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Fiscal Restraint Versus Health and Social Spending
Arguments for and against bigger spending

The Case for Bigger Spending

With a roaring economy, the government has decided to re-establish its social activist side. Widening disparities between the rich and poor in this country have meant less social cohesion. Furthermore, the provinces have been left to sort out drastic education and health care crises due to declining transfer payments; resentment has abounded.

International crises have demanded investment in security and defence, as well as reinvestment in foreign aid. Overall, after a decade of program cutbacks, the case for reinvestment has become rather obvious.

Despite the big numbers, many believe that the budget did not go far enough. Provincial premiers, municipal mayors, health and welfare activists, environmentalists, military lobbyists, and others argue that the issues they are trying to solve will not be addressed by the spending increases announced in the budget.

The Case for Fiscal Restraint

However, the government’s tarnished money management record has called into question its right to spend the people’s money. Moreover, government-centred social welfare programs are criticized for their top-down view of society whereby spending is believed to be inefficient and less effective.

Some critics argue that the budget spreads money around without focussing on the areas where it is most needed. Others argue that it is a return to the oversized governments of the past that accumulated such a vast debt in the first place. These same critics argue that the government should be cutting taxes so that Canadians can spend more of the money they make.

Nevertheless, the Department of Finance has predicted healthy surpluses in the short term. The Liberals are not shy about citing this as the sixth consecutive balanced budget, and are doing all they can to promote an image of fiscal responsibility.

Projected Surpluses - in Billions

• 2002-2003 - $9.4
• 2003-2004 - $8.8
• 2004-2005 - $11.5

The surplus numbers are encouraging for fiscal conservatives. Jeff Rubin, an analyst from CIBC pointed out that by 2005-06, Ottawa is projected to have a debt-GDP ration that will be lower than Washington's. Not long ago that would have seemed fantastic.

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Impact on Canadians