March 9, 2006
Notes for Remarks by
the Honourable James M. Flaherty, P.C., MP
Minister of Finance to the Whitby Chamber of Commerce
Whitby, Ontario
Check against delivery
Good afternoon.
It’s nice to be home among good friends, close neighbours and long-time
supporters. I couldn’t think of a better place to deliver my maiden speech
as federal Minister of Finance. Whitby has been a pillar of support for the
past 10 years, and I appreciate the trust you have placed in me. I’m proud
to say this is home for me and my family.
Throughout my political career, both provincially and now federally, I
have been able to count on the people in this room and in this riding for
insight, information and advice on key issues affecting our families and
businesses.
In the coming weeks, in my primary role as your MP and as Minister of
Finance, I will again turn to many of you as I begin work on the federal
budget and deal with the many other challenges I will face as the person
responsible for the nation’s finances—nearly $200 billion a year
overall.
Five years ago, I was responsible for a $64-billion budget as Ontario
Minister of Finance.
The numbers may be bigger and the issues wider in scope, but the lessons
I learned as provincial Finance Minister will continue to guide me as I
carry out my federal duties.
New 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 frugal, to
be accountable and to make the tough but necessary choices.
That’s just as true today. In fact, Prime Minister Stephen Harper is
taking government accountability to a new level. The trust that Canadians
have placed in the Conservative government will not be taken for granted.
The Harper government is charting a new course:
- replacing the culture of entitlement;
- putting Canada’s interests ahead of the interests of a privileged
few; and
- 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.
I can assure you we are committed, focused and frugal. We are starting
with the five specific areas we outlined in our election platform, keeping
our word to the people of Canada.
Five Priorities
Those five areas are the following:
- cleaning up government by passing the Federal Accountability Act;
- reducing the tax burden of Canadians, starting with a one per cent 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.
While doing my part to implement these priorities, I will draw upon the
other lessons learned throughout my career, whether it was setting up a law
firm, drafting a budget, or working towards more secure neighbourhoods as
co-chair of Stephen Harper’s Task Force on Safe Streets and Healthy
Communities.
Balanced Budget and Fiscal Prudence
For starters, I strongly believe that balanced budgets and paying off
debt are essential to our nation’s success. They are not something to be
bargained away during budget deliberations.
That’s why, when I was Ontario’s Finance Minister, I made the largest
single payment in history to reduce the public debt in Ontario: $3.1
billion.
Deficit financing is not sustainable with your own finances; why should
government be any different?
I will also keep in mind whose money I’m responsible for—yours.
That’s why I’ll strive to keep a lid on federal spending, which last
fiscal year went up by some 15 per cent.
When I was in the provincial Conservative party we used to say that the
problem wasn’t that revenues were too low, but that spending was too high.
We need to ensure that when we spend taxpayers’ dollars, we get
results, and you get good value.
The Prime Minister believes this as well. He has clearly indicated that,
over the past five years, growth in spending has been expanding at an
unsustainable rate.
That’s why our government fully intends to limit future growth in
spending to more reasonable levels. In fact, our government has made a
commitment to limit future growth on federal grant and contribution programs
and within federal departments and agencies to the rate of inflation plus
population growth.
I am currently working with Finance Department and Treasury Board
officials to ensure taxpayer dollars will only be spent on programs that are
effective and efficient—on programs that work for Canadians.
I can assure you the Harper government is leading by example.
We saw one of those examples on February 6 when our government was sworn
in. Our incoming cabinet is leaner than previous ones. It’s a prudent
decision that will save all of us a significant amount of money.
Being fiscally responsible is in everyone’s best interest. It provides
us with the flexibility to ensure you keep more of your own money to invest
it in the things that matter to you.
Tax Relief
Delivering on our GST commitment is a vital part of that. Our government
is committed to reducing the GST by one per cent immediately, putting money
back into the pockets of hard-working Canadians.
It’s a tax cut for everyone. A tax cut you see every time you buy
something.
For example, the average price of a new home in Whitby is $318,000,
translating into a savings of thousands for a young family. Or if you
purchase a new Oshawa-built Monte Carlo, the savings could be in the
hundreds. Clearly, the impact on the Canadian economy will be significant.
This tax initiative is one of Prime Minister Harper’s five main
priorities, and I can assure you it will be front and centre when Parliament
resumes this spring.
Of course, it’s not the only tax relief taxpayers will see. We also
want to lighten the tax burden for business people.
After all, it’s your drive and your investment that creates well-paying
jobs for our neighbours here in Whitby and beyond. The members of this
Chamber of Commerce generate the economic growth that benefits our
community, our province and our country.
That’s why the Harper government is committed to business tax relief
promised, but not delivered, by the previous government.
During the election we campaigned on reducing corporate taxes and
following through on eliminating the federal capital tax. Rewarding
Canadians, in other words, who reinvest their money and create jobs.
Rest assured we will move forward on this as soon as we can.
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 create the vast majority of
jobs across the country.
As we move forward, I will rely on the government’s Opportunity Plan
for Small Business, a package that would 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. Our government will offer
a tax credit of 10 per cent of an apprentice’s wages for two years to a
maximum of $2,000.
Our plan would raise the threshold at which businesses have to pay the
general corporate tax rate, and cut the small business rate itself within
five years.
Fiscal Imbalance
Another commitment made during the election was that our government would
finally address the fiscal imbalance between the federal and provincial
governments. Having been a minister at Queen’s Park, I understand how this
issue is seen from a provincial government perspective.
Our government has begun discussions with the provinces and territories
to try to find a long-term solution to the fiscal imbalance issue. It will
not be a simple exercise.
The issue didn’t emerge overnight, and will not be resolved overnight.
However, the goal will be a comprehensive arrangement that will permanently
address the fiscal imbalance.
And you can be sure it will be done by a federal government that will be
open and completely transparent in the process.
You may be surprised to learn that running a deficit is the exception,
not the rule here in Canada.
Today there are only two provinces in a deficit situation: Ontario and
Prince Edward Island. The majority of provinces have balanced their books,
or are now running surpluses.
I’ll be interested to see what progress Ontario is making on the fiscal
front when it delivers its budget later this month.
I will be also be interested in reading the federal report on
equalization which will be released in the near future.
Before I move on, I just want to touch on the issue of equalization. I
believe the current equalization process is a mess due to ad hoc, one-off
deals by the previous government.
It does not reflect the values that the majority of people hold in this
country. We are Canadians first, and we support each other by sharing the
wealth.
According to a recent survey by the Centre for Research and Information
on Canada, nearly three out of four Canadians agree that by acting together
they can have at least some impact in making our communities better places
to live. This need to work together as Canadians is vital as we move
forward.
The challenges our country faces—and that you face—go beyond
relations between various orders of government and complicated transfer
calculations.
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 the federal minister responsible for the GTA, I
know these infrastructure challenges far too well.
These infrastructure challenges are more than a daily inconvenience; they
pose real risks to the future prosperity of our communities, and to the
entire country. In fact, it’s estimated that traffic congestion in the GTA
alone is costing the Canadian economy billions in lost productivity.
We made it clear during the campaign that our country’s future
prosperity will, to a significant extent, depend 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 GTA.
We also know what our role is, and that the best way to manage it
is in cooperation with provincial and municipal authorities.
As I stressed two weeks ago in a Toronto symposium that included all
three levels of government, we offered Canadians several proposals during
the election that will help build a better future for our urban centres.
We will act on each and every one 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 end result be will 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 we begin this budget process and set the stage for future
budgets.
Making Choices
Let me caution everyone here today. As Finance Minister, I know that
choices have to be made.
We can’t do everything at once; we simply don’t have the resources.
After meeting with the Premiers recently, Prime Minister Harper made it
clear that the provincial wish list was just too expensive. It wasn’t
sustainable.
Our government believes we must set priorities that are reasonable and
affordable, and stick by them. Our approach will be frugal, focused and
fiscally responsible.
In January, Canadians gave us a mandate to lead change, and you can’t
have responsible leadership without making prudent, 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 and corporate profits that
are also near record levels. That cannot be taken for granted—it must be
protected, it must be nurtured.
When I met with my G8 counterparts in Russia a few weeks ago, it quickly
became apparent that Canada’s balanced budget approach, the fact that we
are currently experiencing strong economic growth and that we are going to
make meaningful tax cuts, is increasingly seen as an international success
story.
Others are reaching the same conclusions about our country’s potential.
Standard & Poor’s says Canada’s economic growth will be better
than most of its peers thanks to lower taxes, renewed spending on education,
and a diversified, export-oriented, highly developed economy.
And in a report last week in The Globe and Mail called
"Bypass Switzerland, go straight to Canada," the deputy chief
economist of BMO Nesbitt Burns, Douglas Porter, concluded that Canada now
boasts "some of the soundest economic fundamentals in the world,"
including a current account surplus that is quickly becoming the envy of
most nations.
These are encouraging words. But if we are to maintain our competitive
advantage and build on this success, we will have to make some tough but
necessary decisions.
I can assure you Prime Minister Stephen Harper and our government are up
to the task.
Conclusion
Let me conclude with one 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 Whitby. 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 that those you elect will
remember who sent them and why.
As I have done for the past 10 years, I will be your voice in caucus and
cabinet, I will represent your concerns, and I will never forget the good
people of Whitby–Oshawa.
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.
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