Canada's Budget Brings Home NATO Troops

CANADA is pulling its forces out of Europe as part of a large spending and tax cut announced this week in the nation's budget. Canadian forces - a small part of NATO - have been based in Germany since the end of World War II.

The defense cuts alone will produce savings of $2.2 billion (Canadian; US$1.9 billion) over the next five years. Canada's annual defense budget is presently $12.8 billion.

"The Soviet Union has ceased to exist and the conventional military threat in Europe has all but disappeared," Minister of Finance Donald Mazankowski told the House of Commons. Canada will close two military bases in Germany: The air base in Baden will be shut in 1993 and the Army base in Lahr will be abandoned by 1994. Canada will also drop plans to leave an emergency force of 1,100 troops in Europe. That brigade, along with two squadrons of CF-18 Hornets, will be stationed in Canada "ready to answer an y call."

NATO Secretary-General Manfred Worner said he regretted Canada's decision. The United States has said it will still have 150,000 troops in Europe by 1995 - less than half the number there before the collapse of the Berlin Wall.

Other defense cuts include the cancellation of a new fighter base in Quebec and the closing of a communications facility in Bermuda. Canada's armed forces, now 84,000 strong, will fall to 75,000 by 1996.

The budget is being called conservative even by critics who usually say the Progressive Conservative government hasn't gone far enough since it came to power in September of 1984.

Other budget changes include:

* The 5 percent personal income tax surtax falls to 4 percent in July of this year and to 3 percent next January.

* For one year, Canadians may withdraw $20,000 from Registered Retirement Savings Plans to be used as a down payment on a house. The homeowner would have to pay the "loan" back to themselves in equal annual installments over a 15 year period.

* The abolition of the universal "baby bonus" paid to mothers of all children under 18. Poorer people will get as much as $144 a month per child but richer parents will get nothing. This may be a trial balloon to test the "universality" issue under which social programs are paid to all, no matter what their income.

* Canada's 38 cabinet ministers and Prime Minister Brian Mulroney will see their paychecks cut 5 percent. The prime minister earns $159,700 a year. There will be no pay cuts for ordinary members of Parliament, whose pay was frozen a year ago.

* There will be no more first-class travel by senators, members of Parliament, and senior civil servants.

* Ottawa will shut 21 government agencies, including the Economic Council of Canada and the Science Council. Plans for other agencies such as the Canadian Heritage Language Institute will be put on hold and still other government-owned operations may be privatized, including the profitable Royal Canadian Mint.

ALMOST all provincial politicians disapproved of the federal budget. "This budget says zero to farming," said Roy Romanow, premier of Saskatchewan.

"If the federal government had come forward with a capital works program on infrastructure, perhaps sharing with the province, that would have taken the pressures off us," said Ontario Treasurer Floyd Laughren.

Michael Walker, head of the Fraser Institute, a free-market think tank based in Vancouver, says the fiscally conservative budget is partially a move by the Progressive Conservatives to do an end run around the Reform Party of Canada, a populist party based in western Canada. "A lot of this budget was written in the back-rooms of the Reform Party," Mr. Walker comments. Examples are the reductions of cabinet salaries and social programs, such as the baby bonus.

Canada's budget deficit is projected to be $31.4 billion in the 1991-92 fiscal year; $27.5 billion in 1992-93 and $22.5 billion in 1993-94.

The government is counting on a high growth rate - The Organization of Economic Cooperation and Development has said Canada will have one of the highest growth rates in the industrial world next year - and lower interest rates to cushion the cost of financing the deficit.

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