November 20, 2015
Economic and Fiscal Update Speech
Check against delivery
Thank you for joining me for the release of Canada’s Economic and Fiscal Update.
It is a real pleasure to be here this morning. As you know, I have been Finance Minister for 16 days – not that I’m counting.
I am here to give you a sense of what I have discovered in my early briefings with my department.
Many of you know that I had the opportunity to travel to Antalya, Turkey, last weekend with Prime Minister Trudeau, for our first meeting with G-20 country Leaders and Finance Ministers.
The consensus in Turkey was that this is a challenging time for the global economy, and we believe that this is not time to be idle.
Real change demands a proactive and sustained global effort.
So I returned to Ottawa with a strengthened conviction that we need to focus on inclusive growth.
And that our program of infrastructure spending and tax cuts for the middle class is the right way to address a sluggish economy growing far more slowly than was previously forecasted.
The mandate I accepted from Prime Minister Justin Trudeau directs me to work collaboratively and transparently with Canadians.
To seek out Canadians’ views, and to listen carefully.
And to work together on our shared priorities of economic growth, job creation, and greater prosperity.
With the goal of ushering in a renewed emphasis on growth and prudent fiscal management.
This Update today is my first step in achieving that mandate.
It also serves as a starting point for developing the budget for 2016.
Importantly, it provides all of you with an early understanding of the Government’s finances, as we have inherited them.
We have made a commitment to a government that is open, transparent, and positive.
So, I want to be open and transparent about what we have found so far.
The simple truth is that the economy has not performed as well as projected in the last budget.
But I will say that the situation is not without hope and opportunity.
We built our platform on the need to take a new approach to growing our economy.
We know it is just not possible to cut our way to prosperity.
And Canadians know that investments in our future will benefit us today, and will help our children and grandchildren to experience the kind of success that we all know this great country is capable of.
So, despite the economic situation we have inherited, I want to leave Canadians with a positive impression of what we are talking about today.
Because we have a plan to deal with it.
I will tell you at the outset that we have much work to do.
Over the next few months, I will be working with my colleague, the President of the Treasury Board Scott Brison, to ensure we are effectively managing our expenditures..
We will dive deep into all aspects of our current fiscal framework.
And then we will add in the measures and initiatives we have promised in our platform.
Along with the information Canadians need.
Including how our campaign commitments will be the first step in generating more growth for Canadians.
And how our plan for inclusive growth will become the tide that lifts all boats – making a material difference for people across the country.
First, some background:
The IMF now expects global growth of 3.1 per cent in 2015 – its slowest pace since 2009.
In Canada, our economic performance in the first half of 2015 was poor, mainly due to the sharp drop in crude oil prices that occurred late last year.
- In the first two quarters of this year, real gross domestic product (GDP) declined by 0.8 per cent and 0.5 per cent respectively;
- While recent data have been more positive, with the economy registering three back to back months of growth in June, July and August, overall growth for 2015, which in the April budget was anticipated to be 2 per cent, has now been revised down to 1.2 per cent.
- And going forward, the risks to the Canadian outlook remain tilted to the downside, mostly reflecting low and volatile crude oil prices and a weak global economic environment.
And now, our fiscal situation:
Without considering the investments laid out in our platform, the projected budgetary balances have been reduced by about $6.0 billion per year, on average, relative to Budget 2015.
We now face a deficit of $3 billion in 2015–16 and $3.9 billion in 2016–17, improving to surpluses starting in 2019–20.
I want to tell you a bit about how we have come up with this Update. Our economic outlook builds fiscal projections from economic forecasts from 15 of the country’s leading private sector economists.
The starting point is both objective and independent.
We have also consciously decided not to include any of our campaign commitments to Canadians.
We wanted to show: This is the situation we have inherited.
Canadians have given our Government a strong mandate to take a new approach to securing our prosperity.
I intend to use the fiscal and budgeting tools at my disposal to do just that.
That includes striking a balance between fiscal discipline and our promises to Canadians, including:
- Keeping our debt-to-GDP ratio on a downward track throughout our mandate; and
- Working towards a return to budget surpluses in 2019–20.
Importantly, we must also invest – in our economy, our communities, and in Canadians themselves.
That includes transformative investments in infrastructure and a new plan for a strong middle class.
Articulating a plan like this is a work of substance – and in the weeks to come, Canadians will be invited to share their thoughts with us as we prepare the 2016 budget.
We want Canadians to know up front that we remain committed to implementing our platform over the course of our mandate – responsibly and affordably.
The road ahead is challenging, but we remain optimistic. Canadians have given us the opportunity to forge a new path to a better future.
We will work together with Canadians to implement our platform for real change.
Together we will usher in a more prosperous, inclusive, and sustainable economic future.
Merci/Thank you. I would be pleased to take your questions.