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Address by the Honourable Maurizio Bevilacqua, Secretary of State (International Financial Institutions), to the Canadian Real Estate Association
Ottawa, Ontario
March 31, 2003
Check Against Delivery
Introduction
Let me start by thanking you for the opportunity to address one of Canada’s largest trade associations. I am pleased to be part of your 60th anniversary celebrations, and to recognize the 20th anniversary of your Political Action Committee. This invaluable network of more than 200 members of local real estate boards has consistently pinpointed the economic priorities of this country. I would also like to spotlight the 100th anniversary of the Winnipeg Real Estate Board, the longest running real estate board in Canada.
Of course, the contributions of real estate professionals go back much further than 60 years. While today you debate the future of real estate in Canada, your history of building Canada goes back almost to Confederation itself, when the first real estate board was established in Vancouver in 1888. As Canada matured over the century that followed, so did your industry. According to your own Multiple Listing Service statistics, property transactions accounted for $73 billion in economic activity in 2001, including $65 billion in residential transactions.
But even with changes in education, technology, and certainly prices, your focus has never wavered: building communities, and helping families achieve their dreams. Your profession does much more than sell property. You provide homes, and opportunity, to Canadian families. You don’t just knock on doors-you open them, by enabling generation after generation of Canadians to build a better life.
And you have never wavered from your commitment to making this country a better place. The Canadian Real Estate Association (CREA) Political Action Committee has been an influential presence in Canadian economic policy, and has served its 65,000 members very well. I know that because I have relied on your advice throughout my political career. As chair of the House of Commons Finance Committee, I welcomed your views on issues ranging from increased registered retirement savings plan (RRSP) limits to the fight against money laundering.
Your influence was perhaps best illustrated during the introduction of the Home Buyers’ Plan, which has helped to finance over half a million home purchases and led to more than $7.5 billion in economic spinoffs. Your group should be proud of that accomplishment. You were the first to present the idea to the Department of Finance, and were its strongest supporter. You should also be commended for not only continuing to be a major sponsor of the Parliamentary Internship Programme, but doubling your support last year.
I realize you have many issues to debate this week. But I hope you will take the time to reflect on these and other achievements, and your many efforts to make this country what it is today, because you are a key chapter in the success story that is Canada. You are a vital part of the story of a country that faced its challenges and overcame them. You are an essential element of a story I tell wherever I go-in London, in Paris, in Rome, in New York. As Canadians we are too timid about celebrating our accomplishments. That has to change.
Our Achievements
To truly understand this story, consider how far we have come. About a decade ago The Wall Street Journal dismissed Canada as an economic basket case. Our debt load was crippling. Our prospects looked bleak. Back then we could have thrown up our hands in despair. Instead, we decided to roll up our sleeves, and bring about Canada’s great economic renaissance. We put our fiscal house in order. Together we accepted the sacrifices needed to strengthen this country. Together we created the economic conditions where Canadians, our sons and daughters, could excel.
Look where we are today. When we talk about the great Canadian spirit, nothing shows that more than the great Canadian comeback. And the facts speak for themselves.
Last month the federal government announced its sixth consecutive surplus budget, an achievement not seen in half a century. The Organisation for Economic Co-operation and Development (OECD) expects us to be the only Group of Seven (G-7) nation to record a surplus this year, for the second year in a row. It also expects that, by next year, Canada’s debt burden will be the second lowest among the G-7 and, for the first time in 15 years, the same as in the U.S.
Our ongoing surpluses have enabled us to reduce the federal debt by more than $47 billion since we first balanced the budget in 1997-98. This has helped to reduce our debt-to-GDP (gross domestic product) ratio to less than 45 per cent this year from its peak of 67.5 per cent in 1995-96. That’s the largest decline of any G-7 nation.
That’s not the whole story, however. Canada’s foreign debt as a share of GDP has shrunk from 45 per cent in the mid-1990s to under 19 per cent today – its lowest level in 50 years. For the first time in our history, our foreign indebtedness is lower than that of the U.S.
This fiscal prudence is supported by a renewed commitment to expenditure management, including a permanent review of spending across all government departments and a reallocation of spending from lower to higher priority areas. As a result, government spending as a percentage of GDP will remain significantly below the level of a decade ago.
And don’t forget taxes. By getting our fiscal house in order we could start cutting them – and we did. In 2000 we introduced the largest personal and corporate income tax cuts in Canadian history, worth more than $100 billion over five years. By the time the current tax cut plan is complete, federal income tax will have been reduced by an average of 27 per cent for families with children.
Not surprisingly, Canada achieved the best of both worlds during this time of global uncertainty – job growth and increased productivity. Not surprisingly, our standard of living is on the rise, with the highest growth in the G-7. At 2¾ per cent, Canada has enjoyed the fastest growth rate of GDP per person in the G-7 since 1997.
In a year when U.S. employment fell by 220,000, our economy created more than 560,000 jobs. At a time when the U.S. recovery has been uneven, Canada outperformed our southern neighbour during an economic downturn, for the first time in 25 years. And both the OECD and the International Monetary Fund predict that Canada will, once again, outperform all G-7 countries in growth in 2003.
When you consider this success, imagine the consequences to Canadians had we not taken the necessary steps to fix our economy. If the Government had continued to run up huge deficits, an increasing share of our budgets would have been funnelled into financing more debt, rather than in important investments in health care, education, and research and technology. High-growth industries and their employees would have forsaken Canada, taking jobs and money with them.
These are truly great times for the Canadian economy. We were disciplined, we focused on our plan, and we made sure we had the fundamentals right. Together with Canada’s consistent record of low inflation, these policies have supported public and business confidence. Thanks to this progress, we have regained our credibility with financial markets around the world.
But, unfortunately, I have found that such hard-earned success can often be overlooked. It shouldn’t. We need your help in getting this message out, and making sure Canada and the world know that we have an economy that is alive and thriving. Can Canada go further? Of course we can.
Building the Economy We Need
Last month’s budget, for example, contains measures that will further enhance Canada’s position as one of the best places in the world to invest and do business.
One way we did this was by building on the $100-billion tax cut program, which has meant so much to our world-leading economic performance. For example, Budget 2003 supports investment and entrepreneurship by phasing out the federal capital tax. The average corporate tax rate in Canada is now below the average U.S. rate. When the federal capital tax is eliminated, the Canadian tax advantage will stretch to 6.6 percentage points.
Additional measures building on our tax cut program came from the people right here in this room. Late last year you urged the Government to increase RRSP contribution limits, and index them. We listened, and we acted. Last month’s budget increases RRSP limits to $18,000 over the next four years, and will index them every year thereafter. We recognize that RRSPs play a vital role for Canadians, particularly self-employed Canadians. These changes will help them prepare for a secure and prosperous retirement.
CREA recommendations, of course, extended beyond the Government’s tax package. You recommended that the Government reinstate the $3-billion Contingency Reserve, and provide further assurance that we will not go back into deficit. We listened, and we acted. Once again our recent budget is backed by a $3-billion Contingency Reserve, and an additional $3 billion over two years in fiscal safeguards during this time of global uncertainty.
You recommended increased funding for the Residential Rehabilitation Assistance Program (RRAP) to build on this program’s success. In your pre-budget submission you called it perhaps the greatest federal housing policy success, creating “thousands of jobs.” We listened, and we acted. Budget 2003 will continue to improve our neighbourhoods by investing nearly $400 million over three years, by extending the RRAP and related programs that were set to expire this very day. Homeowners, renters, rooming-house occupants, disabled persons, on-reserve households, the elderly and victims of family violence will all benefit from this commitment to upgrade existing housing – and from your advocacy.
This is only one part of our plan to support Canadians in their communities. Last month’s budget announced an additional $320-million investment over the next five years through our Affordable Housing Initiative, including $80 million in the next two years, to increase the supply of affordable housing. As a result, our investment in this initiative will total $1 billion by the end of 2007-08.
To fight homelessness we also extended for three years the Supporting Communities Partnership Initiative, so that local community groups can sustain their efforts to provide improved facilities and services for homeless people.
And we will provide an additional $3 billion in infrastructure support, including $1 billion for municipal infrastructure. Considering that more than $5 billion has already been announced in previous budgets, this new funding does not signal an end to our commitment, but is a further sign of our continuing intention to make our cities worth living in, for our businesses and families.
All of these initiatives, and all of our economic successes, will make this country better. They will increase our competitiveness and the prosperity of our communities. They will give hope to Canadians that the future for their children will be full of promise. And I hope they might eventually allow more Canadians to see world-leading economic performance as an expectation, not a surprise.
Conclusion
As you continue your work today to create a better Canada, and celebrate all that you have achieved, I ask you to consider this – that together we have set the economic pace in the 21st century. We have shown what it takes to compete and win.
There are many more chapters of the Canadian success story left to write – and there has never been a better time to do it. This is a nation full of opportunities to invest and grow, and to benefit from one of the most educated workforces in the world, competitive tax rates, increasingly sophisticated technology and a standard of living and quality of life that is second to none.
Our economy is strong. Our people are confident. Our future is bright. This is the state of our nation. Thank you.
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| Last Updated: 2004-11-02 |
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