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
Check against delivery
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.
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