Annual lists 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995

April 11, 2006

Address by the Honourable James M. Flaherty, P.C., MP, Minister of Finance, to the Investment Dealers Association of Canada

Toronto, Ontario

Check against delivery

Good evening, and thank you for the opportunity to be here tonight.

As minister responsible for the Greater Toronto Area, it’s important for me to get back home on a regular basis to report on the progress we are making in Ottawa.

As a government, I can assure you we are not standing still. We are working to earn your trust each and every day.

As a country, we are becoming the envy of the world. The Canadian economy is firing on all cylinders. While meeting recently with my G7 colleagues in Russia, they praised our balanced budgets, low inflation, historically low unemployment and record corporate profits.

It seems only yesterday that we were fighting a winter election. A lot has changed in those few short months.

Canadians have entrusted us with a mandate to deliver on five key priorities. I am pleased to report that we have made great strides with a Speech from the Throne last week, and today with the introduction of the Federal Accountability Act.

I will speak about that piece of legislation and our other priorities in a few minutes.

During this pre-budget period I am holding a series of consultation roundtables in Ottawa, and for the first time ever we are encouraging Canadians from coast to coast to coast to participate in the budget process online. People can simply visit the Finance website and share their views. The address is: http://www.fin.gc.ca/activty/consult/prebud_e.html.

This is another example of how Canada’s new government is taking accountability and openness to a higher level.

It’s important to hear from people online, but it is equally important for me to hear you here this evening.

I say this because it is the people in this room who provide the fuel that powers the economic engine of our nation. The statistics bear this out.

• The financial services sector in Canada employs around 600,000 people in good, well-paying jobs, with an annual payroll of $35 billion;

• In 2004, this sector represented six per cent of Canada’s GDP, contributing around $11 billion in taxes to all levels of government; and

• Specifically here in Toronto, the combined equity exchanges operated by the TSX Group make it the third largest in North America and the seventh largest in the world.

The economic impact is impressive. But so is your contribution to our financial security.

Thanks to your efforts, nearly half of all Canadians currently own mutual funds in their investment portfolios. Your knowledge and hard work provide a vital service to Canadian investors and to the successful, diverse and cosmopolitan city that is Toronto.

While the upcoming budget is my main task at hand, I am well aware of the challenges facing your industry. I look forward to working with you over time to resolve them.

I know, for example, that the current securities regulatory system needs to be improved, and I look forward to collaborating with my provincial and territorial colleagues in creating a 21st century securities regulation system for our 21st century economy, in support of a strong economic union.

In addition, the Speech from the Throne stated the government’s commitment to the review of the Bank Act. This will ensure that the regulations governing the financial sector are current and effective.

You can be sure that any future discussions will take into account the crucial role you play in ensuring an economy that functions efficiently and dependably.

The Canadian economy has been resilient, showing strength on a number of fronts. But I am a cautious person who takes nothing for granted.

We know past results do not guarantee future performance. We can and must do better if we are to lead in this highly competitive global economy.

Imagine what we can achieve by rewarding hard work, encouraging investment and pursuing opportunities.

Imagine the contributions to the wealth of Canadians if only you had a federal government prepared to make the same kind of responsible, forward-thinking choices you and your clients do—a federal government that actually puts ordinary working people and their families first.

You no longer have to imagine. Canadians have chosen change. They have chosen a federal government that is turning over a new leaf. We trust in the Canadian people, and our goal is that Canadians will once again trust in their government. As I mentioned earlier, we introduced the Federal Accountability Act today.

Treasury Board President John Baird ushered in the toughest anti-corruption law in Canadian history. It holds Ottawa to a standard never contemplated before. It is about making everyone in government, from the Prime Minister on down, accountable to Canadians.

The days of Liberal scandal and entitlement are over.

The Federal Accountability Act is about fixing the system for Canadians. It’s about streamlining and simplifying how government works. It’s about making government more effective and accountable.

The changes for Canadians include:

• Strengthening the powers of the Auditor General.

• Banning corporate, union and large personal political donations.

• Providing real protection for whistleblowers.

• Ensuring government contracting is proper, fair and open.

• Preventing lobbying by former ministers and other public office holders for five years.

• Creating more open government by improving access to information.

Canadians sent us to Ottawa to get things done, and that’s exactly what we are doing. Like the promising companies you invest in, we are rolling up our sleeves and taking a workmanlike approach to governing.

During the election Prime Minister Harper set out five priorities. As well as making government accountable we have committed to:

1. Reducing the tax burden on Canadians by reducing the GST by one percentage point immediately and another point in the near future.
2. Giving families $1,200 per year per child under 6 to help pay for child care and providing tax credits to employers who cover the full costs of creating child care spaces
3. Tackling crime by proposing changes to the Criminal Code to provide tougher sentences for violent and repeat offenders, and putting more police on the street.
4. Establishing a wait times guarantee for medically necessary services, so Canadians receive the health care they have paid for.

Our approach is based on the old adage, "actions speak louder than words."

Our government is providing real results for real people. We made that commitment during the campaign and we reaffirmed that commitment in the recent Speech from the Throne.

Our approach is focused, straightforward and fiscally responsible.

It should come as no surprise that I believe in balanced budgets and paying down debt. I will behave no differently than I did as Ontario’s finance minister, when I made the largest public debt payment in Ontario’s history.

Behaving otherwise—bargaining away balanced budgets and debt paydowns—puts the future of our children and our grandchildren at risk.

What is the point, after all, of families saving for their retirement if they have a government that mortgages their future at the same time, passing on higher tax bills and accumulated interest to future generations?

This long-awaited obligation to fiscal responsibility also means making headway in reining in unnecessary government spending, ensuring Canadians receive good value for their hard-earned tax dollars.

Under the previous government, federal spending jumped by 15 per cent—more than six times the rate of inflation.

I ask you, would you recommend a company to a potential investor with a track record of spending like that, and so little to show for it? Why should you expect anything different from your government?

As Prime Minister Harper concluded, that kind of spending growth is simply unsustainable.

I can confirm for you tonight that we are taking immediate steps to create a culture of fiscal responsibility. I am now working with Finance and Treasury Board officials to ensure that the spending of taxpayer dollars will be limited to programs that are efficient and effective: programs that work for Canadians.

It is this kind of sensible approach to fiscal management and restraint that will finally result in Canadians keeping more of their money to invest in the things that matter most—to them.

Beyond treating their tax dollars with respect, Canadians need a government that will provide meaningful tax relief.

The Speech from the Throne put it simply: Canadians pay too much tax.

Delivering on our GST commitment—reducing the GST by one percentage point immediately—is the first step in our tax cut plan.

This initiative will leave more money in your pocket. In fact, Canadians on average will be better off under our plan than under the plan of the previous government.

Consider the facts. A GST cut is a tax reform like no other.

1. It’s a tax cut for everyone, including those who don’t earn enough to benefit from a personal income tax cut.
2. Its effect will be seen on purchases large or small, regardless of age or income level.
3. And, unlike other tax measures, it will become clear if anyone tries to take this cut away from you by stealth.

The benefits of a GST cut are obvious. For the young family purchasing a new home the savings could be in the thousands. For people buying a new car, appliance or any other big ticket item, the savings could be in the hundreds.

For the companies Canadians invest in, it will mean knowing their products and services are more affordable to consumers, which can only benefit their bottom line.

I can assure you our government will continue with a responsible approach to lowering taxes for the benefit of Canadians and the Canadian economy, including a further reduction of the GST to five per cent.

Easing the tax burden for hard-working families and businesses is certainly needed. But we recognize that the road to prosperity is a dead end if you’re stuck in gridlock, or waiting for a bus that never arrives, or a delivery that is helplessly idling at the border.

These infrastructure challenges are felt by residents throughout the GTA more than anywhere else in Canada. For Canada’s largest urban centres, traffic congestion costs Canadians between $2.3 billion and $3.7 billion a year, and as much as $1.6 billion in Toronto alone.

Thanks to this industry’s efforts, Canada has financial infrastructure that works. Eight Toronto-based financial institutions rank among Canada’s 30 largest corporations based on sales and operating revenue. Even during the most recent economic recession, Toronto’s financial sector saw positive job growth.

And this financial infrastructure was designed with foresight. Canada has the highest number of automatic banking machines per capita in the world, and benefits from the world’s highest use of debit cards.

Canada has earned a reputation as a leader in e-commerce technology, tying Sweden as the nation most likely to bank online.

But Canada must make the most of this financial capital. As we stressed during the campaign, our nation’s future prosperity depends on the strength, health and security of our cities and communities, and we know the federal government has a useful and supportive role to play in making that happen.

As I mentioned to Toronto Mayor David Miller, Mississauga Mayor Hazel McCallion and Regional Chairs Roger Anderson, Bill Fisch and Emil Kolb when I met with them recently, I am committed to establishing and maintaining a cooperative and open partnership between the three levels of government.

During the election we offered Canadians several new infrastructure initiatives to help urban regions like the GTA cope with growth. As the federal minister responsible for the GTA, I’m here to tell you that we will act on all of them, step by step, as resources permit. They include:

• 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 dividends on these infrastructure investments will be Canadian communities that offer a higher quality of life to their citizens—places where businesses flourish and families feel secure.

Our government certainly has its work cut out for it. Choices—most of them tough choices—need to be made. We must and will be fiscally responsible.

Like any investor, we will have to make the most of the resources we have, and we won’t be able to make all of our investments at once. It’s too expensive, and ultimately unsustainable.

As we mentioned in the Speech from the Throne, our approach will be focused, frugal and fiscally responsible. We will set priorities that are reasonable and affordable, and stick by them, putting ordinary working people and their families first.

We have the good fortune of doing this in the midst of economic growth that will be better than most countries. As a matter of fact, the deputy chief economist of BMO Nesbitt Burns, Douglas Porter, concluded that Canada now boasts "some of the soundest economic fundamentals in the world."

But we cannot fritter away these healthy returns, which were only made possible by the sacrifices of Canadians. We must put the profits of their success back into the economy, through tough choices and clear thinking.

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

Let me conclude with this thought. Yes, the big picture is important, and our decisions must always reflect that.

But this audience knows what that big picture is comprised of: millions of ordinary Canadians who get up day after day to go to work, employ people, invest in their businesses or their own careers and, yes, pay a lot of taxes.

Canadians who—I would certainly hope—follow your advice, quietly and patiently building their family’s nest egg, paycheque by paycheque. People who also see the big picture, and know the time and effort it takes to achieve financial security, and the true value in achieving it.

They deserve to reach their financial goals. They deserve a break from the substantial tax burden. And, in the process, they deserve a government that will be accountable, will keep its promises and will invest in programs that are essential to their families and to their business.

By making this happen, we will be creating a legacy we can all be proud of. As finance minister, and the minister responsible for a region of countless financial success stories, you have my word that I will do all I can to help build a Canada that works for all of us.

Thank you very much.