Department of Finance Canada
www.fin.gc.ca
Common menu bar links
Archived
Executive Summary
By virtually every measure, over the past decade the Canadian economy has been one of the most successful in the world. Since 1997 our country has posted the longest string of federal budget surpluses in our history and our records of growth in living standards, job creation and debt reduction are unmatched by any other major country.
With more and better jobs, rising incomes and lower interest rates, Canadians have been able to invest in our families, skills, homes and businesses. Over the same period, the federal government has reinvested in our social foundations including health care, child care and education. These combined investments have improved our standard of living and secured our common future.
This success was no accident. In 1994 the Government set out a bold economic agenda. With the support and sacrifice of Canadians, the Government consistently implemented that plan over the past decade. It has worked, delivering huge social and economic dividends to Canadians.
To build on that progress and to maintain a quality of life second to none, our country must now focus on the opportunities and challenges that will shape the world over the next two decades, in particular:
- the rapid growth of new economic giants such as China and India, as well as the widespread adoption of new ways of producing and delivering goods and services around the world; and
- the challenge posed to our future standard of living as the baby boom generation retires and the relative number of working-age Canadians begins to shrink.
The time has come for a new economic plan to update priorities, set core policy directions and guide future budget decisions.
A New Plan
At its core the new Plan is about Canadians—our quality of life, the kind of communities in which we live, the kind of retirement we can expect to enjoy, and the kind of opportunities our children will have in the coming decades. This Plan will foster our shared goals of a sustainable environment, safe and creative communities, and high-quality public health care.
The new Plan anticipates the profound reordering of the global economy and outlines Canada’s response.
It recognizes that future increases in our standard of living will depend in large measure on further improvements in the productivity of our economy.
The Plan recognizes that our economic growth must be sustainable, guided by an ongoing commitment to environmental stewardship.
It acknowledges that the Government of Canada alone cannot achieve the goals of greater jobs, growth and sustainable prosperity, but rather that all orders of government, private firms, labour unions, non-profit agencies and individual Canadians will play important roles in building the Canada we want and our children deserve.
Above all, the new Plan responds to the challenge of building a successful and sustainable 21st century economy by investing in people, promoting innovation and facilitating the freer flow of people, goods, services and capital within our borders and across our borders.
It proposes action on four fronts:
- Creating opportunities for all Canadians.
- Advancing an innovative economy.
- Positioning Canada at the centre of global commerce and networks.
- Building the right investment environment.
Creating Opportunities for All Canadians
In a world of accelerating technological change, there is a greater premium than ever on the skills, knowledge and innovative spirit of Canadians. Every region of our country can benefit from the new globally networked economy and its rapidly growing consumer class. To realize this potential and for fundamental reasons of fairness, the single most important investments we as a country can make are those that ensure all Canadians have the opportunity to acquire the skills, training and education they need to succeed in the 21st century workplace.
The Plan focuses on the following fields of action:
Early learning
: Early learning and child care to help ensure children arrive at school ready to learn is the foundation of a world-class workforce. The Government has already taken important steps including a series of early learning and childhood development agreements with provinces. It will do more, and this Plan reaffirms its long-term commitment.Post-secondary education
: Canadians are among the most highly educated people in the world. This not only enriches our lives, but also gives us a competitive advantage in developing and applying new ideas and processes. Despite this success, there remains room for further improvement. For example, we have relatively fewer university graduates with science and business degrees or with combinations of both skill sets. As a nation, we have underinvested in graduate education. Most fundamentally, we must remain vigilant to ensure that barriers to post-secondary education are minimized.Skilled work
: Despite our high rates of post-secondary education, a relatively large number of Canadian workers have low skill levels. We also appear to have a lower rate of workplace training investment by employers than countries like the United States. Business, labour and all levels of government must work together to significantly improve this performance. The Government will continue to work with Canadians to improve their literacy skills, which are necessary to participate in and to benefit from the knowledge economy. Otherwise, Canadian workers could eventually find themselves at a disadvantage in an increasingly competitive global economy.Inclusiveness
: Improving opportunities to participate in the labour force can help compensate for our demographic challenge. Certain groups—older workers, persons with disabilities and recent immigrants—currently experience lower employment rates than our overall population. The Plan sets out initiatives to help close these gaps and to create opportunities for all Canadians.Aboriginal opportunities
: The Government has given particular priority to closing the gap in living standards and life choices between Aboriginal and non-Aboriginal Canadians. The first ever First Ministers’ Meeting (FMM) with Aboriginal leaders and devoted to Aboriginal issues provides an important opportunity to transform approaches to health, housing, economic development and, above all, education. It can also launch a new relationship built on mutual respect, recognition of rights, and a commitment to the principle of good governance.|
To help create better opportunities for Canadians, the Government of Canada will work to:
Enhance Canada’s World-Class Workforce
Meet the Demographic Challenge
Create Aboriginal Opportunities
Improve Labour Mobility and Labour Market Efficiency
|
Advancing an Innovative Economy
A successful 21st century economy creates and quickly adopts leading-edge technology. An innovative economy rests on the foundation of knowledge created in its universities, the level of excellence it attains in new discoveries and its success in training people with advanced skills. Our country must constantly improve its capacity to generate the knowledge, innovation and research that lead to new products, services and methods of doing business in order to provide working Canadians with better jobs and incomes. Sustained, long-term economic growth also requires a comprehensive and innovative approach to environmental sustainability.
The Plan focuses on the following fields of action:
University-based research
: Primary and applied research by universities—including participating in international research projects—are a key source of the new ideas and innovation our country needs. Research-intensive universities also train highly skilled graduates that businesses increasingly need to develop and adopt new technologies. Canadians can be justifiably proud of the progress we have made in this area over the past decade. Canada now leads the Group of Seven (G7) industrial nations in university-based research and development (R&D), an advantage our country must maintain through further investment.Private sector R&D and technology adoption
: There are signs that the improved policy environment since 1994 has encouraged some sectors of the economy to increase their R&D investments. However, while some of Canada’s industries have a strong R&D record, overall, our private sector R&D investment is still relatively low by international standards, especially vis-à-vis the U.S.Commercializing new technologies
: The ability to transform innovative ideas into new products and processes is an important source of economic growth. Canada can further capitalize on our leadership in university R&D. Although Canadian universities create about the same number of licences per research dollar as U.S. schools, they tend to receive less income for this intellectual property. In addition, Canadian companies report that new products and services make up a lower share of their sales than firms abroad.|
To help build a more innovative economy, the Government of Canada will work to:
Retain Leadership in University-Based Research
Strengthen International Research Networks
Encourage Private Sector R&D and Technology Adoption
Accelerate the Commercialization of New Technologies
|
Positioning Canada at the Centre
of Global Commerce and Networks
Canada is a trading nation, with exports representing 40 per cent of our economy. That’s more than any other G7 nation. But the global environment is continuing to change, with giants such as India and China becoming not only more important markets for our resources and goods, but also competitors in global supply chains. Canada must pursue an aggressive trade and investment strategy to help our companies—especially small and medium-sized firms—take greater advantage than ever of opportunities in global markets and position themselves in the high-end, value-added component of global supply chains.
The Plan focuses on the following fields of action:
Supporting open markets
: Countries that are open to trade and investment are usually more innovative, productive and competitive than those that are not and they generally enjoy better economic growth, job creation and incomes. That is why Canada has been a long-time proponent of rules-based international trade in forums such as the World Trade Organization and through agreements such as the North American Free Trade Agreement. Among the nations of the world Canada has always been, and will continue to be, an ardent advocate for both free and fair trade.Foreign direct investment
: Canada is well on its way to becoming a net foreign investor for the first time in our history, making the protection of Canadian investors’ interests in foreign markets more important than ever. At the same time, foreign investment in Canada will remain an important source of new technology, ideas and jobs.Global business networks
: Emerging economic giants offer dramatic market opportunities for Canadian firms from natural resources to environmental and other advanced technologies. To seize this potential, our firms, particularly small and medium-sized ones, will need export start-up help from government, including information on local business conditions, licensing, subcontracting and regulation.World-class gateways
: Countries are linked to their trading partners by "gateways" where land, marine and air transportation networks converge and, supported by advanced communications, connect centres of economic activity. The Windsor-Detroit corridor and key Pacific Coast transport facilities, among others, are essential to our future ability to expand trade with major markets. Another form of gateway—broadband communications networks—will be important in connecting all Canadians to new information and business opportunities anywhere in the world.|
To help position our country at the centre of global commerce and networks, the Government of Canada will work to:
Open Canada to the World
Position Canada in Global Business Networks
Create World-Class Gateways
|
Building the Right Investment Environment
We live in a world where people and businesses are increasingly able to move to where they can obtain the greatest advantage. In this environment, the best way for government to support jobs, growth and prosperity is to create the right conditions for private investment and initiative.
The Plan focuses on the following fields of action:
Maintaining our fiscal advantage
: Canada’s dramatic fiscal turnaround—from 27 years of yearly federal deficits to 8 consecutive years of surplus—is no abstract achievement. It has helped hold our interest rates down to near historical lows, which, in turn, has led to increased private investment, greater economic activity and record job creation. With new challenges on the horizon, including increased spending pressures associated with an aging population, it is critical that the Government maintain its strong focus on fiscal discipline and debt reduction so that Canada has the flexibility to meet future needs.Improving the competitiveness of our tax system
: The tax system can have a direct and determining impact on incentives to work, save and invest. Canada needs to attract and retain the most highly skilled workers and to encourage all Canadians to take advantage of opportunities in the workplace to better their lives and those of their families. We must also encourage savings so that Canadians can aspire to home ownership, a comfortable retirement and higher education. Finally, in a global economy where capital is highly mobile, the tax system needs to be competitive to encourage the investments that create new economic activity, well-paying jobs and more productive and efficient business.Promoting efficient regulations and financial markets
: Regulations are essential to protect the health and safety of Canadians, support a clean environment and underpin a well-functioning market system that promotes saving and investment. They must also be constantly reviewed to ensure they are still serving the best interests of Canadians.Strengthening Canada’s economic union
: The free movement of people, goods, services and capital across our country is vital to its economic strength and competitiveness. While progress has been made, there remain too many artificial barriers within our own borders to the mobility of our citizens and the movement of goods and services. More work with the provinces and territories is required on a range of issues including the recognition of professional and trade qualifications and the more efficient regulation of securities.Driving greater productivity in government
: Getting government right is an important part of building the right environment for investment. The Government must constantly strive to make its programs and services as efficient and cost-effective as possible. It must also maintain the highest possible ethical standards and ensure that its operations are carried out in ways that enable Canadians to clearly see and assess what our government is doing and why.Promoting energy efficiency and environmental sustainability
: A sustainable economy depends on a sound environment. The Government of Canada has made substantial investments in support of a healthy environment and a competitive economy. Further measures consistent with the framework outlined in Budget 2005 will be implemented to promote energy efficiency, spur technological innovation and facilitate adaptation. Such measures will increase the efficiency, sustainability and international competitiveness of the Canadian economy.|
To help create the right environment for investment, the Government of Canada will work to:
Maintain Canada’s Macroeconomic Advantage
Improve the Competitiveness of Our Tax System
Promote Regulatory and Financial Market Efficiency
Strengthen Canada’s Economic Union
Improve Productivity in Government
Promote Energy Efficiency and Environmental Sustainability
|
The Way Forward
This Plan sets out a medium-term economic framework for action. There is no single initiative that can guarantee sustainable prosperity; it cannot be delivered in a single year or a single budget. Instead, just as with slaying the deficit, success will require a sustained effort, with an unremitting focus on results. As with the deficit, Canadians can be confident of success.
The federal government cannot do it alone. Success will require partnerships with the provinces, labour and business. The federal government is committed to working with the provinces across a wide range of initiatives that will affect Canadian prosperity.
Ultimately, Canadians will determine our success. And there are great reasons to be confident. Collectively, we have turned this country around since 1993 from laggard to leader among the major economies. We have unique strengths including our diverse and highly skilled population, openness to the world, immense natural resource potential and robust financial health. Most importantly, we retain the same adventurous spirit that built this great country and that can make this global opportunity our destiny.
The reward is clear: a quality of life second to none.
- Table of Contents - Next -
