Budgets that changed Canada
Re: The budget that changed Canada, William Watson, Feb. 27 In his article, William Watson described Paul Martin’s 1995 budget as epoch-making, and quoted Martin’s opening from his budget speech. “Mr. Speaker,” said Martin, “there are times in the progress of a people when fundamental challenges must be faced, fundamental choices made — a new course charted. For Canadians this is one of those times ... We can take the path — too well trodden — of minimal change, of least resistance, of leadership lost. Or we can set out on a new road of fundamental reform, of renewal — of hope restored.”
I heartily associate myself with Martin’s inspiring call for fundamental change, and as a minister in Brian Mulroney’s government, I was fortunate to be a participant in the introduction of many such changes, changes that while deeply unpopular at that time, and each one opposed by Martin’s political party, helped paved the road for his success. In fact, John Manley, who followed Martin as finance minister, would later admit that the Chrétien government’s success would have been impossible without the changes brought about by the Mulroney government.
When our government came to office, program spending exceeded revenues by $ 16.1 billion. By 1991- 92, the operating balance was $6.6 billion in surplus, a $22.7-billion swing from what we inherited from the previous Trudeau government. In effect, excluding debt- servicing costs, the government was being run in the black. Government spending on programs was reduced from $ 1.23 for every dollar in total revenues in 1984 to $0.97 by the end of 1993 fiscal year.
The average rate of growth of program spending by Mulroney’s government was cut by 70 per cent, to 4.1 per cent per cent from 14 per cent a year over the previous 15- year period. In fact, according to the Fraser Institute, which issued the collection of essays in which William Watson’s chapter appears, Mulroney’s government recorded average annual per-person spending declines of 0.3 per cent, one of only two prime ministers in Canadian history to have done so.
During our time in office, the federal deficit we had inherited from the previous government, the largest in history, was virtually cut in half from 8.7 per cent of GDP in 1984- 85 to 4.6 per cent of GDP in 1990-91. I note for the record that Chrétien, as concerned as he may have been for the deficit in 1995, showed no such concern when he was the minister of finance in the government that rang up the deficits we were left to deal with. All of the deficits and increases in the national debt during our time in government were attributable to interest on the debt that existed before we came into office.
While the deficit did increase to 5.2 per cent of GDP in 1991- 92 as a result of the recession of the early 1990s, we were confident that with the introduction of the Canada-u.s. Free Trade Agreement, NAFTA, and the GST, the latter two which Chrétien had promised to abolish, the deficit would resume its downward trend as the country emerged from the recession, and as the full effect of those transformational initiatives took hold. In fact, a 1993 Privy Council analysis predicted that the deficit would be reduced to 0.9 per cent by the 1997-98 fiscal year.
We did other things as well, all to ensure that the bloated, sloppy, inefficient government we had inherited would be a thing of the past. We deregulated the energy, transportation and financial services sectors and completely overhauled the government’s regulatory process. In the energy sector, for example, the National Energy Program was abolished, along with the petroleum and gas revenue tax. We abolished FIRA and our government privatized or dissolved 39 Crown enterprises and other holdings. Legislation was introduced and administrative taken to eliminate or consolidate 41 agencies, boards and commissions. Those initiatives, along with operational efficiencies, resulted in 90,000 jobs being removed from the federal payroll.
These initiatives, and others besides, helped transform the Canadian economy for the better. So, while I do not begrudge in any way Watson’s praise of Paul Martin, I do suggest he also save some for Brian Mulroney and Michael Wilson. Charlie Mayer, Minister of Agriculture and Minister of Western Economic Diversification in the government of Brian Mulroney