How Ottawa Spends, 1998-1999: Balancing Act: the Post-deficit Mandate

This is the nineteenth edition of How Ottawa Spends, a series designed to analyze federal government policy and administration, and to contribute to informed national debate on key policy developments and trends. This edition is unique in that it is the first since the inception of the series to examine a federal government that has balanced its books, is reducing its debt, and is talking seriously about increased spending and tax cuts. The February 24, 1998 federal budget was a "balancing act" in every sense of the term. However, this fiscal balancing act actually is a reflection of a deeper challenge facing the Liberals: how to shape an agenda for the second mandate won in June 1997. The Liberals' first mandate, whatever its flaws, was driven by several clear ideas, primarily deficit reduction. The second mandate was won with the slimmest of majorities, and the new government seemed to drift through most of the summer and fall of 1997. The February 1998 budget was a highlight, but it remains to be seen if the federal government really has the will to tackle important policy challenges, from Quebec separatism to economic productivity to child care.