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Ottawa, November 2005 Economic and Fiscal Update: Strong Growth, Healthy Finances and a New Plan to Promote Long-Term ProsperityRelated document: A new plan to promote job creation, stimulate learning, research and development and boost Canada’s investment climate highlights Minister of Finance Ralph Goodale’s second Economic and Fiscal Update. Minister Goodale said that our country has made significant economic and fiscal progress over the past several years. He noted that Canada has posted eight consecutive budget surpluses, reduced the federal debt by more than $63 billion and made major investments in health care, education, research and innovation, and environmental protection. "The road from 1994 to 2005 has been difficult at times, but the achievements remarkable," Minister Goodale said. "Today, Canada has gone from economic laggard to leader and we can look forward to the future with tremendous confidence." The Minister stated that, based on forecasts by private sector economists, Canada’s economy is expected to grow by 2.8 per cent this year, rising to 2.9 per cent in 2006 and 3.1 per cent in 2007. Based on independent forecasts, after adjusting for the $3-billion Contingency Reserve and economic prudence and taking into account measures announced since Budget 2005, the amounts available for planning purposes are:
These surplus forecasts, which total $54.5 billion, have been revised upwards from Budget 2005, reflecting higher projected corporate and personal income tax receipts and lower public debt charges. The Minister said that the Government is on track to meet its Budget 2004 target of reducing Canada’s debt-to-GDP (gross domestic product) ratio to 25 per cent within 10 years and is now setting an even more ambitious target of bringing the ratio down to 20 per cent by 2020. Minister Goodale also unveiled a new economic plan aimed at improving Canada’s productivity and securing the nation’s long-term economic prosperity—A Plan for Growth and Prosperity. It outlines the challenges facing the Canadian economy in an increasingly competitive global marketplace and establishes clear objectives for meeting these challenges. "At its core, this Plan is about people—our quality of life, the quality of our natural environment, the sustainability, creativity, safety and security of the communities in which we want to live," the Minister said. "It’s about people living fulfilling lives, the kinds of retirements we can expect to enjoy and the opportunities our children will have." The Plan focuses on action on four fronts: creating opportunities for all Canadians, advancing an innovative economy, positioning Canada at the centre of global commerce and networks, and building the right investment environment. Building the Right Investment Environment Among the first steps in implementing its new economic plan, the Government proposes to introduce a full package of tax measures, including:
The Minister stated that this new tax reduction plan will deliver $30 billion in tax relief over the current year and the next five years, including immediate personal income tax relief of up to $325 for all taxpayers this year, with further relief in years to come as other tax reductions are phased in. Legislation to implement the tax reduction plan will be introduced in due course. The Minister said the Government will take the first steps in implementing its new economic plan on three other fronts as well. Creating Opportunities for All Canadians The Government proposes substantial investments, including:
Advancing an Innovative Economy The Government proposes further investments to advance innovation, including:
Positioning Canada at the Centre of Global Commerce and Networks The Government also proposes investments to help our country take greater advantage of opportunities in the global economy, including:
Minister Goodale stated that these measures, and others proposed in the Economic and Fiscal Update, would be implemented in a prudent and fiscally responsible manner. Background material to the Economic and Fiscal Update, A Plan for Growth and Prosperity and other related documents are available on the Department of Finance Canada website. The public can also obtain information by calling 1 800 622-6232. TTY: 1 800 926-9105 (telecommunications device for the speech and hearing impaired/deaf). ___________________________________
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