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Home > Features > The 2003 Federal Budget: ‘Northern Tiger’ Spends Big
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.