August 20, 2012
Hamilton, Ontario

Archived - Remarks by the Honourable Ted Menzies, Minister of State (Finance), to the Association of Canadian Port Authorities

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Thank you, and good morning, ladies and gentlemen.

I’m very pleased to be with you today, though some of you may be wondering what a Minister from landlocked Alberta knows about Canada’s ports.

That’s a fair question.

As an MP from the West, I know that our national highway and railway systems connect Alberta’s oil, wheat, and a host of other goods to many of Canada’s major ports.

And as a Cabinet Minister, I know that, for more than half a century, ACPA members have been making a major contribution to the local, regional and national economy of Canada.

For example

  • According to your own figures, each year Canada’s Port Authorities contribute $30 billion to our GDP, and account for 250,000 direct and indirect jobs.
  • Canada’s Port Authorities handle over $150 billion worth of goods annually, a quarter of our country’s trade.
  • And here in Hamilton, you handle the largest volume of cargo and shipping traffic of any Canadian Great Lakes port.

Without your work, this country would be far less successful on the global stage, and our people would have a much lower standard of living.

Given these—and your many other strengths—some people might think that you would be inclined to be a bit complacent, assuming that your success would naturally continue.

They would be very much mistaken.

Your association has consistently shown the innovative spirit to look ahead and take a strategic view of future economic challenges.

For example, as your conference program states, and I quote, “The next few years will be interesting times for Canadian ports, with many domestic and global ‘Game Changers’ affecting the world in which we operate.”

And that brings me to my remarks for today.

I’ve been asked to give you a global economic forecast, not an easy job these days.

If I had to sum it up in three words, they would be “fragile, uncertain, and volatile.” However, while that’s certainly true, it doesn’t begin to convey the scope and complexity of the many forces at work.

So, during the next 20 minutes, I want to consider three main issues:

  • First, the state of our economy today.
  • Second, some of the key forces that could well weaken Canada’s future prospects.
  • And finally, how our Government is addressing these challenges to ensure that we safeguard our long-term prosperity.

Canada’s record of success

Thanks to prudent fiscal and economic decisions made before the recession hit in 2008–2009, Canada’s economic and fiscal health today is stronger than most other developed nations.

When faced with that unprecedented global crisis, our Government responded with the Economic Action Plan, which stimulated the economy, protected Canadian jobs during the recession and invested in long-term growth.

Today, the Canadian economy has achieved one of the best performances among the G-7.

We have recovered and exceeded all of the output and all of the jobs lost during the recession.

As of July 2009, almost 736,000 net new jobs have been created—the strongest job growth among G-7 countries over the recovery. Virtually all jobs created since that time have been in full-time positions.

The unemployment rate has dropped to 7.3 per cent, 1.4 percentage points lower than the recession peak in August 2009, and employment is now close to 305,000 above its pre-recession peak.

Real GDP is now well above pre-recession levels—the best performance in the G-7. Both the IMF and OECD expect Canada to be among the fastest growing G-7 economies over the near term.

Three credit rating agencies—Moody’s, Fitch and Standard & Poor’s—have reaffirmed their top ratings for Canada, and it is expected that we will maintain their AAA rating in the year ahead.

Canada’s fiscal fundamentals are also solid and sustainable. Our US$3-billion bond issue earlier this year was widely subscribed, with Euroweek magazine concluding, “The fact that Canada is able to do a trade like this…cements Canada’s status as a true Treasury alternative and the best credit in the world.”

These achievements are encouraging. But this does not mean that our work is done.

While we’re not currently facing the depths of the downturn of a few years ago, the global economy remains stubbornly fragile. Any potential offshore setbacks could generate serious adverse impacts on Canada.

For example, growth in a number of emerging market economies is slowing, and concerns are growing about the capacity of the U.S. to balance the necessary fiscal consolidation while sustaining economic growth.

But the major immediate threat is the enduring sovereign and banking crisis in Europe, which has pushed some countries back into recession.

The euro zone crisis

As Prime Minister Stephen Harper has observed, “The risks to the global economy stemming from the euro zone remain considerably elevated, with the capacity to affect all of us.”

The 2008–2009 financial crisis exposed fundamental weaknesses in the European economic system while also revealing significant flaws in the European banking system, including the excessive use of leverage and inadequate capital positions, and the reliance of sovereigns on bank balance sheets.

This uncertainty surrounding how and when the crisis in Europe will be resolved has lowered the value of government bonds, increased borrowing costs, and raised concerns about bank and fiscal solvency for several countries.

Many nations, even those an ocean away, are concerned about the impact of the euro zone crisis on their own economies.

To complicate the issue, policy response options are now much more limited than they were during the 2008–2009 crisis.

High debt levels in some countries mean new fiscal stimulus could be counter-productive. In addition, monetary policy rates are near zero in many countries, raising doubts about the ability to further lower interest rates and stimulate lending.

Our Government continues to make influential contributions to the global recovery effort. We played an active role in G-7 and G-20 discussions on stabilizing the world economy and setting the stage for a return to global growth.

In the future, we will continue to work with our G-20 partners to develop further measures needed to bring us towards a global economy that is stronger and more stable than when the crisis first emerged.

And that leads me to the final key issue I want to address today—what the Harper Government is doing to position Canada to weather any approaching storms from offshore.

We are focusing on the drivers of growth and job creation—innovation, investment, education, skills and communities—underpinned by our ongoing commitment to keeping taxes low, and returning to budget balance over the medium term.

Our Jobs, Growth and Long-Term Prosperity Act is fundamental to advancing this agenda.

I haven’t time today to itemize its many key elements, but I would like to highlight two major initiatives that provide better support to you as ports administrators.

New infrastructure of interest for Canada’s ports

The first concerns infrastructure.

Since 2007, our Government has made significant investments in ports and other infrastructure in support of transportation and trade.

These investments will support the role of ports as gateways to global markets and promote jobs and growth.

Canada’s west coast ports are closer to Asian markets than any others in North America. As a result of our strategic investments and partnerships, Canadian exports to the Asia-Pacific region have reached record levels. For example, in 2011 alone, Canadian exports to China increased an impressive 27 per cent.

Last month, Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway, held consultations in Manitoba, Saskatchewan, Alberta and British Columbia on Canada’s Asia-Pacific Gateway and the Harper Government’s active and ongoing engagement in the Asia-Pacific region.

Since 2006, the Harper Government has invested $1.4 billion in Asia-Pacific Gateway infrastructure projects, an amount that has been leveraged to almost $4 billion with the participation of provincial and municipal governments and the private sector.

Our Government continues to take steps to strengthen Canada’s port system. Over the last year, our Government has announced other significant investments in ports in Eastern Canada such as Montréal, Sept-Îles and Saguenay, as well as the creation of the Oshawa Port Authority.

New funds were allocated in Economic Action Plan 2012 to support the divestiture of regional port facilities and the continued operation and maintenance of federally owned ports. We are thus pursuing efforts undertaken under the National Marine Policy to improve the efficiency of Canadian marine transportation by rationalizing the port system and placing decision-making and operations in the hands of users and local interests.

Our Government has also just completed a series of provincial and territorial roundtables to discuss the development of a new long-term plan for public infrastructure that will extend beyond the expiry of the current Building Canada plan in 2014.

We will continue working with stakeholders to develop a new plan that will continue to deliver results for Canadians through long-term investment programs.

Opening new markets for Canadian businesses

The second key initiative in our Jobs, Growth and Long-Term Prosperity Act concerns expanding trade opportunities.

Our Government’s trade agenda has already made Canada one of the most open and globally engaged economies in the world.

Since 2009, our Government has eliminated more than 1,800 tariffs, including all tariffs on imported machinery, equipment and manufacturing inputs. As a result, Canada is now the first tariff-free manufacturing zone in the G-20.

We have also removed the monopoly power of the Canadian Wheat Board, providing marketing freedom to Canada’s grain producers.

In six years we’ve reached free trade agreements with nine countries, and we’re negotiating with many, many more. We’ve also concluded foreign investment promotion and protection agreements with 11 countries, and we’re in active negotiations with 14 others.

By the end of this year, we hope to conclude negotiations for a free trade agreement with the European Union. Just last week, Prime Minister Harper met with German Chancellor Angela Merkel in Ottawa to strengthen dialogue on this key initiative.

Canada is joining the Trans-Pacific Partnership negotiations.

In addition, our Government is actively pursuing new trade and investment opportunities in the other large, dynamic and fast-growing economies, including China, India and Japan, reflecting our belief that freer and more open trade is a key stimulus for global economic recovery.

Before I conclude, let me briefly highlight one more element of our Jobs, Growth and Long-Term Prosperity Act that is a personal priority.

Ensuring the long-term strength of Canada’s retirement income system

One of our major challenges is to stay ahead of the curve in responding to the demands posed by our rapidly aging society, in particular by ensuring the ongoing strength of Canada’s retirement income system.

Today, estimates are that more than 60 per cent of Canadians do not have access to a workplace pension plan.

And, while participation in retirement savings vehicles like pension plans and Registered Retirement Savings Plans is reasonably high for middle- and higher-income earners, some Canadians may not be taking full advantage of these personal retirement savings opportunities.

That is why our Government has introduced the Pooled Registered Pension Plan.

Pooled Registered Pension Plans will be large-scale, low-cost, broad-based pension arrangements available to employees—with or without a participating employer—as well as the self-employed.

By pooling pension savings, the cost of administering the pension funds will be spread over a larger group of people. This will allow plan members to benefit from lower investment management costs—in effect, Canadians will be buying in bulk.

The PRPP is the right solution at the right time to help many Canadians better save for their retirement.

Conclusion

I could easily continue for another 20 minutes, and more, highlighting the many challenges to the global economic recovery, and the strategies our Government is pursuing to meet them.

But I want to leave some time for your questions and comments, so let me briefly conclude.

To use a maritime metaphor, when it comes to the future economic forecast, we’re sailing into uncharted waters.

While Canada continues to maintain strong economic and fiscal fundamentals, we cannot afford to be complacent.

The global recovery is extremely weak in some sectors and, at best, we’re facing an extended period of slow growth.

Nevertheless, I am hopeful that the major difficulties will be resolved and the global recovery will strengthen.

When extraordinary times demanded it, countries came together, rolled up their collective sleeves and overcame the economic challenges of our times.

I believe that we will meet these challenges—if all members of the global economy work together to turn commitments into actions.

As we have in the past, Canada will continue to play its part.

And with your support, we will keep our economy strong and growing for the benefit of all Canadians

Thank you.