Canadian Fiscal Update

Canadian Minister of Finance Jim Flaherty
Delivers Fiscal Update

The Honourable Jim Flaherty, Minister of Finance, today announced in his 2008 Economic and Fiscal Statement that the Government will take actions to restrain spending, protect Canada’s hard-won fiscal advantage and reinforce the stability of our financial system amid this period of global economic uncertainty.

"Without a doubt, here in Canada and around the world, these are difficult times that will require difficult choices," said Minister Flaherty. "We cannot ask Canadians to tighten their belts during tougher times without looking in the mirror. We have a responsibility to show restraint and respect for tax dollars."

The Government will continue to manage spending responsibly. To that end, this Statement takes action to:

• Eliminate the taxpayer subsidy for politicians and their parties.

• Reduce the cost and ensure the effectiveness of government operations.

• Ensure sustainable federal public sector wage rates and modernize the pay equity regime. This will also apply to MPs, Senators, Cabinet Ministers and senior public servants.

• Put Equalization on a sustainable growth path.

Minister Flaherty said the Government continues to plan on balanced budgets. However, given the fluidity of the economic situation and the rapid decline in commodity prices, a deficit cannot be ruled out.

"Our goal must be to ensure the strength of the economy—to protect jobs, to encourage investment and to help businesses grow," the Minister said. "We must do that while protecting the long-term fiscal position of the Government, so that if we must run a deficit, when the economy improves, we return quickly to balanced budgets."

While the Government has already taken major actions to strengthen and preserve the competitiveness of Canada’s world-leading financial sector, this Statement takes further measures to:

• Support the financial system in extraordinary circumstances.

• Provide solvency funding relief to federally regulated private pension plans.

• Enhance credit availability through Crown agencies for Canadian businesses affected by the global credit crisis.

• Reduce the required minimum withdrawal amounts for Registered Retirement Income Funds by 25 per cent for 2008.

The Government will consult with provinces and territories, and all Canadians, to develop responses to short-term economic issues, while continuing to implement its long-term economic plan. The immediate priorities are to accelerate infrastructure projects, improve opportunities for workers and sectors affected by current economic conditions, strengthen our world-leading financial system in line with our G20 commitments, and improve the competitiveness of the Canadian economy.

"The next fiscal year will be difficult," said Minister Flaherty. "But Canadians can be fully confident that we will overcome whatever hardships may lie ahead in 2009 and beyond."