Federal Minister of Finance Ralph Goodale says Ottawa will continue to turn in balanced budgets, even as it ramps up health-care spending.

Speaking to the National Press Club in Ottawa Thursday morning, Goodale stressed the importance of balanced budgets, arguing that it reduces the debt burden, boosts consumer and business confidence, and helps foster economic growth. Balanced budgets have also allowed the government to deal with unanticipated events, such as SARS and mad cow disease, he said.

He noted that the government will continue to spend its contingency reserve of debt reduction. “Unless we continue to reduce our debt burden, the inheritance we leave our children and grandchildren will be a heavy mortgage on their futures,” he said. “We also have to begin to prepare now for an aging population… The less old debt we are still carrying in 2010 and thereafter, the more flexibility we’ll have to meet emerging demographic pressures.”

Goodale also pointed to positive signs in the current economic data. “I can tell you that we are more optimistic today about our future prospects than at the time of the budget in March or the election in June, given recent economic developments and monthly fiscal results published so far this year,” he said, noting the annualized growth rate for the first quarter of 2004 has been revised upward-from 2.4% to 3% and in the second quarter the economy grew at an annual rate of 4.3%.

That said, Goodale noted that it’s still early. The government must still prepare for uncertainties such as geopolitical tensions and the impact of higher oil prices over a protracted period of time.

He also announced a comprehensive review of Ottawa’s economic and fiscal forecasting. “The time has come to test our assumptions and make sure that we are still using best practices-benchmarking ourselves against the best in the world,” he said. The review, the first since 1994, is expected to be completed in time for the next federal budget.

On the topic of new spending Goodale promised that the government will boost healthcare spending by:

  • investing $15 billion in new funding by 2005-06 to support specific health priorities;
  • getting the annual “base” for ongoing federal cash contributions up to the appropriate level called for in the Romanow report for 2005-06, and;
  • creating an escalator to ensure growing and predictable funding for the provinces and territories in the future.



Goodale noted that funding is only part of the solution to resolving medicare challenges. He stressed that, “to be sustainable in the long run, our health care system requires important, thoughtful reform.” To this end, Ottawa is committed to pursuing that reform with its provincial and territorial partners and with health care providers.

“Addressing health care above other priorities does not mean addressing health care instead of all other priorities,” said Goodale. “Canadians want to see real progress on many other important fronts.”