

The budget does not contain any tax relief for Canadians, despite continued multi-billion dollar surpluses and an 8.9 per cent spending increase over the next two years. Under Prime Minister Paul Martin, the Liberal government's program spending (this figure excludes public debt charges) will total $143.4-billion in 2003/04, it will increase to $147.9-billion in 2004/05, and jump to $156.1-billion in 2005-06. In addition, estimated gross surplus figures will be $5.5-billion this year, $4.2-billion in the coming fiscal year, and $6.6-billion in 2005/06.

"We are disappointed the budget is devoid of any broad-based tax relief," said Williamson. "It is not believable that the government cannot cut taxes. Ottawa is running multi-billion dollars surpluses and the Employment Insurance fund has a $3-billion surplus this year yet this government is fixated on keeping as much money as possible in Ottawa. There is nothing in the budget that demonstrates a willingness to control costs and prioritize spending."

"Program spending has risen 31.5 per cent since 2000/01 and is projected to climb by 8.9 per cent under Paul Martin," Williamson noted. "Mr. Martin's spending still outpaces the combined growth of inflation and population growth, which breaks his own Budget 2000 pledge that spending will be limited to inflation and population growth."

"The federal government has a decade-long history of low-balling surpluses to diminish Canadians' expectation of tax relief," noted Mr. Williamson. "The word 'prudence' has become Ottawa-code for fudging the revenue and surplus numbers to avoid providing Canadians with tax relief. The annual surplus is nothing more than an unnecessary tax grab. Obviously, the government is desperately trying to appear prudent so it can get through the election and re-open the spending taps."

The Debt Picture

"We are pleased Minister Goodale will reduce the debt by $1.9-billion this year," Williamson stressed. "And we applaud the federal government for reducing $52-billion in net debt over the past 7 years. But the government has again refused to implement a legislated debt reduction schedule. Reducing the debt-to-GDP ratio might excite the pointy-heads on Bay Street, but simply reducing that ratio is insufficient. Debt servicing will chew up $35.4-billion this year, an astonishing 20 cents of each dollar collected. Ottawa should set yearly debt reduction targets as was done with the deficit and make those targets the law."

Infrastructure Initiatives - The Cities Agenda

The 2004 budget will accelerate $1-billion earmarked for municipal infrastructure spending. Rather than spend the money over a decade the timeline will be 5 years. This money is on top of proposed legislation to exempt Canada's towns and cities from the goods and services tax, saving them $580-million in 2004/05 and another $605-million in 2005/06. The federal government will collect $5.3-billion next year in fuel excise taxes.

"Despite a pledge to spend an additional $250-million a year on infrastructure, motorists are still shortchanged. Spending on roads and infrastructure only accounts for 6 per cent of federal excise taxes on fuel," noted Williamson. "Whatever happened to Mr. Martin's campaign promise to allocate a share of gas tax revenues to Canadian cities Today's announcement represents a pittance of what Ottawa collects each year in gasoline taxes."

Petro-Canada Sale

The government announced its intention to sell its remaining 50-million shares of Petro-Canada. "Petro-Canada was one of the thousands of decisions made by the Liberals that created Canada's monstrous debt," said Williamson. "Every penny that is earned from its sale should be dedicated to paying down the $508-billion debt. It is not proper stewardship to skim money from the sale of assets and use it for program spending."

Final Thoughts

"For years Canadians were told Paul Martin was a man with a vision and bold ideas, but that Jean Chrétien was holding him back," noted Williamson. "In light of today's do-nothing budget, Canadians will probably wonder who's holding him back now."