1989 Canadian federal budget

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1989 (1989) Budget of the Canadian Federal Government
Canadian federal Budget '89 logo.jpg
Presented27 April 1989
Parliament34st
PartyProgressive Conservative
Finance ministerMichael Wilson
Total revenue
DeficitC$29,143,000,000
‹ 1988
1990 ›

The Canadian federal budget for fiscal year 1989–1990 was presented to the House of Commons of Canada by finance minister Michael Wilson on 27 April 1989. It was the first budget after the 1988 Canadian federal election.[1]

The budget set the stage for a plan to eliminate of the deficit within three years. It would do so by making spending cuts and raising taxes.[1]

Background[edit]

In the November 1988 election campaign, the issue of the debt and the deficit was seldom raised. However, in February 1989, International Moneratary Fund had publicly warned the Canadian government that its Canadian national debt had gone out of control, and that radical measures were needed to curb the deficit. At the time, it totaled 320 Billion dollars, and was the highest among all industrialized countries except Italy.[2]

In the months prior to the presentation of the budget, the government often bought up the subject of the debt and the deficit in public appearances, making the case that it was putting the Canadian economy in great danger. These efforts were fruitful. According to gallup polling data from March 1989, the deficit was second in the list of the people's major concerns, with 18% saying it was the issue that required the greatest attention, behind the environment at 28%. In January 1989, that number was 10%, and 4% during the last election cycle.[3]

Leak[edit]

On April 26, 1989, parts of the budget were leaked to the press. Global TV Parliament Hill bureau chief Doug Small read the highlights of the budget on air. He had received the documents that afternoon from John Appleby, a Department of National Defence clerk (whose friend worked at the recycling plant where it was found).[4] This forced minister Wilson to call a press con[5] ference at 5:30 PM that day, where he improvised the early release of the budget.[1]

Brian Mulroney called the leak a criminal act, and charged Small, Appleby, the recycling plant worker and 2 others of possession of stolen property. Charges against Small were eventually thrown out the following year.[4]

Key elements[edit]

The main provisions of the budget are measures with the objective to reduce the deficit. These include spending cuts and tax increases.

Cuts[edit]

Via Rail's subsidy was be cut by 500 million dollars, as were the subsidies of numerous other crown corporations and agencies. Air Canada was fully privatized, as the 55% of shares the government still held were planned to be sold.[5]

The 8-billion dollar nuclear submarine program has been scrapped, and the military was planned to suffer spending cuts amounting 2.7-billion dollars over five years.

Federal day-care commitments were also cut, as were many other provincial transfers.[5]

Tax measures[edit]

The budget raised 9 billion dollars in new taxes.[5]

The budget planned on taxing back old-age-security and family allowance benefits from people with net income of $50,000 or more. This measure chips away the universality of these programs.[5] On July 1, 1989, the 3% surtax on personal incomes would raise to 5%, and to 8% for taxpayers earning for that $70,000 per year.[5] The federal Tax on liquor rose by 1%, as did the tax on telecommunication services and construction materials. The price of gasoline rose by 1 cent per litre,

Goods and services tax[edit]

The budget announced the introduction of the Federal Goods and Services Tax, which planned to be effective on January 1, 1991. It was initially planned to be set at 9%.[5]

Reactions[edit]

Opposition[edit]

The Liberal Party and the New Democratic Party (NDP) were both vehemently opposed to the budget. On the day the budget was leaked, NDP leader Ed Broadbent called on finance minister Michael Wilson to resign.[1]

Unions[edit]

Almost every Canadian labour unions reacted very negatively to the budget, criticizing its tax increases and its lack of job-creating measures. Shirley Carr, president of the Canadian Labour Congress (CTC), said that the budget was "an economic aggression that is not necessary. It is a cruel and brutal that will come to symbolize the free trade agreement".[6] The CTC and 80 affiliated labour unions launched a nationwide campaign to have most of the budget's measures undone.[7]

Provinces[edit]

Every single provincial governments was opposed to the budget. As per example, Manitoba's PC premier Gary Filmon said he was "extremely disappointed" by the budget.[8] Both him and Quebec premier Robert Bourassa called on other provinces to oppose the budget, which he saw as a ploy to transfer the federal government's financial burden on to the provinces.[9]

Provinces were especially introduction of a federal sales tax. Shortly after the budget was presented, Bourassa and Ontario premier David Peterson called for its introduction to be cancelled. They were subsequently joined in this effort by British Columbia premier Bill Vander Zalm and Newfoundland and Labrador premier Clyde Wells.[7] The former had previously claimed the budget was "worse than expected".[8]

Parti Québécois leader and Leader of the Opposition in the National Assembly of Quebec Jacques Parizeau called for Quebec to patriate Employment Insurance from Canada in reaction to the cuts proposed to the program in the budget.[10]

External links[edit]

References[edit]

  1. ^ a b c d Waddell, Christopher (April 27, 1989). "Budget raises taxes, Scuttles subs". The Globe and Mail.
  2. ^ Jannard, Maurice (April 22, 1989). "L'argument du déficit : le boomerang à quelques jours du budget fédéral". La Presse. p. B1.
  3. ^ Kohut, John (April 16, 1989). "Tories will face selling job after budget, too". The Globe and Mail. pp. B1–B2.
  4. ^ a b "This week in Canadian media history: Global TV leaks the federal government budget in 1989 - JSource". JSource. 2014-04-21. Retrieved 2018-10-28.
  5. ^ a b c d e f g "Budget Highlights". The Globe and Mail. April 27, 1989.
  6. ^ Lortie, Marie-Claude (April 28, 1989). "Un budget dans la tourmente : les syndicats déplorent la hausse des taxes et l'absence des emplois". La Presse.
  7. ^ a b "Peterson est prêt à s'unir à Bourassa contre la taxe Wilson; le Congrès du travail lance une vaste campagne pour combattre le budget conservateur". La Presse. May 10, 1989.
  8. ^ a b "Un budget dans la tourmente : un vent de consternation de Terre- Neuve à Victoria". La Presse. April 28, 1989.
  9. ^ Pépin, André (May 9, 1989). "Bourassa invite les provinces à s'unir contre le "stratagème" de Wilson ; il soupçonne Ottawa de vouloir transférer aux provinces son impasse financière". La Presse.
  10. ^ Lessard, Denis (April 28, 1989). "Un coup dur pour le Québec ; Parizeau propose de "rapatrier" l'assurance- chômage". La Presse.