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March 27, 2006

Address by the Honourable James M. Flaherty, P.C., MP, Minister of Finance, to the Surrey Chamber of Commerce

Surrey, British Columbia

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Good afternoon.

I appreciate this opportunity to be with you today. Being in beautiful Surrey not only gives me a bit of a break from budget preparations, but it gives me a bit of a break from the Ottawa chill—and I am referring to the weather, not the political climate.

I understand Prime Minister Stephen Harper addressed this Chamber of Commerce less than a year ago. A lot has changed in those short few months. Canadians have entrusted us with a mandate to deliver on five key priorities. I can assure you we will not take that trust for granted. The Prime Minister is a man of his word, and the vision he articulated here at the Chamber will become a reality. I will speak more about our priorities in a few minutes.

At this time I want to acknowledge my federal colleague and co-chair of the Conservative task force on crime, Russ Hiebert. Russ is a tireless worker and an excellent representative. The people of B.C. and Canada are well served by Russ and all of our Conservative MPs from the Greater Vancouver Area.

Our government is committed to working in a new collaborative way with our provincial and territorial partners.

It’s wonderful to be back in British Columbia again. You can feel the energy and optimism everywhere you go.

And why not? You have every reason to be proud. B.C. boasts a booming economy, bustling trade with Pacific Rim countries, wonderfully diverse communities, and a tourism industry that is strong and diversified. Your global reputation as a destination of choice for tourists is well deserved.

I am also impressed with the progress being made right here in Surrey.

As part of the Greater Vancouver Area, Surrey has been a major contributor to B.C.’s success. Like the Greater Toronto Area, my home, the population of Surrey is exploding, adding about a thousand residents each and every month. This is currently the province’s second largest city; however, I understand that within 20 years it is projected to become B.C.’s largest. What do you do for an encore? The Olympics perhaps?

Taking on the World, and Winning

The countdown is on: it is just 1,418 days to go before the Winter Olympics, an event that will greatly benefit Surrey and the Vancouver region overall. The Lower Mainland will soon become an international centre of athletic excellence, in a setting that offers natural beauty, a rich cultural life and all the ingredients needed for economic success in the 21st century.

The Greater Vancouver Area is, indeed, Canada’s Pacific gateway to long-term prosperity.

And yet, as the marvellous performances by our Canadian Olympic and Paralympic athletes demonstrated so clearly in Torino, the ultimate measure of success will not just be in welcoming the world, but in taking on the world’s best—and winning. The Canadian results at this year’s Winter Games were truly inspiring, creating a sense of pride from coast to coast to coast. I’m sure we all look to the 2010 Games with a growing sense of anticipation and optimism.

But our country’s success goes beyond speed skating ovals and ski slopes. The Canadian economy continues to deliver a gold medal performance each and every day.

Consider how the world sees us today.

While meeting with G8 Finance Ministers in Russia last month, it was obvious to me that our balanced budget approach, strong economic growth and commitments to meaningful tax cuts are increasingly held up internationally as the way to go.

A KPMG study released last week concluded that Canada is still the least expensive place to do business among the G7 countries. It also found that Canada is one of three countries that offers the greatest research and development tax incentives, and has competitive combined salary, wage and benefit costs.

Furthermore, in a recent Globe and Mail article entitled "Bypass Switzerland, go straight to Canada," the deputy chief economist of BMO Nesbitt Burns concluded Canada now boasts "some of the soundest fundamentals in the world," including a healthy current account surplus.

The facts speak for themselves:

• low inflation;
• an unemployment rate at a 30-year low;
• a strong retail sector with record sales in January; and
• corporate profits that are also at record levels.

Responsible Choices

The reality is, it’s because of people like you—your effort, your drive, your focus—that Canada is accomplishing this medal-worthy performance. Our country is reaping the benefits of your hard work in opening doors in new markets, developing innovative ideas, and making investments that benefit Surrey, British Columbia and Canada.

We all know that today’s positive performance is no guarantee of what we will be able to achieve in the future.

Entrepreneurs like you must be able to compete in a country with a supportive economic environment that rewards hard work. Supported and encouraged by a federal government that is prepared to make the same kind of responsible choices that you are; a federal government that works hard on your behalf.

You may recall that when Stephen Harper addressed this audience a few months back, he promised that a Conservative government was going to be different. He gave you his word that he would take government accountability to a new level. That he would put an end to the sorry chapter of Liberal waste, scandal and corruption.

Well, I am here to tell you that the Harper government is charting a new course for Canada:

• we are replacing the culture of entitlement with one of accountability;
• we are putting Canada’s interests ahead of the interests of a privileged few; and
• we are focusing on your priorities.

Canadians sent us to Ottawa to get things done and that’s exactly what we intend to do. We are rolling up our sleeves and taking a workmanlike approach to government.

In my 2001 Ontario budget speech I referred to hard-working families that make responsible decisions about their own budgets, every single day. They expect governments to behave the same way—to be prudent, to be accountable and to make the tough but necessary choices.

I can assure you that we are committed, focused and frugal. As I mentioned earlier, we are starting with the five specific areas outlined in our election platform and keeping our word to the people of Canada.

The Five Priorities

The five priorities are as follows:

• cleaning up government, by passing the Federal Accountability Act;
• reducing the tax burden of Canadians, starting with a one-percentage-point cut to the GST;
• making our streets and communities safer, by cracking down on crime and introducing mandatory minimum sentences;
• supporting families, by providing a $1,200 per year Choice in Child Care Allowance for each child under six, and providing tax credits to employers who cover the full cost of creating child care spaces; and
• working with the provinces to improve health care, by establishing a Patient Wait Times Guarantee.

I’m currently working with my cabinet colleagues to transform all of these priorities into reality. These initiatives are important to Canadians, and Canadians deserve nothing less.

The Starting Line—Balanced Budgets, Disciplined Spending

In preparing the next federal budget, I’m starting from the premise that we must take a focused, responsible approach. We have set priorities that are reasonable and affordable, and we must stick to them.

Balanced budgets and paying off debt are essential to an even brighter future for Canadians. They’re not something you bargain away during budget deliberations.

I learned this lesson five years ago when I was Ontario’s Finance Minister. In fact, I had the honour of making the single largest public debt payment in Ontario’s history: $3.1 billion.

I continue to believe that paying down debt is essential—not only because we have an obligation to the taxpayers of today, but also because we have an obligation to the generations of tomorrow. I have triplet boys and I am not prepared to mortgage their future or your children’s future. Deficit financing simply passes tax payments onto our children along with the accumulated interest.

Our obligation means we must also make real progress in reining in unnecessary government spending, so that Canadians receive good value for the hard-earned tax dollars they entrust to their government.

I imagine a number of you know that, under the previous government, federal spending jumped by 15 per cent—more than six times the rate of inflation.

As Prime Minister Harper concluded, that kind of spending growth is simply unsustainable. It’s why our government has committed to limiting future growth on federal grant and contribution programs. And limiting growth within federal departments and agencies by reallocating money from existing programs.

Like you, I believe that federal spending needs to be reviewed. I am now working with Finance and Treasury Board officials to ensure that the spending of taxpayer dollars will be limited only to those programs that are efficient and effective.

Programs, in other words, that get results and work for Canadians.

How serious are we about this?

Well, you may have noticed that, right off the bat, we made our cabinet much leaner than the federal cabinets we’ve seen for many years. That means substantial savings, which means more money in the bank for things that matter to Canadians.

Such fiscal discipline means you will be able to keep more of your own money to invest in the things that matter to you. As Stephen Harper said when he was here last, "Our new Conservative government will be one where we put the budgets of Canadian families first, and the pet projects of politicians and bureaucrats last."

Lightening the Tax Burden

Tax relief is a vital part of our plan, and delivering on our GST commitment is the first step in our plan.

We will reduce the GST by one percentage point immediately, so that money will go back where it belongs—in your pockets.

And why not? Consider the facts.

1) Unlike other options, a GST cut is a tax cut for everyone, whether you earn enough to pay personal income taxes or not.

2) You will see it in action every time you buy something, regardless of your age or income level. Everyone from a newspaper carrier to a senior on a fixed income will see a savings.

3) And, unlike other tax measures, no future government will be able to take this tax cut away from you by stealth.

The benefits for individuals can be significant. Just imagine the thousands of dollars in potential GST savings for young families who want to buy a new home in an expanding market like Surrey, where the average price of a new, single detached home is over $550,000.

Or the hundreds of dollars in savings that will be available to Surrey families buying a new car, an appliance or any other big-ticket item.

Almost anything you purchase, no matter how large or how small, will save you money and contribute to economic growth.

That’s why this inclusive tax cut is one of Prime Minister Harper’s five main priorities. It’s why it will be front and centre in our first budget.

Here’s what many commentators have neglected to mention. This one-percentage-point cut is an important part of our tax relief plans—but it’s not the only one.

We also intend to act on other fronts—for example, on the current tax burden shouldered by business people like you.

The previous government promised tax relief to business, but failed to deliver. We will deliver.

Why? Because all Canadians stand to gain from this kind of tax relief. Competitive corporate tax rates attract the kind of investment that boosts economic growth and creates well-paying jobs. During the election we campaigned on reducing corporate taxes and following through on eliminating the federal capital tax.

We also believe Canadians who reinvest their money and create jobs in their communities, their province and their country should be rewarded for doing so. It’s why we campaigned on eliminating the capital gains tax for individuals on the sale of assets when the proceeds are reinvested within six months. With respect to this particular initiative, we will be taking some time to consult Canadians before moving forward.

Rest assured these initiatives are real priorities for our government.

We will also make sure we support the lifeblood of Canada’s economy: small business owners. We all know it’s the small dry cleaners, the corner framing shop, or the neighbourhood grocer who creates the vast majority of jobs across the country.

As we move forward, we will be implementing our Opportunity Plan for Small Business, a package that will lower small business taxes and create a tax incentive to hire new apprentices in industries that so urgently need them.

Canada currently has a shortage of 20,000 skilled tradespeople, an unacceptable situation that needs to be addressed. In fact, during my visit to Calgary last week, I was told the shortage of plumbers, of electricians, of tool and dye makers is so severe it is becoming an impediment to growth.

Our government is prepared to address this issue head-on by offering much-needed support for businesses that establish apprenticeship positions and further the development of the skilled trades.

Our plan would also raise the threshold at which businesses have to pay the general corporate tax rate, and cut the small business rate itself within five years.

Clearly, we have a lot of work to do on the tax front. But we are prepared to roll up our sleeves and lighten the financial load on Canadian families and businesses.

At the same time, we are also aware of the challenges that face this country on the infrastructure front. As I noted earlier, cities like Surrey are growing at a tremendous rate, and while that’s good for the economy, it creates some daunting challenges.

Infrastructure

As we all know, traffic congestion is strangling our roadways, our basic infrastructure is aging and our border crossings are inadequate. As a former Ontario cabinet minister and now the federal minister responsible for the GTA, I know these infrastructure challenges all too well.

They are more than a daily inconvenience, they pose real risks to the future prosperity of our communities, and to the entire country. According to a Transport Canada study released last week, traffic congestion is costing the Canadian economy between $2.3 billion and $3.7 billion. The cost in the Greater Vancouver Area alone is between $400 million and $600 million a year, each and every year.

We made it clear during the campaign that our country’s future prosperity, to a significant extent, depends on the strength, health and security of our cities and communities.

We know the federal government has a useful and supportive role to play in securing the future of our cities and communities, including large urban centres like the Greater Vancouver Area.

We also know what our role is, and that the best way to move forward is in cooperation with provincial and municipal authorities. During the election we offered Canadians several new infrastructure initiatives that will help our urban centres cope with the growth.

We will act on each and every one of them, step by step, as resources permit. They include:

• supporting the Pacific gateway initiative, giving greater freedom to British Columbia and the other partners to designate their priority projects without federal interference;
• maintaining existing infrastructure agreements between the federal government, the provinces and municipalities;
• making the New Deal better, by allowing cities and communities with more than 500,000 people to use gas tax transfer dollars for building and repairing roads and bridges, to improve road safety and reduce traffic congestion;
• negotiating a new infrastructure agreement with the provinces to provide a stable and permanent Highways and Border Infrastructure Fund;
• working to increase the stock of affordable housing in our towns and cities; and
• making our communities safer by, among other things, providing stiffer sentences for crimes involving firearms and reallocating funds from the gun registry program to support the hiring of more front-line police officers.

The end result will be Canadian communities that offer a higher quality of life—Canadian communities that enable businesses to flourish, and families to feel secure. These items will also be a key part of the deliberations as I set out to draft this budget and set the stage for future budgets.

Making Choices

I want to take a moment to re-emphasize something I believe we all need to remember. As Finance Minister, I will have to make choices, sometimes difficult ones.

We can’t do everything at once; we simply don’t have the resources. For example, after meeting with the Premiers recently, Prime Minister Harper made it clear that the provincial wish list is just too expensive. It isn’t sustainable.

Our government believes we must set priorities that are reasonable and affordable, and stick by them. Our approach will be focused, frugal and fiscally responsible.

In January, Canadians gave us a mandate to lead change, and you can’t have responsible leadership without making responsible choices. We cannot afford to jeopardize our strong economy with reckless spending.

And I can assure you we won’t. Our plan is both prudent and affordable.

Canada now has a record $1-trillion economy. That cannot be taken for granted. We have to work hard to maintain it and grow it. It must be protected, it must be nurtured.

I can assure you Prime Minister Stephen Harper and our government are up to the task.

Conclusion

Let me conclude with a final thought. Certainly the big picture is important. Canada is a major player on the world stage.

But what drives our economy is people like you here in Surrey and the Greater Vancouver Area. It’s people like you who get up day after day to go to work, to operate your own business, to employ people, to deliver goods and services and yes, to pay a lot of taxes.

For those reasons, you have the right to expect a federal government that will be accountable, keep its promises and provide programs that are important to you, your family and your business.

This is the beginning of a new era in Canada. Prime Minister Stephen Harper has set out to build a foundation for success brick by brick. It won’t be easy, and it won’t happen overnight. But to me, it’s better that we take it a step at a time and get it right. This is what responsible government is all about. Achieving something worthwhile, something of lasting value.

Once again, I look forward to working with you, and with all Canadians, to deliver the positive change that will benefit us all.

Thank you very much. It is an honour for me to be here today with you in Surrey, British Columbia, Canada.