April 7, 2014
Toronto, Ontario

Archived - Speech by the Honourable Joe Oliver, Minister of Finance, at a luncheon hosted by the Canadian Club of Toronto

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Introduction

Thank you very much, Gordon (Raman), and good afternoon, ladies and gentlemen.

I am very pleased to have the privilege of addressing the Canadian Club of Toronto, for my first public speech as Minister of Finance.

For more than a century, your Club has been a pre-eminent public affairs podium. As your mission statement so accurately states, you provide a leading platform to engage Canadians on what matters most.

I was deeply honoured when the Prime Minister named me to this post because it deals with many of the very issues that matter so much to Canadians.

To start, because I am among friends, let me give you the backstory of how it happened. So, I was sitting on a plane at Pearson Airport, just before take-off to Vancouver, when my BlackBerry buzzed, which is not terribly unusual.

It was an email from my staff who said the Prime Minister wanted to speak to me, but no indication what it was about and that was unusual. Then seconds later another email arrives, this time from my wife saying the PM wants to speak to me.

OK. I got it. But then the plane takes off, so I have 5 hours to consider what it might mean.

This could be good. Or not.

Well you know how the rest of the story goes. So now I want to talk about my priorities and the principles that will be guiding me in my new portfolio.

Creating Jobs and Growth for Hardworking Canadians

Let me get right to the point: as Finance Minister my top priority will be creating jobs and economic growth right across the country.

I will be building on our Economic Plan, which started as a response to the global financial crisis in 2008. The crisis originated elsewhere, but a sharp decline in demand for our goods and services materially affected our economy.

When the recession hit, we responded by implementing one of the largest and most effective economic stimulus plans in the world.

Our actions included historic investments in infrastructure, encouraging businesses to invest and helping them avoid layoffs.

We also made substantial new investments in skills training, and we extended support for workers who lost their jobs.

As a result, during those difficult years, Canada outperformed most other G-7 economies and for that we can thank the Prime Minister and my predecessor Jim Flaherty.

Since the recession, we have had the strongest job creation record in the G-7 – better than the US, better than the UK, and better than Germany. In fact, the Canadian economy has created over 1 million net new jobs since 2009.

These are good, solid jobs:

  • 65%, in high wage industries
  • 88%, full-time
  • 82%, in the private sector.

Furthermore, Canadian households have seen an almost 10% increase in their after-tax incomes under our Government and more than a 45% increase in their net worth.

Last Friday, Statistics Canada reported that the Canadian economy created almost 43,000 new jobs in March, 3/4 among youth, and that our unemployment rate dipped below 7%.

Economic growth leads to more jobs, higher incomes and more opportunity – in short, it leads to long-term prosperity for Canadian families.

Moreover, a strong, vibrant, growing economy generates tax revenues – without having to raise tax rates.

This revenue is used to fund important social programs such as health care, education, retirement benefits, and financial support for families. These are programs that you and I rely on and help make Canada the great country it is. Because, at the end of the day, economics is about people, our standard of living and our quality of life.

But while Canada’s economy is doing relatively well, we know that there is much more to do.

Too many Canadians are looking for work.

Workers fearful about losing their jobs. Pensioners anxious about their finances. Families worried about the increased cost of living and whether they are going to make ends meet. Parents concerned about their children and their future.

I empathize with these concerns. And our government is tackling the challenges head-on.

We understand that the global economy has fundamentally changed and Canada needs to adapt.

That is why a few years ago, our plan shifted from short-term stimulus to a broader, more comprehensive plan to ensure we could compete with the emerging economies of the 21st century.

The Prime Minister articulated the issue in a speech to the World Economic Forum in January 2012. He said:

“…Western nations face a choice of whether to create the conditions for growth and prosperity, or to risk long-term economic decline. Canada’s choice will be, with clarity and urgency, to seize and to master our future, to be a model of confidence, growth, and prosperity in the 21st century.”

Since then, we have relentlessly implemented our plan for jobs, growth and long-term prosperity.

Our plan has a number of key pillars.

First and foremost – keep taxes low and create a strong business climate. Businesses create jobs and growing businesses create more jobs.

We are in a competitive global economy. We are no longer competing only with the United States and Europe for jobs, investment, and workers. Now we must also compete against China, India, Brazil and other developing countries. For our businesses to grow and succeed our tax rates must be competitive and our business climate stable and welcoming.

Bottom line, no country can tax its way to prosperity…and we will not go down that well-trod path to economic decline.

Our plan is working. Canada’s total business tax costs are now the lowest in the G-7, and more than 40% lower than those in the United States. In 2013, Canada leapt from sixth to second place in Bloomberg’s ranking of the most attractive places to do business.

Our second pillar is connecting Canadians with available jobs. There are sectors of the economy and regions of the country that have skilled job shortages, yet too many people are still unemployed.

Our Government has taken action through the Canada Job Grant - an innovative way of delivering training that will lead to a guaranteed job.

We have improved the Employment Insurance system to ensure those on EI are receiving more up-to-date information on jobs in their areas.

We are reforming the Temporary Foreign Workers program to ensure that Canadians get the first crack at available jobs and that employers that do employ temporary foreign workers have a plan to transition to a Canadian workforce.

Third – we are opening new markets for our exports. Canada is a great trading nation with a relatively small population. Indeed, more than half our economy is based on our ability to export our goods and services. 1 in 5 jobs in Canada is tied to trade.

To keep growing our economy, we must secure new markets for our products.

About six months ago, the Prime Minister announced an agreement in principle on a Comprehensive Economic and Trade Agreement with the European Union – the largest economy in the world. An agreement that eclipses NAFTA in size and scope.

Last month he also announced that we concluded negotiations with the Republic of Korea – Canada’s first free trade agreement with an Asian country.

Altogether, we have signed trade and investment agreements with over 30 countries since 2006. These agreements will create new opportunities for Canadian businesses and workers in all parts of the country.

Fourth – we are responsibly developing our natural resources. Since Canada’s earliest days, our economy has been built on our abundant natural resources.

Directly and indirectly, the natural resource sector employs 1.8 million Canadians, many in skilled, high-paying jobs. Resource development generates over $30 billion annually in revenue to governments to fund health care, education and other social programs that Canadians have come to rely on and cherish.

We are extraordinarily fortunate to have vast natural resources - sufficient to fuel a growing economy and supply energy and other resources to a resource-hungry world for generations to come.

However, for Canadians to benefit fully from our natural resources we must diversify our markets to the burgeoning economies of the Asia Pacific region.

But inadequate infrastructure threatens to strand these resources jut when global demand for Canadian energy is soaring. That is why we are determined to deliver our resources to market.

Fifth – we are investing in world-class research, innovation, and technology. Not everyone knows that, we lead the G-7 when it comes to investing in post-secondary research.

We know that science and technology investments help Canadian business remain competitive, while creating high-paying jobs.

Our challenge is to take our research from the laboratory to the marketplace. To stay competitive in the global economy, we must commercialize the brilliant ideas of our scientists and engineers.

That is why, since 2006, we have invested billions to support innovative companies in Canada. Some of these initiatives are the Venture Capital Action Plan, the Automotive Innovation Fund, Sustainable Development Technology Canada, the Strategic Aerospace and Defence Initiative, and the transformed National Research Council.

This is alongside substantial new investments in post-secondary research, including the new Canada First Research Excellence Fund announced in Budget 2014.

In addition, the New Building Canada Plan, announced earlier this year, will see out government invest over $53B in infrastructure across the country over the next 10 years.

For Ontario, this represents approximately $11B in dedicated federal funding, a significant amount here in Toronto.

Low taxes, connecting Canadians with available jobs, opening new markets, supporting businesses, and investing in research, technology, innovation and infrastructure. These are the pillars of our Economic Action Plan.

Continue strong fiscal management by balancing the Budget

Later this week I will participate in meetings of the G-20 Finance Ministers and the International Monetary Fund in Washington.

I am fortunate to attend these meetings as the Finance Minister of a country with strong economic fundamentals that are the envy of the world.

Both the IMF and the OECD expect Canada to be among the strongest growing economies in the G-7 over this year and next.

We have the lowest net debt of any developed country. Canada’s net debt is 1/3 of the size of the economy – half the average of the G-7 economies.

Our credit rating is superb. We are one of only a handful of countries that has a triple-A credit rating, which means we pay less interest on our debt.

And crucially, we will balance the budget next year.

Canadians understand what happens when they spend more than they earn. They end up in debt and are saddled with interest payments that erode their ability to afford necessities and save for retirement. Most people understand that budgets do not balance themselves, any more for governments than for families.

So a balanced budget flows from sound fiscal management that creates a stable business climate, leading to increased investment, new jobs, and more growth.

We have projected a deficit of $2.9 billion this year, plus a cushion of $3 billion to adjust for emergencies. Next year, we are projecting a surplus of over $6 billion, plus the cushion.

Canadians should be proud of this tremendous accomplishment.

Stark illustrations from around the world - from Detroit to Athens - demonstrate the dire consequences when governments spend more than they take in.

For the third year in a row, we have reduced direct program spending, something few governments have done in decades.

This commitment to balanced budgets and sound fiscal management protects important social programs. In fact, it enables us to increase funding for health care, education, and retirement income.

Again, this is not something that just happens. For example, the federal budget was balanced in the 90’s by cutting funding to the provinces for health care and education.

Provide tax relief to Canadian families

Durring the next year, many suggestions will be put forward from all parts of the country and all walks of life.

I welcome the ideas and I encourage the conversation. However, I want to be clear about two things:

First, our government will not engage in reckless new spending schemes that would lead to increased taxes or higher debt or both.

We worked too hard to return to a balanced budget to throw it all away. So do not expect a big stimulus program.

Second, once the budget is balanced our priority will be to provide tax relief for hardworking Canadian families.

That is what we committed to in the last election, that is what we have delivered and that is what we are going to continue to do.

Our Government has consistently lowered taxes -– sales taxes, income taxes, and business taxes.

As a result of the Government of Canada's strong record of tax relief, an average family of four will pay up to $3,400 less in taxes in 2014.

In addition, seniors are now receiving about $2.8 billion in additional targeted tax relief as a result of our actions. That means a senior couple saves over $2,300 per year.

A small business with $500,000 in taxable income will save over $28,000 in taxes this year, money that can be reinvested in their business to help it grow and prosper.

We still believe Canadian families pay too much in tax.

Canadian families are the backbone of our communities and our country. When they prosper the country prospers.

That is why we will provide tax relief for Canadian families once the Budget is balanced.

Conclusion

In conclusion, let me reiterate that Canada’s economy is strong and getting stronger.

My priority is to grow the economy and create jobs.

Due to the hard work of our government, we will balance the budget next year.

This will allow us to keep our commitment to provide tax relief, so Canadian families can keep more of what they earn, rather than have to hand it over to the government.

During this year and next my colleagues and I will be travelling around the country, listening to Canadians and considering your ideas about how we can make the greatest country in the world even better.

Thank you for listening.