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> Part IV
> 
> The Taxpayers' Budget
> 
> To balance the budget, the Reform budget must identify $25 billion in
> net spending reductions. In order to reach this target, Reform Members
> of Parliament undertook two separate reviews of government spending:
> 
>   1. A review of government operations and non-social spending which
>      found $10 billion in savings
> 
>   2. A social program review which identified $15 billion in savings.
> 
> Expenditure reductions are recommended in accordance with principles
> outlined in Part III and based on what Canadians told us. These
> include calls for reductions at the top, first, beginning with the MP
> Pension Plan.
> 
>     ------------------------------------------------------------------------
> 
> 
> The Reform Vision: A New and Better Canada with a Balanced Federal
> Budget
> 
> The confidence of Canadians in their economy and their federal
> government must be restored and invigorated. The first step toward
> this goal is to listen carefully to what the people say, to ask them
> what kind of country they want to live in, and then listen closely to
> their responses.
> 
> Over the past five years Canadians shared with the Reform Party their
> ideas on the principles which should guide this country into the
> twenty-first century. One of their most frequent responses is that
> Canada must become a place where "governments live within their
> means."
> 
> A federal government that lives within its means is also essential to
> maintaining the unity of the country. A federal government which runs
> chronic deficits and accumulates huge debts, which imposes taxes on
> taxes, and which presides over the deterioration of Canada's social
> programs cannot present a strong, vigorous case for the maintenance
> and strengthening of federalism.
> 
> The Reform Party believes that the federal budget can and should be
> balanced within the life of the 35th Parliament - that is, within the
> next three years.
> 
> The Taxpayers' Budget represents the Reform Party's Plan to achieve
> this objective.
> 
>     ------------------------------------------------------------------------
> 
> 
> Equality of Contribution
> 
> The Taxpayers' Budget is guided by the premise that Canadians are
> over-taxed and will not tolerate further tax increases. The federal
> budget, therefore, must be balanced by way of spending cuts alone.
> Although opponents of spending reduction frequently allege that
> Canadians will not support such spending reductions when they make
> personal impact, this is not what Canadians have been telling
> Reformers.
> 
> Indeed, Canadians are far ahead of politicians on this subject. The
> vast majority of Canadians understand that governments cannot long
> live beyond their means any more than individuals or businesses can.
> 
> They recognize that spending reductions are necessary in order to
> sustain a basic level of social services and to provide tax relief.
> 
> What Canadians insist upon, however, is that when spending cuts come,
> the burden of deficit reduction must be spread out across the
> population. No one - particularly those with special political or
> economic clout or privileges - should be exempt from reductions.
> Sacrifice should begin at the top, starting with a complete overhaul
> of the over-generous, MP-pension plan. Furthermore, the burden of cuts
> should fall least heavily on the most vulnerable members of our
> society.
> 
> In devising our alternative budget plan we gave special attention to
> implementing the principle of equality of contribution. This does not
> mean that we have not prioritized our spending. Areas that Canadians
> regard as investments in our future - especially health and education
> - have been reduced less than others.
> 
>     ------------------------------------------------------------------------
> 
> 
> EMPOWERMENT
> 
> Where the Reform Party's Plan for balancing the federal budget
> involves significant reductions in federal transfers to individuals,
> groups or provinces, we have brought into play another principle to
> offset any sacrifice. This is the promise of empowerment: the
> provision of better tools and increased opportunity for individuals,
> groups and provinces to improve their own social and economic
> security.
> 
>     ------------------------------------------------------------------------
> 
> 
> DECENTRALIZATION
> 
> Where government must be involved in social service delivery, Reform
> believes the resources and responsibility must be devolved to those
> levels of government closest to the people.
> 
> In principle, this would mean a major shift in responsibility from the
> federal to provincial and municipal governments with respect to social
> assistance, health care, child care, education / training and cultural
> development. This would also mean a greater respect for the existing
> constitutional division of powers between the federal and provincial
> governments.
> 
> This does not mean that there would be no role for the federal
> government in these areas, but the federal role would be focused on
> working with the provinces to establish and maintain national
> standards, using equalization as the principal mechanism of bringing
> those standards within the financial reach of every province.
> 
> The Reform Party proposes a number of empowerment measures to enable
> seniors, the unemployed and the poor to provide better for their own
> needs as the federal government takes a more modest approach to
> spending. The Taxpayers' Budget also proposes a significant transfer
> of tax points to the provinces to better enable them to discharge
> their responsibilities in the fields of education, health care and
> public assistance. Before judging the impact of any of the major
> proposed spending cuts, Canadians should consider the positive effects
> of the offsetting "empowerment measures" which are an integral part of
> our alternative budget.
> 
>     ------------------------------------------------------------------------
> 
> 
> The Reform Review of Government Operations and Non-Social Spending
> 
> Beginning early in the summer of 1994, Reform MPs reviewed all
> departments and recommended reductions to the departments in their
> critic areas of spending.
> 
> Departmental spending was evaluated according to five principles. This
> process yielded $10 billion dollars in program expenditure reductions.
> 
> The principles are:
> 
>   1. The people at the "top" of government must be the first to make
>      significant and visible sacrifices
>   2. Funding must be preserved for high priority items
>   3. Duplication and overlap between federal and provincial
>      governments must be reduced. Some federal programs should be
>      transferred to other levels of government or the private sector
>      or not offered at all [25]
>   4. The overhead costs of government should be reduced as part of a
>      comprehensive restraint program
>   5. A dollar in the hands of the taxpayer is more productive than in
>      the hands of government. The government should not subsidize
>      business, special interests or regional development.
> 
>     ------------------------------------------------------------------------
> 
> Summary of $10 Billion Savings in Government Operations
>     ------------------------------------------------------------------------
> 
> Table 1
>     ------------------------------------------------------------------------
> 
> 
> Reforming Canada's Social Security Structure
> 
> In developing options for social reform, the Reform Party and in
> particular our Human Resources Development critics Diane Ablonczy,
> Gary Breitkreuz and Dale Johnston, carried out extensive consultations
> with our own membership and with Canadians at large. We consulted and
> solicited responses to the question of what specific action should be
> taken at this time to save $15 billion while enhancing Canadians'
> personal security.
> 
> The Reform Party's social policy review has been guided by the five
> principles outlined in our Vision for a Better Social Security System
> for Canadians. These five principles are:
> 
>   1. Build on the Canadian tradition of self reliance, recognizing the
>      family as the primary caregiver in society
>   2. Empower communities and charitable organizations to play
>      increasing rather than diminished roles in social security
>   3. Make assistance available to those who are genuinely incapable of
>      providing for themselves
>   4. Where governments must be involved in social service delivery,
>      vest the resources and responsibility with those levels of
>      government closest to the people
>   5. Ensure that we can pay for security measures without borrowing
>      more money.
> 
> These principles are based on the assumption that when people are
> equipped with the tools to take care of their security (and their
> family's and community's), they will do it better than government.
> 
> In the long-term, these principles would lead to the fundamental shift
> in social policy we have outlined in our Vision for a Better Social
> Security System for Canadians. They also point the way for social
> policy adjustments which lead to the savings described below.
> 
> The redesign of the major social spending areas - the Old Age Security
> Program, Unemployment Insurance, Canada Assistance Plan (welfare),
> Established Programs Financing (health and education), and
> Equalization - will yield $15 billion in spending reductions.
> 
>     ------------------------------------------------------------------------
> 
> 
>      Old Age Security Program (does not include the Canada Pension
>      Plan)
> 
>      The Old Age Security Program has three components: a Guaranteed
>      Income Supplement (GIS) for low income seniors based on personal
>      income, a Spousal Allowance (SA) and Old Age Security (OAS) which
>      is universal but taxed back based on individual incomes.
> 
>      While the GIS is the primary vehicle to help seniors in need, a
>      significant portion of this program remains universal,
>      particularly OAS.[26] These programs overlap the Canada Pension
>      Plan and erode funds which might be used more effectively for
>      seniors who are truly dependent upon this income.
> 
>      The Reform Party would enact reforms to make certain that all
>      those in the low-income range would retain all current benefits.
>      All funds would be targeted according to need, especially to
>      those most in need. This need-based principle would not apply to
>      the Canada Pension Plan.
> 
>      What we propose is to enact a taxback on the current Old Age
>      Security based on a formula which considers an income threshold,
>      an age requirement, a definition of household and current tax
>      policy.
> 
>      The details of such a program requires further discussion with
>      Canadians and seniors, specifically. The question is how best to
>      allocate $17 billion in seniors' hands annually.
> 
>      SAVING: $3 BILLION
> 
>     ------------------------------------------------------------------------
> 
> 
>      Retirement
> 
>      Many seniors express frustration at mandatory retirement. Despite
>      the fact that seniors are healthier and living longer than ever
>      before, many of them are legally obliged to stop functioning as
>      productive members of the economy once they turn 65. To
>      complicate matters further, federally-run pension programs start
>      paying benefits at age sixty five. As a result, older Canadians
>      who might want to continue working find disincentives to do so.
> 
>      We suggest the following changes:
> 
>           Ottawa should repeal all federal legislation mandating
>           retirement at age 65, and should encourage the provinces to
>           do likewise.
> 
>      These reforms recognize that in our society, seniors can be - and
>      have the right to be - economically productive beyond the age of
>      65.
> 
>      Unemployment Insurance
> 
>      For renewal of Canada's Unemployment Insurance Program, the
>      Reform Party proposes both a near-term option and a longer-term
>      option.
> 
>      Near-Term
> 
>      In the near term the Reform Party would follow the prescriptions
>      proposed by the Macdonald and Forget Royal Commissions, by
>      leading social researchers, and by many Canadians. This would
>      involve returning the UI program to its proper role as an
>      insurance program for short-term unemployment.
> 
>      This means that non-insurance-related functions would be removed
>      from the program. The fund would not be available for
>      non-insurance uses: for example, as a slush fund for spend-thrift
>      ministers. In addition, regional differences in the benefit
>      structure including benefit periods, rates and periods of
>      eligibility would be eliminated.
> 
>      Second, the period of qualification for eligibility would be
>      lengthened and benefit payouts reduced. One possible scenario
>      would involve a benefit structure requiring two weeks of work for
>      one week of benefits. The minimum eligibility requirement could
>      be raised from the current sliding scale of 12-20 weeks of
>      employment to perhaps 26 of the previous 52 weeks. The maximum
>      period for collecting benefits could be shortened to perhaps 25
>      weeks instead of the 50 weeks currently allowed.
> 
>      Repeat users of UI would face declining benefit payouts for each
>      additional claim within a specified time period. For example, the
>      benefits could be lowered by five to ten percent for each claim
>      in five years exceeding three claims.
> 
>      Applied together, such reforms would result in some savings to
>      the unemployment insurance program over the near-term. To ensure
>      that savings from reform of UI translate into deficit
>      elimination, the Reform Party recommends the establishment of a
>      permanent reserve fund for UI. Until the budget was balanced,
>      funds from this reserve would be applied against the deficit.
>      After the budget was balanced, this fund would remain to balance
>      revenue and expenditure fluctuations under UI throughout the
>      economic cycle. This would lessen premium increases during
>      economic slowdowns and premium decreases during economic
>      expansion (both counter-cyclical). Any additional savings from
>      this restructuring of UI would be passed on to employees and
>      employers in the form of a reduction.
> 
>      The Reform Party would also investigate the possibility of
>      equalizing UI premiums for employees and employers, rather than
>      making employers bear a heavier payroll burden.
> 
>      SAVING: $3.4 BILLION
> 
>     ------------------------------------------------------------------------
> 
> 
>      Long-Term
> 
>      Over the long-term, the Reform Party is investigating a number of
>      options for renewal of Canada's UI system. Among the most
>      promising is to replace it with a Registered Personal Security
>      Plan (RPSP). UI premiums would be redirected into a personal
>      security fund similar to RRSPs which could then be withdrawn in
>      periods of unemployment. Funds in the RPSP would be rolled into
>      retirement funds when the holder retired. A major advantage of
>      such a system is that funds would remain with individual workers
>      and for their own benefit and would not disappear into government
>      operations.
> 
>      This, however, would not result in any additional budgetary
>      saving to the federal government. All funds currently spent on UI
>      would effectively be returned to individuals and would reside in
>      private and personal savings plans. This would increase the funds
>      available for investment, and personalize security for
>      unemployment.
> 
>     ------------------------------------------------------------------------
> 
> 
>      Department of Indian Affairs and Northern Development
> 
>      Application of the principle of decentralization to the
>      Department of Indian and Northern Affairs requires the gradual
>      transfer over time of the powers of the department to aboriginal
>      agencies, and local, aboriginal government. Changes to the many
>      native programs, however, would take time. As well, any such
>      changes would only be made within the context of financial
>      responsibility and accountability.
> 
>      The Reform Party is committed to giving natives more direct say
>      over where monies for programs affecting them are spent. There
>      are a number of options for natives to explore, all of which take
>      the federal government out of the administration and design of
>      native programs, and put more control in the hands of individual
>      natives and native bands. The Reform Party would continue to
>      consult natives and Canadians as to the most fair and equitable
>      method of reforming native programs in Canada.
> 
>      SAVING: $0.8 BILLION
> 
>     ------------------------------------------------------------------------
>