Canada's new Progressive Conservative government today outlined a long-term austerity program that promises deep cuts in government spending and a review of the country's extensive social welfare programs.
Speaking on behalf of Prime Minister Brian Mulroney, Finance Minister Michael Wilson told the House of Commons in Ottawa that government spending will be reduced by the equivalent of $2.67 billion in U.S. currency during the fiscal year beginning April 1.
Nevertheless, Wilson said in his nationally televised speech, Canada's federal budget deficit still will climb to $26.3 billion this year and to $26.7 billion the year after. Those figures mean that Canada will have a larger per capita federal deficit than the United States.
Wilson's program marks a determined effort to change the ideological approach followed by the Liberal Party, which governed Canada for much of the last quarter century. The Liberals increased government intervention in business and installed widespread welfare programs.
"We must ensure that government itself -- through its taxation, expenditure and regulatory programs -- does not impede the change and adjustment necessary to improve productivity and increase our international competitiveness," Wilson said.
Wilson also announced that the government will immediately end its subsidy of oil prices, meaning that Canadians will begin paying world price levels for oil, an increase of 9 percent.
In other moves, he said $211.6 million worth of capital projects will be canceled and the federal civil service will be frozen at its current size.
The Canadian Broadcasting Corp. will lose $64.9 million of its $687.5 million budget. An agricultural export promotion agency created earlier this year by the Liberals is being eliminated, as is the 1986 census.
Despite Progressive Conservative campaign promises to increase defense spending, Wilson said that military and related programs will be given less money. Additional savings will be made by closing several embassies and other government facilities abroad.
Wilson was cautious in his hour-long speech in discussing social programs, and he pledged that no Canadian will lose any existing benefits. Still, his program indicates that there will be less money available for several welfare programs, including unemployment benefits.
At the same time, the government economic spokesman promised to increase spending for job creation by $910 million in hopes of reducing Canada's 11.8 percent unemployment rate.
But that was virtually the only increase indicated. Wilson, to the distress of the opposition Liberals and the socialist New Democratic Party, said that a serious study is under way to reform federal programs for children and the elderly to ensure that the poor receive a greater proportion of the available money.
He also repeated his party's promises to relax restrictions on foreign investment and protective oil and energy programs.
Wilson said that Canada must set out on "a new direction" in economic policy if the country is to regain its momentum. Otherwise, he warned, Canadians face a dire future.