Feb. 19, 2004. 08:46 PM
Goodale details extra spending
New cash for cities also promised


OTTAWA — Almost $1 billion for emergency aid, $2 million for new toilets and $5,000 for special combat socks were among billions of dollars in extra spending announced by the federal government Thursday.

Ottawa's supplementary estimates — spending outside the regular budget — came just as Finance Minister Ralph Goodale promised mayors from across the country at least $7 billion in new funding for Canada's cities.

However, the finance minister may be less generous Friday when he sits down with his provincial counterparts to hammer out a new funding deal.

Goodale is struggling to keep the books in balance while paying down debt, boosting health funding and meeting commitments made earlier this month by Prime Minister Paul Martin in his maiden throne speech.

A key promise there was a $7 billion, 10-year GST rebate to municipal governments which will cost Ottawa about $580 million this year alone.

Ottawa also intends to share a portion of the federal gas tax with cities, although working that out will be complicated and details won't be ready for his upcoming budget, Goodale said after meeting with mayors.

That's expected in early March.

"The next thing that we will want to tackle is the gas tax and the cities are anxious for ongoing signals that the government of Canada is serious and that there is momentum building here," he said.

However, provincial governments, which are responsible for cities, have balked at Ottawa dealing directly with the cities and a showdown over the gas tax issue looms.

Talks will also be heated Friday over a new equalization payment agreement to replace the one that expires next month and Goodale has already hinted he expects to save money this year.

Under the current equalization plan, worth roughly $10 billion this fiscal year, annual payments are made to the provinces by Ottawa to provide roughly equal services across the country.

Five provinces, including Ontario, provide the base for the complex formula and since Canada's most populous province saw a sluggish economy last year, everyone's payments will likely be reduced.

But with several provinces facing budget deficits this year, they're pressing for a new method of calculating equalization payments.

"We need an approach that lets everybody come out ahead," Manitoba Finance Minister Greg Selinger said Thursday evening.

Alberta's Pat Nelson said she'll be pressing for a meeting this spring involving health and finance ministers on sustainable funding for medicare.

"Health care costs are spiralling out of control and they have to be brought into some sort of a structure that is sustainable," said Nelson.

"I'm hopeful that that'll be some of the dialogue here."

Earlier in the day, Alberta Premier Ralph Klein warned that his Tory government was prepared to break the Canada Health Act by charging for some medical services to keep enough money in the system for basic health care.

Federal money is fairly tight, in part because of a series of economic crises that hammered the Canadian economy — and Ottawa's treasury — very hard in 2003.

To help cope with the major SARS crisis, which hit Toronto especially hard, the federal government spent $375.4 million outside its regular budget, according to today's estimates.

An almost identical amount — $375.2 million — was spent to ease the damage to the Canadian cattle industry after a single case of mad cow was found in an Alberta herd last May.

Another $1.2 billion was set aside for implementation of a new farm income management plan while an extra $9 million was spent defending Canada's softwood lumber industry in a long-running trade dispute with the United States.

Estimates also included:

— $240,000 for collection and preservation of the personal and political papers of former Prime Minister Jean Chr้tien.

— $2 million for renovations to washrooms in Ottawa's Lester B. Pearson Building, which houses the Foreign Affairs department.

— $5,000 for a special "combat sock system" for the Defence department.

— $9.5 million for new financial market enforcement teams to root out white-collar crime.

— $5.2 million for intelligence-gathering and prosecution of organized crime.

— $25 million in extra spending related to the Canadian Forces mission in Afghanistan.

— $17.5 million to compensate RCMP officers for injuries sustained in the line of duty.

"There are no surprises in these supplementaries," said Goodale.

By far, the biggest item in the additional spending estimates was almost $5 billion in extra transfer payments to provincial governments.

About $2.5 billion of that was earmarked for health care, arising from last year's health care deal between Chr้tien and the premiers.

Another $1.5 billion was part of a diagnostic and health equipment trust fund.

However, these estimates don't include the $2 billion in new health care money promised to the provinces a few weeks ago by the prime minister.

That will be funded from the surplus left when the current fiscal year's books are closed after March 31, Goodale said.

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