Ottawa, December 13, 2013
The following guest column by Finance Minister Jim Flaherty was published by Postmedia News on December 12, 2013.
Balancing act: If Canada wants to prosper, it needs to stay on firm fiscal footing
As 2013 comes to a close, I am optimistic for the future - even though it is clear we still face an uncertain global economy. Even though Canada's economy has performed better than most, the global economy remains fragile with slower growth than anticipated at the start of the year.
In uncertain times such as these, it is essential that all governments remain on solid fiscal ground. Stark illustrations from around the world - from Detroit to Greece - have shown the dire consequences of governments that allow ongoing and growing deficits. That is why I believe it is even more important now for all governments in Canada to remain focused on balanced budgets. This means governments must focus on what they can directly control: reducing wasteful spending and making ongoing spending as efficient as possible.
While requiring discipline and tough decisions in the short term, the importance of balanced budgets is defined in what is gained in the long term. With fewer hard-earned tax dollars used to finance debt, more are available for priorities such as keeping taxes low for Canadians and ensuring sustainable social programs - such as health care - for our children and grandchildren well into the future. In short, balanced budgets signal stability and pave the road to prosperity.
When I meet with my provincial and territorial finance ministers next week, I will be reinforcing this point. If Canada's economy is to succeed, it must be supported by responsible fiscal management at all levels of government. As a critical first step, we must return to balanced budgets. The federal government is on track to balance the budget in 2015-16 and not only that, we are projecting a healthy surplus of $3.7 billion for that year.
This is an important part of Canada's long-term economic resilience during the recession and over the recovery. Since July 2009, employment has increased by more than one million - the strongest job growth in the G7. Canada's economic growth has been the strongest among G7 countries over the recovery. As a result, real GDP is significantly above pre-recession levels. In fact, both the IMF and the OECD expect Canada to be among the strongest-growing economies in the G7 over this year and next. What's more, the major credit rating agencies have all affirmed Canada's triple-A credit rating - one of only a handful of countries left with such a stellar credit rating.
These results are no accident. They illustrate how fiscal sustainability is essential for the long-term success of our country. Our record instills confidence, which makes Canada an attractive place for people to invest and do business. This creates jobs for Canadians here at home, helps our economy grow, and is a major step toward securing our long-term prosperity.
That being said, Canada is a federation and we must all do our part to keep Canada on strong fiscal footing. With federal transfers to the provinces and territories now at historic levels - having increased by more than 50 per cent from when we came to office in 2006 - they are better positioned than ever before to achieve balanced budgets in the years ahead.
I look forward to working with Canada's finance ministers to make that collective return to balanced budgets a reality.