November 26, 2007
Check against delivery
I am delighted to be here today to share some thoughts about the Canadian economy: our economic success, our unbounded potential and our challenges moving forward.
We live in a global economy with fierce competition and growing uncertainty. If we are to stay ahead of the curve we must be bold and innovative. We must create an environment that rewards hard work, encourages growth and improves our quality of life.
Our government is leading the way:
1. We are making broad-based, long-term tax reductions;
2. We are reducing record amounts of debt; and
3. We are spending responsibly and efficiently.
At the same time, we are making the largest investment in infrastructure in modern history-$33 billion over seven years. This is new money to build roads and transit lanes, rehabilitate bridges and water systems, and to upgrade our international gateways, ports and airports.
If we are going to make the most of this investment, we need to rethink the traditional government approach to infrastructure renewal. We must look beyond just thinking outside the box, and look to reinventing the box.
Building modern infrastructure in a more efficient and cost-effective way is a goal I believe we all share. This conference brings together people who are dedicated to innovative solutions and adopting best practices.
I'm sure you would all agree that governments can no longer afford to finance, build and maintain every single infrastructure project in the country.
As the Canada West Foundation pointed out, "There is broad agreement that a large infrastructure deficit exists, that it is growing, and that traditional approaches to infrastructure financing, funding and delivery are incapable of addressing it."
Our government is doing its part by providing long-term predictable infrastructure funding. But clearly there is, in many instances, a better way-the use of public-private partnerships.
The Canadian Council for Public-Private Partnerships defines a P3 as:
"A cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards."
Our government believes the private sector can and must play a bigger role. We have seen P3s being used on a limited scale here in Canada, but it's time to open the door to greater possibilities.
It's time to tap into the wealth of experience, knowledge and ready capital accumulated by those in the private sector-those who have designed, constructed and financed some of the most complex and successful infrastructure projects around the globe.
As you well know, P3s have been a success in other jurisdictions internationally including the United States, the UK, Australia and Chile.
This approach will allow us to modernize our infrastructure much quicker and at lower risk and lower cost to the taxpayer. This, our government believes, will lead to a stronger, more dynamic economy.
Currently, we are working from a position of strength.
Canada has a great story to tell and believe me, I tell it whenever I travel internationally-the G7, G8, the IMF-World Bank, APEC and a week ago at the G20 in South Africa:
1. We are experiencing the second-longest period of economic expansion in Canadian history;
2. Our budget is not only balanced, we are one of the few countries enjoying surpluses;
3. Business investment is expanding for the 12th consecutive year;
4. Our unemployment rate is the lowest in 33 years, with more Canadians working than ever before. In fact, since our government took office, employment has increased by more than 655,000 jobs, with employment up in every province;
5. Canada is one of the few countries in the world with sound public pension plans; and
6. We are on the best fiscal footing of the major western industrialized countries. In fact, we're the only member of the G7 with both ongoing budget surpluses and a falling debt burden.
As Prime Minister Stephen Harper is fond of saying, Canada is an emerging energy superpower:
We have the second-largest petroleum reserves on the planet next to Saudi Arabia;
1. We are the largest exporter of oil to the U.S.;
2. We rank third in global natural gas production;
3. We are the world's second-largest producer of clean hydroelectric power;
4. We are the world's largest producer of potash and uranium;
5. We are the second-largest producer of nickel;
6. We are the third-largest producer of aluminium and diamonds; and
7. We are the largest exporter of forest products.
While Canada is certainly on a solid financial footing, we are mindful of the various challenges that confront us-global pressures and domestic challenges that vary from region to region and sector to sector:
1. We have seen a sharp appreciation of the Canadian dollar, and that has left a variety of sectors struggling, such as the auto sector, agriculture, tourism and forestry;
2. We are seeing a significant decline in the U.S. housing market and the negative economic effects that can have;
3. We are seeing countries around the world trying to cope with the ongoing credit market turbulence in an attempt to maintain well-functioning capital markets and mitigate the impact on their economies;
4. We are seeing increasing economic competition from abroad, especially from emerging economies like China, Brazil and India;
5. We are seeing an aging population and a shortage of skilled workers; and
6. We are seeing aging infrastructure and increased gridlock.
While these challenges are significant, our government has a long-term economic plan entitled Advantage Canada. It focuses on creating five key advantages:
1. An Infrastructure Advantage-Building modern, world-class infrastructure that promotes economic growth, a clean environment and international competitiveness;
2. A Knowledge Advantage-Creating the best-educated, most-skilled and most flexible workforce in the world;
3. An Entrepreneurial Advantage-Reducing unnecessary regulation and red tape by 20 per cent and increasing competition in the Canadian marketplace;
4. A Fiscal Advantage-Eliminating Canada's total government net debt in less than a generation; and
5. A Tax Advantage-Reducing taxes for all Canadians and creating one of the most competitive and attractive tax environments on the planet.
Since Advantage Canada was released a year ago, we have gone well down the path towards achieving these advantages.
On the knowledge side, we have made significant investments in labour market training, in the Canada Foundation for Innovation and in developing Centres of Excellence in Commercialization and Research, such as the Li Ka Shing Knowledge Institute at St. Michael's Hospital and the Heart and Stroke Foundation Centre for Stroke Recovery affiliated with the University of Toronto.
On the fiscal side, we are reducing the national debt by more than $37 billion-the equivalent of $1,570 for every man, woman and child in Canada.
On the tax side, we are lowering taxes for everybody-employees, businesses, investors and consumers. With the $60 billion of cuts announced in our fall Economic Statement, the total actions taken by this government to date are approaching $200 billion in personal and corporate tax cuts over this and the next five years.
Key to our objectives for a strong business environment is the reduction of the federal corporate income tax rate from 22 per cent this year to 15 per cent by 2012-the lowest corporate income tax rate among the major developed economies.
Combined with the elimination of the federal capital tax, the acceleration of cuts to small business taxes and further drops in Employment Insurance premiums, our government is determined to create the conditions for business to succeed.
Our competitive business taxes will be a powerful brand for Canada globally.
And that's not all.
We are reducing the GST by 1 percentage point, moving it from 6 per cent to 5 per cent effective January 1, 2008.
For people living in Toronto, the total savings from our 2-percentage-point GST reduction will mean an additional $940 million each and every year.
Our government is also reducing personal income taxes, moving the lowest personal income tax rate to 15 per cent from 15.5 per cent retroactive to January 1, 2007.
At the same time, we are increasing the basic personal amount to $9,600 retroactive to January 1, 2007 and to $10,100 on January 1, 2009. This is the total amount all Canadians can earn without paying federal income tax.
Together, these tax cuts will move some 385,000 people off the income tax rolls altogether.
To build on this solid economic foundation, we are creating a Canadian infrastructure advantage.
Our government is making the largest single federal investment in public infrastructure since World War II through our Building Canada plan-again, a total of $33 billion over the next seven years for roads, bridges, water systems, public transit and international gateways.
When contributions by other levels of government and the private sector are taken into account, we should be able to leverage a $100-billion investment in infrastructure.
So what exactly is our Building Canada plan?
Building Canada will fund strategic investments in projects designed to produce results in three areas of national importance: a growing economy, a clean environment and strong and prosperous communities.
Building Canada provides long-term, predictable funding right up to the year 2014. It will provide the provinces, territories and municipalities with the certainty they have been looking for. In fact, over half of the funding under the Building Canada plan will be provided directly to municipalities.
Specific elements include:
This injection of infrastructure funding will be positive for people throughout the Greater Toronto Area.
Our government has set aside nearly $1 billion for our GTA transportation plan entitled FLOW. It will help keep people, traffic and goods moving in the largest metropolitan area in Canada.
FLOW includes the extension of Toronto's Spadina subway, rapid transit projects in Mississauga, Brampton and York Region, investments in Durham Transit, the widening of Highway 7 in Durham Region, the extension of Highway 404 north beyond Newmarket, and the extension of Highway 407 east to Highway 35/115.
Highway 407 is one example of a public-private partnership here in Canada. There are others, such as:
As I mentioned, history has proven that P3s, when managed properly, can help close the infrastructure gap. As you know, some international jurisdictions have used this approach extensively and realized tremendous benefits.
One of the most successful P3s in the United States was apparently the $87-million effort to restore the Statue of Liberty.
According to a 2004 report by the International Monetary Fund, Chile had engaged the private sector to build various transit projects, airports, prisons and reservoirs. The report said "Chile's experience with P3s has been successful, and a significant portion of the sizable infrastructure gap a decade ago has been filled."
When I was in the UK a few years ago, I met with Prime Minister Tony Blair's Chief of Staff, who said using P3s is "a Conservative idea.that works."
Under what is called the Private Finance Initiative, the United Kingdom has engaged the private sector to build schools, hospitals, prisons, courts, police and fire stations, public transit and waste management systems. P3s were also used to modernize the London Underground subway system, the motorway network and various bridges.
Again, the International Monetary Fund reports that more than two-thirds of these projects were delivered on time and no cost overruns were borne by the government. In contrast, less than a third of traditional public investment projects in the UK were typically delivered on time and within budget.
Subsequently, the government has set up Partnerships UK to help improve the process.
Dedicated P3 Offices have been set up in jurisdictions that are leaders in pursuing public-private partnerships, including B.C. and Quebec.
Public-Private Partnership (P3) Office
The planned creation of a national Canadian P3 Office is a key element of Building Canada.
We want to see P3s used more extensively-but in the best interests of Canadians.
Provinces, territories and municipalities pursuing innovative P3s will be eligible to access the $1.26-billion national fund for public-private partnerships.
To oversee this process, our government is committing $25 million over five years to establish a P3 Office. It will respond to the need to have a single entity responsible at the federal level for P3 matters and to act as a centre of expertise. The Office will evaluate individual projects and assess whether a P3 is the best avenue to pursue.
Building Canadawill also encourage the development and use of P3 best practices. It will require that P3s be given consideration in larger infrastructure projects funded through the Gateways and Border Crossings Fund and by the Building Canada Fund.
Specifically, all projects seeking $50 million or more in federal contributions will be required to assess and consider the viability of a P3 option.
Now, I've gone on for almost as long as it seems. Let me conclude with a few final thoughts.
Infrastructure drives productivity, supports trade and fuels economic growth. In today's highly competitive, just-in-time world, modern, smart infrastructure is not a luxury; it is a necessity.
Replacing our aging infrastructure is a challenge. Many of our ports, gateways and highways are operating at or near capacity. Many of our bridges, water systems, and waste management facilities are nearing the end of their useful lifespan. As technology advances, we need further investments in public transit and green energy.
Our government has developed a forward-looking infrastructure renewal plan that balances regional needs with national priorities. Building Canada provides historic infrastructure funding of $33 billion over seven years. It provides long-term base funding for municipalities.
I would like to remind some municipal leaders that when it comes to infrastructure, the Government of Canada is doing the heavy lifting. We have made a substantial financial commitment. Municipalities and the provinces should be working together, hand in hand, to build modern, healthy communities today and for future generations.
To help in this endeavour, our government is moving in a new direction.
We are establishing a new federal P3 Office. We are launching a new era of infrastructure renewal in Canada.
Jurisdictions around the world have adopted this approach, and it works. There is no reason why we can't catch up and eventually surpass them. We have the knowledge and experience, we have the financial tools, and now we have the political will and the public support.
A new poll by the Canadian Council for Public-Private Partnerships found that the majority of Canadians agree that the private sector should be involved in the delivery of new roads, hospitals, schools, public transit, and water and electrical systems.
It's abundantly clear that to sustain our Canadian advantage we must not just embrace change, we must lead it.
There is nothing this country can't do if we put our minds and energy behind it. There is nothing Canadians can't do when we mobilize and focus our creativity and talent.
My friends, there are three good reasons to be optimistic about our great country: The government is clean. The economy is strong. And the country is united.
We have a brilliant future together.
Thank you for inviting me here today.