Ottawa, November 2005
2005-077
Related document:
The Economic and Fiscal Update 2005
A new plan to promote job creation, stimulate learning, research and
development and boost Canada's investment climate highlights Minister
of Finance Ralph Goodale's second Economic and Fiscal Update.
Minister Goodale said that our country has made significant economic and
fiscal progress over the past several years. He noted that Canada has posted
eight consecutive budget surpluses, reduced the federal debt by more than
$63 billion and made major investments in health care, education, research
and innovation, and environmental protection.
"The road from 1994 to 2005 has been difficult at times, but the
achievements remarkable," Minister Goodale said. "Today, Canada
has gone from economic laggard to leader and we can look forward to the
future with tremendous confidence."
The Minister stated that, based on forecasts by private sector
economists, Canada's economy is expected to grow by 2.8 per cent this
year, rising to 2.9 per cent in 2006 and 3.1 per cent in 2007. Based on
independent forecasts, after adjusting for the $3-billion Contingency
Reserve and economic prudence and taking into account measures announced
since Budget 2005, the amounts available for planning purposes are:
2005-06: $8.2 billion;
2006-07: $9.2 billion;
2007-08: $9.5 billion;
2008-09: $7.9 billion;
2009-10: $8.4 billion; and
2010-11: $11.3 billion.
These surplus forecasts, which total $54.5 billion, have been revised
upwards from Budget 2005, reflecting higher projected corporate and personal
income tax receipts and lower public debt charges. The Minister said that
the Government is on track to meet its Budget 2004 target of reducing Canada's
debt-to-GDP (gross domestic product) ratio to 25 per cent within 10 years
and is now setting an even more ambitious target of bringing the ratio down
to 20 per cent by 2020.
Minister Goodale also unveiled a new economic plan aimed at improving
Canada's productivity and securing the nation's long-term economic
prosperityA Plan for Growth and Prosperity. It outlines the
challenges facing the Canadian economy in an increasingly competitive global
marketplace and establishes clear objectives for meeting these challenges.
"At its core, this Plan is about peopleour quality of life, the
quality of our natural environment, the sustainability, creativity, safety
and security of the communities in which we want to live," the Minister
said. "It's about people living fulfilling lives, the kinds of
retirements we can expect to enjoy and the opportunities our children will
have."
The Plan focuses on action on four fronts: creating opportunities for all
Canadians, advancing an innovative economy, positioning Canada at the centre
of global commerce and networks, and building the right investment
environment.
Building the Right Investment Environment
Among the first steps in implementing its new economic plan, the
Government proposes to introduce a full package of tax measures, including:
Immediately increasing the basic personal amountthe amount of
income that all Canadians can earn tax-freeby $500, effective January
1, 2005.
Immediately reducing the lowest personal income tax rate from 16 per
cent to 15 per cent, effective January 1, 2005, with
subsequent reductions of 1 percentage point to each of the two
middle rates by 2010.
Consulting with the provinces and territories to design and implement
a Working Income Tax Benefit to help encourage low-income Canadians to
join the workforce.
Confirming the 2-percentage-point reduction in the general corporate
tax rate to 19 per cent by 2010 and the elimination of the
corporate surtax for all corporations, as well as the elimination of the
federal capital tax as of 2006, two years earlier than originally
planned.
The Minister stated that this new tax reduction plan will deliver $30
billion in tax relief over the current year and the next five years,
including immediate personal income tax relief of up to $325 for all
taxpayers this year, with further relief in years to come as other tax
reductions are phased in. Legislation to implement the tax reduction plan
will be introduced in due course.
The Minister said the Government will take the first steps in
implementing its new economic plan on three other fronts as well.
Creating Opportunities for All Canadians
The Government proposes substantial investments, including:
More than $2.1 billion over five years to improve student financial
assistance and help make post-secondary education more affordable for
lower- and middle-income Canadians.
$3.5 billion over this year and the next five years to increase
workplace-based training programs, and to enhance the participation of
Aboriginal people, immigrants and persons with disabilities in the
Canadian economy.
$1.3 billion over five years to improve settlement and integration
services for new immigrants to Canada.
$1 billion in 2005-06 for provinces and territories for the
Post-Secondary Education Innovation Fund.
Advancing an Innovative Economy
The Government proposes further investments to advance innovation,
including:
More than $2.1 billion in additional funding, beginning in 2005-06
and over the next five years, to sustain Canada's leadership in
university-based research.
Almost $200 million over the next five years to create up to 3,500
internships and up to 500 scholarships for natural and health
sciences and engineering graduates.
Positioning Canada at the Centre of Global Commerce and Networks
The Government also proposes investments to help our country take greater
advantage of opportunities in the global economy, including:
$590 million over the next five years to support transportation
infrastructure investments and other initiatives enhancing Canada's
Pacific gateway.
$485 million over five years to implement CAN-Tradea new
international commerce strategy to position Canadian companies,
especially small and medium-sized firms, in priority markets such as
China and India.
An additional $100 million over the next five years to continue
supporting broadband installation in rural, remote and First Nations
communities.
Minister Goodale stated that these measures, and others proposed in the
Economic and Fiscal Update, would be implemented in a prudent and
fiscally responsible manner.
Background material to the Economic and Fiscal Update, A Plan for
Growth and Prosperity and other related documents are available on the Department
of Finance Canada website.
The public can also obtain information by calling 1 800 622-6232. TTY: 1
800 926-9105 (telecommunications device for the speech and hearing
impaired/deaf).
___________________________________
For further information, media may contact:
Pat Breton
Press Secretary
Office of the Minister of Finance
(613) 996-7861
David Gamble
Public Affairs and Operations Division
(613) 996-8080
