Dear Friends,

Budget 2000 -- the first of the 21st Century -- is the next step in our government's balanced and comprehensive plan to make Canada the place to be in the 21st Century. It was with great pleasure that I was given the opportunity to work very closely with Finance Minister Paul Martin on Budget 2000 in my role as his Parliamentary Secretary.

After the sacrifices that all Canadians made during the years of deficit reduction and cutbacks, in this year's budget our government was able to translate Canada's better financial situation into a better quality of life for all Canadians.

Budget 2000 moves us forward with a balanced approach which combines:

• Focused and targeted investments in health care, knowledge and innovation, in families with children and in the environment;

• A five-year tax reduction plan; and

• An unshakeable commitment to sound fiscal management and debt repayment.

I invite you to read more about Budget 2000 in the following pages. If you have any comments or questions about Budget 2000, or about any issue of a federal nature, please do not hesitate to contact me. Information on Budget 2000 is also available on my website, www.roycullen.com

Yours sincerely,


Roy Cullen


                                                           Budget 2000

Better Finances, Better Lives

Thanks to the efforts of all of us, Canada is in an era of budget surpluses. All Canadians - especially families with children - in all regions of the country - will benefit from a budget that takes us into the future with an education system second to none, secure social programs, a Five-Year Tax Reduction Plan, and a strong and innovative research community.

Health Care and Post-secondary education

Budget 2000 will boost funding for post-secondary education and health care by $2.5 billion - the fourth consecutive increase to the Canada Health and Social Transfer (CHST). Combined with last year's historic investment, this budget will bring the federal government's cash contribution to the CHST to $15.5 billion - an increase of almost 25 per cent over two years. Total federal support to the provinces - including the tax transfer - will reach an all time high of close to $31 billion next year. Health care, education and other programs in less prosperous provinces will also benefit from a $500 million boost in Equalization transfers.

Tax Reduction: A Five-Year Plan

Budget 2000 puts forward a Five-Year Tax Reduction Plan that benefits all Canadians, and in particular, families with children. Our plan is anchored by two fundamental structural changes. First, we are restoring full indexation of the personal income tax system and, second - for the first time in 12 years - a core tax rate is being lowered. The middle rate will fall from 26 to 23 per cent.

Canadian businesses will also benefit from tax cuts that will encourage innovation and investment and put all sectors of our economy on an internationally competitive footing. As a first step, we are lowering the tax rate paid by higher-taxed industries - mostly in the high-tech services sectors - from 28 to 21 per cent.

Overall, Budget 2000 provides at least $58 billion in cumulative tax relief to Canadians over the next five years. We are cutting personal income taxes by an average of at least 15 per cent. Many will enjoy even bigger cuts. Middle and low-income Canadians, for example, will see their taxes fall by at least 18 per cent, and families with children will see their taxes, on average, fall by at least 21 per cent.

Skills, Knowledge, and Research

The knowledge-based economy is changing the way we live, communicate and do business. The Canada Foundation for Innovation (CFI), created in 1997 to help post-secondary institutions, research hospitals and not-for-profit organizations modernize their laboratories, equipment and technologies, will receive $900 million in this budget. This will bring the federal government's investment to $1.9 billion.

Budget 2000 makes good on our promise in the Speech from the Throne to create the 21st Century Chairs for Research Excellence. We will provide $900 million in funding over five years for 2,000 new research chairs. To make higher learning more accessible to more Canadians, we are also increasing the tax exemption on scholarships and bursaries from its current level of $500 to $3,000.

Infrastructure

The capacity to move people and goods safely and efficiently is key to an innovative and productive economy. The federal government is committed to expanding economic development in communities right across the country by strengthening the basic physical infrastructure of both rural and urban Canada. We are contributing $450 million for the next two years, and $550 million in each of the following four years, to strengthen the infrastructure of cities and rural areas, including affordable housing, in cooperation with provincial and municipal governments, and where applicable, the private sector.

This budget is about helping Canadians build a future of opportunity for themselves and their children. Our economy is healthy and our plan will open doors to a greater prosperity and an exciting 21st century.

A Five-Year Tax Reduction Plan for all Canadians

With the deficit eliminated and substantial surpluses for the first time in three decades, the time is right for more tax cuts- - cuts that are responsible, fair and permanent. Our Five-Year Tax Reduction Plan delivers.

Budget 2000 will make the most important structural changes to the federal tax system in more than a decade.

First, we are restoring full indexation of the personal income tax system - eliminating "bracket creep" and, second - for the first time in 12 years - a core tax rate is being lowered. The middle rate will fall from 26 to 23 per cent, starting with a two point reduction (to 24 per cent) in July 2000 - cutting taxes for some 9 million Canadians. Tax Relief for Low and Middle-Income Canadians

All Canadians - and low- and middle-income Canadians in particular - will see substantial tax relief over the next five years. While our Plan will reduce personal income taxes by an average of at least 15 per cent for all Canadians, low- and middle-income Canadians will see cuts of at least 18 per cent. Families with children will benefit from tax cuts averaging at least 21 per cent.

Innovation and Global Competitiveness

Canadian businesses will also benefit from tax cuts that will encourage innovation and investment, and put all sectors of our economy on an internationally competitive footing. As a first step, we are lowering the tax rate paid by higher-taxed industries - mostly in the high-tech, services sectors - from 28 to 21 per cent by 2004. Also, small businesses with income between $200,000 and $300,000 will benefit from the 21 per cent corporate tax rate beginning January 1, 2001.

For Families, for Children

Families with children in all regions of the country will benefit from a budget that takes us into the future with an education system second to none, secure social programs, and a Five-Year Tax Reduction Plan.

A Boost to the Canada Child Tax Benefit

Families with children will see an increase in the Canada Child Tax Benefit (CCTB) thanks to a boost of $2.5 billion. This means that families now receiving the CCTB will receive more generous benefits, and more middle-income families will qualify for the benefit.

Our objective is to raise the maximum benefit to $2,400 for a family's first child by the year 2004. The benefit for a second child will be raised to $2,200. This means that low-income families will receive $6 billion, and modest and middle-income families $3 billion, of the yearly total of over $9 billion by 2004. These benefits - as well as personal income taxes - will also be fully indexed so that family incomes won't be eroded by inflation.

In all, changes to the CCTB will benefit nine out of ten Canadian children, or about 3.8 million families.

Cutting Taxes for Families

Under Budget 2000, families with children will see their personal income taxes fall by an average of at least 21 per cent, compared to other tax payers who will see their personal income taxes fall by an average of at least 15 per cent.

For example, a one-earner family of four with an income of $40,000 will pay at least $1,623 less a year in net federal income taxes by the year 2004 - a reduction of 48 per cent! A typical two-earner family of four with an income of $60,000 will pay at least $1,546 less a year in net federal income taxes by the year 2004 - a reduction of 27 per cent.

Parental Benefits

As promised in the Speech from the Throne, we are also doubling the duration of maternity and parental leave as part of the Employment Insurance Program. As of December 31, 2000, parents can stay at home as long as a year with their newborn or newly adopted child. We are also making it easier to qualify for maternity and parental benefits by lowering to 600 from 700 the number of hours of work required to be eligible for benefits. These changes, and others, will benefit some 150,000 families a year at an estimated annual cost of $900 million.

We are also committed to working with federal and territorial governments to reach an agreement on a national action plan, by December 2000, to support early childhood development.

Making Canada's Economy More Innovative

Innovation is the driving force of the new economy. Budget 2000 builds on previous initiatives to encourage knowledge, innovation, research and development to ensure Canada and Canadians are positioned to succeed.

Research and Development

Over the past six years, our Liberal government has taken important steps to ensure that all Canadians are ready - both to benefit from, and contribute to - innovation. We're well on our way today, thanks to initiatives like the Canadian Opportunities Strategy and the Canada Foundation for Innovation (CFI).

Budget 2000 makes important investments in these and other initiatives. It increases funding for the CFI by another $900 million so it can continue its work into 2005 - bringing total funding for the CFI to $1.9 billion. Budget 2000 also provides $900 million over five years to establish and sustain 2,000 21st Century Chairs for Research Excellence in Canadian universities by 2004-05. To help students, Budget 2000 increases the tax exemption on income from scholarships, fellowships and bursaries from $500 to $3,000. Budget 2000 also advances the study of genes and biotechnology - focusing on how they relate to health - with a $160 million investment in the new Genome Canada project.

Environmental Technologies and Sustainable Practices

Clean air and water, and healthy habitats are essential to a higher quality of life. Understanding that our economy and our environment are closely linked is also part of any comprehensive innovation strategy.

Between 1999-2000 and 2002-03, Budget 2000 commits some $700 million in funding towards developing new technologies and tools that will meet our environmental challenges. We will create a new Sustainable Development Technology fund to help companies develop new technologies and bring them to market. We will also encourage the development of a network of research institutes through the creation of the Canadian Foundation for Climate and Atmospheric Sciences. The Green Municipal Enabling Fund will also help communities assess where their environmental needs are the greatest.

For more information on Budget 2000, please visit the www.roycullen.com and follow the links.