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Ottawa, February 16, 1999
1999-018

1999 Budget Increases Federal Support for Health Care

Finance Minister Paul Martin announced today in the 1999 federal budget that the provinces and territories will receive an additional $11.5 billion for health care over the next five years.

"The decisions we are announcing today are about much more than dollars and cents. They are about a fundamental choice Canadians have made about the kind of society in which we want to live," Minister Martin said.

The dramatic increase in federal financial support for health care is the largest single new investment the government has made since coming to office in 1993. It will help the provinces deal with the immediate health care concerns of Canadians – waiting lists, crowded emergency rooms and diagnostic services. It will also help to build a stronger health care system that reflects the changing needs of Canadians and provides timely access to high quality health care.

Of the $11.5 billion in additional funding for health, $8 billion will be provided through future-year increases in the Canada Health and Social Transfer (CHST), and $3.5 billion as an immediate one-time supplement to the CHST from funds available in the current fiscal year. Allowing for a gradual and orderly drawdown in the supplement by the provinces and territories over the next three years means that total support for health care would increase by $2 billion in 1999-2000 and in 2000-01, and by $2.5 billion in each of the following three years. This $2.5-billion increase takes what is regarded as the health component of the CHST as high as it was before the period of expenditure restraint in the mid-1990s. Together with the growing value of CHST tax transfers, federal support is expected to reach a new high of $30 billion by 2001-02, surpassing where transfers stood prior to restraint.

The government's investment in health is part of a continuing effort to address national priorities in a balanced way. Consistent with this approach, the 1999 budget takes action on three fronts:

In his remarks on the fiscal situation, the Minister confirmed that the government's books will once again be balanced or better in the current fiscal year. "This will mark the first time in almost half a century that the federal government will have recorded two balanced budgets or surpluses, back to back," Minister Martin said.

Eliminating the deficit allowed the government to begin providing broad-based tax relief in the 1998 budget. As part of a long-term strategy to permanently reduce taxes, the 1999 budget builds on last year's budget by reducing taxes for all taxpayers in Canada:

• The 1998 budget raised by $500 the amount of income that low-income taxpayers can earn before paying income tax. The 1999 budget increases that amount by a further $175 to $675 and extends it to all taxpayers.

• The 1998 budget began the process of eliminating the 3-per-cent surtax. The surtax was eliminated for taxpayers with incomes up to about $50,000 and reduced for those with incomes between $50,000 and $65,000. The 1999 budget completes the process by eliminating the 3-per-cent surtax for all taxpayers.

Measures in the 1999 budget will give Canadians $1.5 billion of tax relief in 1999-2000, $2.8 billion in 2000-01 and $3.4 billion in 2001-02. Together, the 1998 and 1999 budgets and the employment insurance premium rate reduction for 1999-2000 will provide $17.3 billion in tax relief over the next three fiscal years.

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