Canadian federal budget, 2005
From Wikipedia, the free encyclopedia.
The 2005 Canadian federal budget was the budget of the Government of Canada for the 2005-2006 fiscal year. It presented on February 23, 2005, by Finance Minister Ralph Goodale. It was the first federal budget presented by a minority government in Canada since the budget presented by the minority government led by Joe Clark in 1979. The defeat of that budget led to an election in which Clark's Progressive Conservative Party of Canada was defeated.
Having fewer than half the seats in the Canadian House of Commons meant that the governing Liberal Party of Canada had to win the support of members of other parties for the 2005 budget to pass. Without that support, the budget would be defeated, and new elections would likely be called.
In the 2005-05 fiscal year, the government faced a large surplus of expected revenues over expenses, meaning that the government would be able to fund a wide array of new initiatives.
The budget bill (C-43) received Royal Assent on June 28, 2005. Controversial amendments made to the budget to gain the support of the New Democratic Party (Bill C-48) were also given assent three weeks later following considerable debate.
Contents |
Details of the budget
The budget was the eighth balanced budget in a row presented by the Liberal government. The budget contained minor tax cuts for both businesses and individuals over the next five years. These cuts, however, would mostly come in the latter years of the five-year period, which means that the majority of them would likely not occur before a new election is held.
The personal income tax cut offered will raise the basic personal exemption to $10,000 from its present level of just over $8,000 over the next five years. This will mean an average tax savings of $16 for each Canadian in 2006 with the final total reaching $192 several years down the road. However, the basic personal exemption is already indexed to inflation and, therefore, would be scheduled to rise to roughly $9,000 over the next several years in any case.
The budget also contained $12.7 billion for the Department of National Defence over the next five years. However, not all of this money is new funding and, as with most of the budget, it is back-loaded. The total new funding for 2006 will be $500 million.
Start-up money was provided for Canada's efforts to comply with the Kyoto Accord and for a national child care program. Additional funding was provided for cities, health care, and foreign aid.
Some cuts were made. The Air Travel Complaints Commissioner was abolished, and foreign aid to Thailand, Malaysia, and all countries now in the European Union was ended. In total, $11 billion in savings are expected.
Initial response by opposition parties
The budget, as expected, displeased the Bloc Québécois who were demanding an overhaul to employment insurance and the elimination of the fiscal imbalance. The Bloc voted against the budget.
The Conservative Party, the largest opposition party, surprised many by announcing that it would support the budget immediately after it was read in the House of Commons. Party leader Stephen Harper described it as "better than expected", and described its focus on tax cuts and defence spending as being in line with Conservative policy. It is highly unusual for the official opposition to vote in favour of the government's budget. However, Harper later changed his position on the budget, and his party launched the largest abstention in Canadian history.
The New Democratic Party voted against the budget on first reading. Leader Jack Layton agreed with Harper that it was a "conservative budget" and was especially critical of the corporate tax cuts and the limited new funding for social programs.
Changes following the Liberal-NDP deal
Prior to the second reading the political situation changed dramatically due to Jean Brault's explosive testimony at the Gomery Inquiry. Stephen Harper announced that the Liberals had lost the moral authority to govern and vowed to bring down the government. Thus when the budget came to its second reading, with the Conservatives rallied against it. To survive the Liberals struck a deal with the NDP for a reduction of the foreseen corporate tax cuts and $4.6 billion in spending on social programs. The additional bill to implement these measures was dubbed the "NDP budget" by the official opposition.
Despite the NDP support, the government remained in a precarious position requiring the support of all three independent Members of Parliament (MPs). On May 17, Conservative MP Belinda Stronach crossed the floor to the Liberals, giving them a crucial extra vote. Soon after, the Liberal polling numbers ended their slide and began to recover. Two Conservative MPs from Newfoundland and Labrador, Loyola Hearn and Norman Doyle, were also pressured by their constituents -- and by provincial premier Danny Williams -- to vote in favour of the budget, as it included the provisions of the government's recent Atlantic Accords. The Conservatives eventually announced that they would vote in favour of the main budget bill, containing the Atlantic Accord, but would vote against the second bill containing the NDP amendments.
Voting in the House of Commons
After Stronach's move, the government could count on the same number of votes as the opposition: the Liberals, the NDP and Carolyn Parrish supported the budget, while the Conservatives and the Bloc opposed it. The fate of the government then hung on the voting choices of two independent MPs: David Kilgour and Chuck Cadman. The government needed the support of at least one of the two.
On May 19, votes were held for second reading of Bill C-43 (the main budget) and Bill C-48 (the amendments). The main budget bill passed on a vote of 250 to 54, with only the Bloc Québécois voting against. The second bill received a vote of 152 Yea and 152 Nay. The Conservatives and Bloc Québécois voted against second reading, while the Liberals and NDP voted in favour. Conservative MP Darrel Stinson was unable to attend the vote due to cancer surgery, so Liberal MP Peter Adams agreed to sit out as a courtesy. Independent MP David Kilgour voted against the budget, while Carolyn Parrish and Chuck Cadman voted in favour. In the event of a tied vote, the Speaker is required to cast the tie-breaking vote. According to Parliamentary procedure, the Speaker is required to vote, whenever possible, for the continuation of debate. Thus, the Speaker voted in favour of second reading, "to allow the House time for further debate so that it can make its own decision at some future time."
After this vote, the Conservatives admited their defeat and backed away from their pledge to bring down the government. On June 14, a series of 16 votes were held pertaining to the budget: one for concurring in the committee report for Bill C-43 and dozens of amendments and other motions. As many as 15 were considered confidence votes and could have triggered an election if one was lost. Several opposition members were absent. The government won each vote, virtually guaranteeing that no election would be held in the summer of 2005. [1]
Two days later, Bill C-43 was finally passed, and moved to the Senate. Meanwhile, the NDP amendments came out of committee and debate was launched.
On June 23, the House voted to extend the session into the summer to deal with C-48 and Bill C-38, the same-sex marriage bill. Then, in a late-night session after several Conservative members had already left the house, the Liberals, NDP, and Bloc suddenly voted to invoke closure on the debate. The Liberals and NDP then voted in favour of passing Bill C-48, defeating the Conservatives and Bloc by a margin of 5 votes. The unexpected upset enraged Conservative MPs, and left C-38 as the only major business to be dealt with during the extended session in the House. It, too, was passed on June 28, allowing the House to call a recess.
The bills moved to the Senate. Bill C-43 was still in committee hearing stage on the morning of June 28, but Liberal senators rushed the bill through the legislative process all day, allowing it to receive Royal Assent before the day was over.
Bill C-48 was more controversial, but continual invocations of closure stopped what might have been a filibuster by the Opposition, and on July 20, it, along with four other controversial government bills, were passed, allowing the Senate to enter into recess. They all received Royal Assent within the day.
