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Ottawa, March 05, 2001
2001-025

Speech by the Honourable Paul Martin, Minister of Finance for Canada,  at a Luncheon Sponsored by the British Columbia Technology Industries Association

Vancouver, B.C.
March 5, 2001

Delivered text is official version.

Let me thank the British Columbia Technology Industries Association for the generous invitation to launch the consultation process leading to the next budget

To begin, there is no doubt that we are in a period of economic uncertainty. The United States is in the midst of a slowdown. And it remains to be seen how long and how sharp it will be, but clearly, Canada will be affected. That being said, this is not the first time we have faced economic turbulence since we formed the government. Twice in the past seven years – the Mexican crisis of 1994, the Asian crisis two years ago, which you in B.C. know so well – we have had to absorb significant economic shocks from outside our borders.

Are we concerned about the current situation? Yes, of course. But the fact is, we are better able to handle economic challenges today than we have been in many a decade. Our current account is in surplus, disposable incomes are up, our productivity is growing, our inflation is low, our debt is declining. We have the best record of job creation of any Group of Seven (G-7) country over the past four years and we are projected to have the best economic growth of any G-7 country this year. Furthermore, the stimulative measures we introduced in January are just starting to take effect. These include the largest tax cuts in our history – cuts which on a per capita basis are six times larger than those proposed for this year by President Bush.

The bottom line is that we have done – and we will continue to do – whatever it takes to weather the effect of a slowing U.S. economy. What is crucial is that we not make the same mistakes as previous governments.

Thus, as resources permit, we must continue to reduce the tax burden on Canadian families and on Canadian entrepreneurs. And we must ensure that our debt ratio continues to fall. In short, we must not squander the advantages Canadians have worked so hard to achieve over the past seven years.

That being said, while action on debt and taxes is critical, we must recognize that they are but points of departure. There are other areas as well that must be addressed, and it is to this aspect of the journey before us that I would like to devote my remarks today. Globalization on the one hand, the cascade of new technologies on the other, these are the defining issues of our day. How we react now and over the course of the next decade to the pressures and opportunities of the new world they are creating will determine the quality of life and the level of achievement not only of our children but of many generations of Canadians to come.

That is why I believe today’s consultations are so important. Why? Because the first thing we have to do is to look at this new world with new eyes and to challenge it with new ideas.

A country is not a balance sheet. Citizens are not just shareholders in a giant corporation called Canada. They must also share a sense of belonging, a sense of participation in the decisions that affect them. They need to know that we are prepared to turn conventional wisdom on its head, to try new ideas and test old assumptions.

For instance, let’s discuss what globalization means to our understanding of citizenship. Let’s discuss how a modern society can be both competitive and generous. Let’s discuss how we can set excellence as our standard and equity as our goal. Let’s talk about opportunity and how to expand it; innovation and how to encourage it; medicare and how to strengthen it; the environment and how to preserve it; child poverty and how to end it.

Let’s debate the proper balance between cutting taxes and providing core services. But let us also address the changing role of government. Let us see how we can help the young software engineer to refurbish his or her skills. But let us examine as well how to help the single mother or the laid off factory worker return to the paid workforce. In short, let us use these consultations to determine the kind of society we want to become and the kind of economy we want to create. For we cannot – and we must not – accept the notion that widening gaps – in income and opportunity – are the unavoidable consequences of economic growth. We simply cannot afford to draw a dividing line through our society between those with access to better jobs and those without; between those who have access to technology and those who don’t.

This, the principle of equality of opportunity, must be the first imperative of our time. And in order to achieve it there flows a second imperative, and that is the reason that I wanted to be here with you today: the unequivocal need to make Canada the first and best home of the knowledge economy.

New technologies create new industries. New industries mean new markets – global markets – and global markets bring new rules, and rule number one is don’t be second. To the first mover go the prime opportunities – to hit the ground running, to become the standard that future rivals will have to displace.

Few understand better than the people in this room that technological change and globalization represent profound shifts in how societies are organized, in how people and countries must prepare themselves to succeed, in how economies operate and in how jobs are created.

The volatility of the dot-com craze notwithstanding, the spread and impact of technological change will continue to drive economic growth in all sectors: information and biotechnology today, nanotechnology and genomics tomorrow. This is where the "true" new economy is to be found – not in short-lived speculative trends, but in enduring change, in the revolutionary flood of new technologies.

The question is: How do we enable our people to capture the potential of our times? How do we marry the twin imperatives of equality of opportunity with the need to be forever ahead of the curve, to be at the leading edge of technological advance? In other words, how do we ensure that we have an education system second to none and an R & D climate that doesn’t just encourage innovation, but that recognizes it as the basic engine of economic growth?

Over the past few years we introduced enhanced registered education savings plans to help parents save for their children’s education. We provided funding for those already in the workforce to upgrade their skills. We increased assistance for graduates struggling to repay student loans. But this must be only the beginning of a massive national effort as we come to grips with the priorities of the knowledge revolution. Education isn’t only about part of life. It’s about all of life. Education means early childhood development, for the care our children receive in their earliest years is critical to ensuring that they arrive at school ready to learn. Education means investing in a system that teaches not only the three Rs, but also the three Cs of computation, calculation and communication. Education means access to lifelong learning in order to ensure access to lifelong opportunities; it means on-the-job training and mentoring programs that surpass existing norms.

Basic research creates ideas and pushes forward the frontiers of knowledge. Applied research transforms this into new products, services and technologies. That is why we have substantially increased government funding for basic research. That is why we have created one of the most attractive tax regimes for private sector R & D in the world. But quite simply, we must do more of both. And we must do both better.

For instance, how do we give our colleges, universities and research hospitals an even greater role in seeding the networks and clusters that will connect our brightest researchers with our most dynamic entrepreneurs? How do we enable Canadians to finance their ideas and bring them to market, right here at home? How do we convince our pension funds not to shortchange new ventures that are rich in ideas, but poor in bricks and mortar? These are the questions we must ask. Indeed, we must do more than that. Our task is to decide together how to advance the yardsticks.

For instance, at the moment we’re not among the top five nations in international math and science tests. How do we join the top tier and then rise within it? How do we ensure that all of our young people, not just the fortunate few, are computer literate by the time they graduate from grade school? How do we double the amount of job-related instruction Canadians receive? Currently we are 16th in the Organisation for Economic Co-operation and Development in R & D. What do we have to do to be among the top five by 2010? We must do a better job of bringing the results of R & D in our universities to market. How do we match the commercialization results of comparable U.S. schools? How do we ensure that Canadian ideas are developed in Canada? How do we place among the top three industrial countries in the level of new venture capital investments? These are questions we must ask.

Now, at this point in my remarks, I suspect two lines of thought are going through your minds. Some of you are probably saying: We pay this guy good money; why doesn’t he figure out the answers to these questions on his own? Others of you are saying: He says he wants our opinion. Ottawa always wants our opinion. But they never listen. Well, let me just say that might have been the case once, but it isn’t any more. Let me tell you that it is not a coincidence that I have come here to launch this new round of consultations.

The fact is, our last budget dealt extensively with the knowledge economy and I can tell you that a good many of the actions we took – from capital gains tax reductions, to tax-free rollovers, to stock options – were a direct result of representations made by this association.

There’s another factor at play here as well. Just as the knowledge economy is changing how industry works, so too it is changing how government works. Today the role of the federal government can no longer be, if it ever could, to try and direct the economy by remote control from Ottawa. Innovation is by nature entrepreneurial, decentralized and highly dependent on a broad band of networks in communities right across the country. That means listening to people by going to where they live, work and build. This is why B.C., and indeed this association, are so important.

Whether it is software, fuel cells or film and new media, British Columbia is winning in the knowledge economy. There are more than 7,300 high-tech firms operating in this province, many of them the direct result of B.C.’s world-class universities.

And so, make no mistake, I am here to listen and to learn. Indeed, in that context, the time has come to turn the microphone over to you. So let me just summarize as follows.

Let no one doubt that while we face an uncertain time because of the state of the U.S. economy, we will come through it. But as we do so, we must not lose sight of our ambitions for the future.

I believe the moment is here to make Canada the standard by which other nations judge themselves in the new economy. I believe the moment is here to give every young entrepreneur the resources to realize their dreams. But I also believe the moment is here to give every child a decent start and a first-rate education. To give every worker the skills and tools to succeed. In short, I believe the moment is here to address ourselves fully to the evolving meaning of citizenship, as well as the evolving nature of economics.

Finally, one last point. As you in this room know better than anyone, we are at the early stages of the most significant economic transformation of our time. The information revolution was its preface, but the larger story has many more chapters to be written. I believe that Canada has the capacity to write those chapters. To build an economy that attracts talent like a magnet attracts metal. To lead the world. To set the pace. And to build from this revolution’s promise an even greater prosperity. To create a country where our people feel that there is nowhere else they would rather be, because there is no place else they can achieve so much.

To do so, however, we need to make sure that we are debating the real issues – that the questions we ask are in keeping with the challenges we face. In other words, that we bring to the debate the mindset of the future, not simply the perspective of the past. And that is why I am so grateful you have given me this opportunity to open the discussion today with you.

Thank you.