Ottawa Finance Minister Paul Martin delivered a budget for troubled times Monday, outlining massive spending to shore up Canada's security and increased efforts to help stimulate the country's sputtering economy.
As expected, the centrepiece of the document was $7.7-billion over five years dedicated to air security, the country's military and initiatives designed create a more secure and efficient border in the wake of September's devastating terrorist attacks in New York, Washington and Pennsylvania.
Opposition: Not enough, leaders charge
"Just three months ago tomorrow, terror touched our continent and changed our world," Mr. Martin said in his budget speech delivered to the Parliament Monday afternoon.
"Today, we deal with its economic consequences, but that day was first and foremost a human tragedy, measured in lives taken, families destroyed and fears awakened."
Security measures had widely been expected to form the basis of the budget, which left Mr. Martin walking a fine line, trying to balance the need for increased vigilance in the wake of the Sept. 11 terrorist attacks in the United States with dwindling revenues and a sharply slowing economy.
The budget's $7.7-billion security package includes $6.5-billion for areas like air security and funding for the country's military, while another $1.2-billion has been earmarked for border initiatives.
At the country's airports, the federal government will set aside $2.2-billion to make air travel more secure. That money will see armed undercover police officers on Canadian aircraft; better-trained personnel to screen passengers and baggage; new explosive detection systems at Canada's airports and permanent modifications to aircraft cockpit doors.
The money for those efforts will come from a new charge for air travellers, starting April 1, 2002. Called the Air Travelers Security Charge, it will see travellers in Canada pay an additional $12 each way.
"In the aftermath of the terrorist attacks, Canadians are understandably concerned about their own security and that of the nation," Mr. Martin said.
"We have struggled to explain to our children what we ourselves must seek to understand."
At the border, Ottawa will spend $1.2-billion in total. Of that, $646-million will be used to step up security while ensuring continued flow between Canada and its biggest trading partner, the United States. A further $600-million program will be created to improve infrastructure — like highways, commercial vehicle processing centres and technology — to support major border crossings.
Intelligence and policing measures, meanwhile, will get $1.6-billion to deploy more officers, improve information-sharing between agencies, boost marine security and strengthen the role of the Financial Transactions and Reports Analysis Centre of Canada in cutting off terrorist funding.
"It was definitely a security budget," Peter Hall, associate director of the Conference Board of Canada, told globeandmail.com
"The bulk of the measures were security. Not just border security but also economic security issues."
Mr. Hall praised the almost $7.7-billion earmarked, including the $1.2-billion to improve border security and efficiency.
"We are dependent on the U.S. for trade," Mr. Hall said. "Any issues that go to cleaning up border issues are a good thing."
But Canadian Alliance Leader Stockwell Day said the budget failed to give Canada's defence forces the funding they need.
"The Auditor-General, in terms of just getting the maintenance budget going for the Armed Forces, talked about $1.3-billion per year and [the Liberals] are talking about $300-million per year. It falls so far short," Mr. Day said.
As well, $1-billion will be spent over five years to improve the screening process for those coming into Canada. Among the measures aimed at improving screening for immigrants, refugee claimants and visitors is the introduction of what the government described as fraud-resistant permanent resident cards.
A total of $1.6-billion will go toward emergency preparedness and the military, with spending including doubling the capacity of the Canadian Forces' elite anti-terrorism unit.
The economy — which was fraying even before the September attacks — has increasingly become a concern for many Canadians.
Already this year, the Bank of Canada has cut its benchmark overnight rate nine times in a bid to boost the economy. Most economists are expecting another cut next month when the central bank makes its next fixed date policy announcement, particularly following last Friday's report of rising unemployment and falling full-time work in Statistics Canada's most recent labour force survey.
To stimulate job growth, the government said Monday it was targeting investments of almost $3-billion. That includes the creation of a new Strategic Infrastructure Foundation, with a minimum federal commitment of $2-billion to fund large-strategic projects. Another $1.1-billion over three years has been earmarked to support skills, learning and development.
"Managing an economy through tough times means striking the right balance," Mr. Martin said.
"This budget does that. It provides vital support at a critical time. But, it does not go so far as to jeopardize either the progress of our past or the prospects of our future."
Despite sagging government revenues, Mr. Martin — whose political hallmark has long been the elimination of the deficit — maintained that Monday's budget provided necessary spending without falling back into the red. However, he said, the government was forced to use part of its $3-billion contingency reserve.
As a result, he said, the reserve for the four months remaining in the current fiscal year will be $1.5-billion. While it has been the government's practice to use the that fund to pay down debt, this year Ottawa will use any remaining money for the Strategic Infrastructure Fund and foreign aid.
For 2002-2003, the fund will be $2-billion and for the following fiscal year it will rise to $2.5-billion, Mr. Martin said.
"With these reserves as buffers, I can also confirm that if current projections hold or even using the average of the four most pessimistic private sector growth forecasts, we will balance the budget — or better — next year and the year after that for a total of seven balanced budgets in a row," Mr. Martin said.
While no new tax cuts were announced, Ottawa said it would stick to its guns in delivering the $100-billion in reductions announced last year. Under Monday's plan, small businesses, however, got a bit of a break with a decision to allow them to defer their corporate tax instalments for January, February and March next year for a period of six months.
"In total, this will defer — without interest or penalty — $2-billion in taxes for small businesses," Mr. Martin said.
Other measures in Monday's budget, included:
• $185-million over the next two years for aboriginal child care, increased funding for children on reserves who have special needs at school and programs aimed at combating fetal alcohol syndrome.
• Increase international assistance by $1-billion over three years with $500-million going to funding promoting sustainable development in Africa and other funds earmarked for humanitarian emergency assistance in Afghanistan.
• $110-million to build and operate a broadband network — called CA*net 4 — which is seen benefiting research organizations across the country.
• $75-million more annually for the Canadian Institutes of Health Research and $95-million for the Canadian Institute for Health Information.
With a report from Allison Lawlor