The 1979 Canadian federal budget was presented by
Minister of Finance
A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation.
A finance minister's portfolio has a large variety of names around the world, such as "treasury", " ...
John Crosbie
John Carnell Crosbie, (January 30, 1931 – January 10, 2020) was a Canadian provincial and federal politician who served as the 12th lieutenant governor of Newfoundland and Labrador, Canada. Prior to being lieutenant governor, he served as a pr ...
in the
House of Commons of Canada
The House of Commons of Canada (french: Chambre des communes du Canada) is the lower house of the Parliament of Canada. Together with the Crown and the Senate of Canada, they comprise the bicameral legislature of Canada.
The House of Common ...
on 11 December 1979.
It was the first and only
Canadian federal budget
In Canada, federal budgets are presented annually by the Government of Canada to identify planned government spending and expected government revenue, and to forecast economic conditions for the upcoming year. They are usually released in Februa ...
presented under the premiership of
Joe Clark
Charles Joseph Clark (born June 5, 1939) is a Canadian statesman, businessman, writer, and politician who served as the 16th prime minister of Canada from 1979 to 1980.
Despite his relative inexperience, Clark rose quickly in federal polit ...
. The budget was never adopted, as the government was defeated in a vote of confidence on a budget subamendment on December 13, 1979.
Background
The budget is tabled six-and-a-half months after the
1979 Canadian federal election
The 1979 Canadian federal election was held on May 22, 1979, to elect members of the House of Commons of Canada of the 31st Parliament of Canada. It resulted in the defeat of the Liberal Party of Canada after 11 years in power under Prime Mini ...
where the
Progressive Conservatives led by Joe Clark won 136 seats, falling 6 seats short of a majority. On paper, support from either one of the three other official status parties (
Liberal
Liberal or liberalism may refer to:
Politics
* a supporter of liberalism
** Liberalism by country
* an adherent of a Liberal Party
* Liberalism (international relations)
* Sexually liberal feminism
* Social liberalism
Arts, entertainment and m ...
,
NDP
NDP may stand for:
Computing
* Neighbor Discovery Protocol, an Internet protocol
* Nortel Discovery Protocol, a layer two Internet protocol, also called SONMP
* Nondeterministic programming, a type of computer language
Government
* National Deve ...
or
Social Credit
Social credit is a distributive philosophy of political economy developed by C. H. Douglas. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made them. To combat what he ...
) would be enough to pass a budget should all the PC MPs vote likewise.
The economic climate was still precarious with a series of mixed signals during 1979:
* GDP growth and employment took a turn for the better, with strong recovery of business investment;
* Balance of payments and external trade balance seriously deteriorated due to slowing exports to the US (due to the weak economy there) and increasing imports (especially of foreign-made machinery and equipment);
* Inflation still remained high with CPI increase of 9% over 1978.
Taxes
Despite having campaigned on tax cuts during the
1979 Canadian federal election
The 1979 Canadian federal election was held on May 22, 1979, to elect members of the House of Commons of Canada of the 31st Parliament of Canada. It resulted in the defeat of the Liberal Party of Canada after 11 years in power under Prime Mini ...
, Joe Clark's first budget contained several measures that departed from that. The budget included an 18-cent per gallon tax increase on gasoline, a 10 percent tax increase tobacco products, and a corporate surtax amounting to 1 percent of their income taxes. Farmers, Fishermen, and public urban transit were to receive a 10 percent gasoline tax rebate.
Personal income taxes
* Introduction of a refundable energy tax credit: to ease the impact of the proposed energy tax, the government planned for the introduction of an income-tested refundable tax credit of up to $80 per adult and $30 per child.
* Introduction of the Mortgage Interest and Property Tax Credit: scheduled to be phased in over 3 years (1980 to 1982). That measure is however not included in the ''Notice of Ways and Means Motion'' tabled along the budget.
* Creation of the Canadian Common Stock Investment Plan to encourage savings in common stocks of businesses in Canada
* Refundable Quebec abatement: the government planned to make the Quebec abatement refundable for the portion in excess of federal tax payable, starting in the 1980 fiscal year.
Corporate income taxes
* Temporary 5% surtax: a 5% surtax is imposed for all corporations for fiscal years ending between 12 December 1979 (date of the budget) and 31 December 1981.
Other taxes
Gasoline tax
The Gasoline tax (officially designated Energy Tax in the budget speech) was implemented at midnight between December 11 and December 12, the night the budget was announced. This led many Canadians to rush to the gas stations to buy "cheap gas" before the gas tax came into effect at midnight that night. However, when the government fell on December 13, the gas tax was rolled back, along with other budgetary measures that were provisionally implemented.
Expenditures
Legislative history
The day following the presentation of the budget, the
Liberals and the
New democrats
New Democrats, also known as centrist Democrats, Clinton Democrats, or moderate Democrats, are a centrist ideological faction within the Democratic Party in the United States. As the Third Way faction of the party, they are seen as culturall ...
vowed to do everything they could to bring down the government. The
Social Credit Party also announced that they would not support the budget.
Before the no-confidence vote, Joe Clark entered negotiations with Socred leader
Fabien Roy
Fabien Roy (born April 17, 1928) is a former Canadian politician who was active in Quebec in the 1970s. Roy was elected to the National Assembly of Quebec and the House of Commons of Canada, and advocated social credit theories of monetary refo ...
to obtain their support for the budget. Clark offered to double the energy tax credit proposed in the bill, but to no avail. Roy believed Joe Clark had come to him too late to obtain their support for the budget, and thus left too little time for negotiations. The government was ultimately defeated 139 to 133 on a confidence vote of an NDP motion proposed by
Bob Rae
Robert Keith Rae (born August 2, 1948) is a Canadian diplomat and former politician who is the current Canadian Ambassador to the United Nations since 2020. He previously served as the 21st premier of Ontario from 1990 to 1995, leader of the ...
condemning the budget.
Aftermath
Following the fall of the government,
Pierre Elliot Trudeau
Joseph Philippe Pierre Yves Elliott Trudeau ( , ; October 18, 1919 – September 28, 2000), also referred to by his initials PET, was a Canadian lawyer and politician who served as the 15th prime minister of Canada from 1968 to 1979 and ...
decided to walk back his resignation from the leadership of the Liberal Party. Trudeau ended up defeating
Joe Clark
Charles Joseph Clark (born June 5, 1939) is a Canadian statesman, businessman, writer, and politician who served as the 16th prime minister of Canada from 1979 to 1980.
Despite his relative inexperience, Clark rose quickly in federal polit ...
and in the
1980 Canadian federal election
The 1980 Canadian federal election was held on February 18, 1980, to elect members of the House of Commons of Canada of the 32nd Parliament of Canada. It was called when the minority Progressive Conservative government led by Prime Minister Joe ...
as the Liberals were swept back in power with a majority government.
Notes and references
Official documents
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{{Canada federal budget
Canadian budgets
1979 in Canadian law
1979 government budgets
1979 in Canadian politics