December 2, 2009
Check against delivery
I'd like to thank you for being a part of today's important event—the release of the Fourth Report to Canadians on the ongoing progress of our Government's Economic Action Plan.
As you may know, for past reports Prime Minister Stephen Harper personally met with Canadians as part of this quarterly report to Canadians.
The Prime Minister extends his regrets that he could not be here today, as he begins an important visit to China.
His trip, like his visit to India last month, is part of our Government's ongoing commitment to deepen economic relations with these large emerging markets. This effort to enhance trade and investment has included a series of free trade agreements, the launch of historic negotiations with the European Union, and the elimination of a broad range of tariffs to lower costs for Canadian manufacturers and encourage innovation.
All of this, of course, makes for an excellent introduction to today's event. And the University of Winnipeg is an ideal location, even with all the dust and commotion.
I'm sure everyone here can handle the noise, though, in the full knowledge of what will result. It's why the Economic Action Plan was introduced in the first place.
Today you hear the sounds of construction, thanks to a government commitment to improve this university and other post-secondary institutions across the country, while giving a much-needed boost to the local economy.
Through the Knowledge Infrastructure Program, the University of Winnipeg will receive more than $18 million for the construction of the new Science Complex and Richardson College for the Environment. The foundation piles are in the ground and the construction of this complex will employ 400 workers through to March 31, 2011.
Next year and in the years to come, this activity will be replaced by researchers and students hammering out new discoveries, making our nation more innovative and keeping Canada a world leader.
As today's report makes clear, our Economic Action Plan is doing precisely what it was meant to—providing unprecedented short-term stimulus to respond to a global economic downturn, while making sure Canada will emerge stronger than ever and well positioned to lead in the global economy over the long term.
An Extraordinary Response
As 2009 comes to a close, Canadians should be proud of what this country has accomplished during a time when other nations were brought to their knees.
While global banks were failing or requiring taxpayer dollars to survive, Canada's financial institutions were being recognized as the world's soundest.
While other countries were trying to manage recessionary spending on top of chronic deficits, Canada went into a global downturn with a solid record of debt reduction and sound fiscal planning, and we'll come out of it with the strongest growth and lowest debt burden in the G7.
And while nations now ponder tax increases in attempts to keep a lid on unsustainable debt loads, we actually reduced taxes to support Canadians and businesses, before the global downturn, in anticipation of tough times ahead.
That this year ends so optimistically is the direct result of our Government's response at its start.
When called upon, this Government acted decisively to address the unprecedented crisis that crashed across our borders, the deepest global recession since the Second World War.
In January, we introduced the earliest budget in Canadian history, representing one of the most comprehensive stimulus packages in the industrialized world.
It went further and did more than any budget before it. It had to.
The Economic Action Plan was an approach endorsed by the G20 and G7.
After introducing extraordinary economic stimulus, we took unprecedented steps to get this boost into the Canadian economy in record time.
As this report to Canadians makes clear, 97 per cent of the first year of our Economic Action Plan has been committed, adding up to some 12,000 projects.
Of those, work has actually begun on approximately 8,000 of them.
Throughout this country, Canadian communities, businesses, workers and families are getting the support they need.
Speaking to you today, less than a year after Canada's Economic Action Plan was released, the Canadian economy has begun to turn the corner.
Economic Impact of the Plan
In fact, the deterioration of Canada's economy over the course of the global recession has been less severe than in virtually all other major industrialized economies.
The loss of jobs in Canada has been considerably less pronounced than in the United States. The unemployment rate in Canada is now 1.6 percentage points lower than it is in the U.S.—the largest gap in a generation.
There is every reason to be hopeful in 2010, as the full weight of both monetary and fiscal policy supports growth. The IMF considers Canada's economy well positioned to resume expansion, with household and financial institution balance sheets that are stronger than in many countries.
Recent areas of strength in the Canadian economy show that the Economic Action Plan is working.
One of the principal objectives of the Action Plan was to restore confidence in the economy. Consumer and business confidence has recovered sharply since the beginning of the year.
Private spending on consumer and investment goods has rebounded strongly in recent months.
Following large declines at the end of 2008 and early 2009, residential investment has rebounded since March, led by increases in renovation activity.
According to Statistics Canada, government capital investment increased almost 25 per cent in the third quarter of this year, the largest increase in nearly a decade.
Evidence of these investments can be seen across the country. We're in the midst of one here at the University of Winnipeg.
But I can think of many others as well:
But I must stress to you today that our recovery remains fragile. Employment remains far too low and, while output in Canada has improved, growth remains modest.
That is why I pledge to you today that we will see this Plan through, to ensure a full and robust recovery firmly takes hold.
Our economic focus will be on following through in getting all of the measures we've announced out the door and into the economy.
The impact of the Plan will continue to build throughout 2010 and support growth during the recovery.
A Plan in Progress
With 97 per cent of 2009–10 funding committed, elements of the Action Plan directly controlled by our Government are largely in place.
All of them are making a difference.
Extended EI benefits are flowing and training programs have been expanded.
We are stimulating construction on the infrastructure that matters most to Canadians, their homes, through the Home Renovation Tax Credit.
Unprecedented actions to improve access to financing have ensured Canadian families and businesses are able to access low-cost financing even in the aftermath of a global financial crisis.
And, as the work being done at this university illustrates, substantial investments are being made right now in higher education, science and technology.
The measures all have one thing in common: they provide the immediate short-term support our country needs today, while making sure we are equipped to succeed tomorrow.
Creating the Economy of Tomorrow
As indicated in today's report, 100 per cent of the $2-billion Knowledge Infrastructure Program, which supports research and advanced education by funding deferred maintenance, repair and construction projects at colleges and universities across Canada, has been committed.
All told, the Economic Action Plan includes nearly $5 billion in science and technology initiatives—significant new resources that will strengthen Canada's position in knowledge leadership, and establish centres of excellence in key priority areas such as health, energy, the environment and information and communication technologies.
Canada's investments in higher education research and development as a proportion of the economy are now the highest in the G7.
It is by making these investments that our Government is ensuring all our communities with colleges and universities remain vibrant, dynamic and central to our future prosperity.
Reducing the Tax Burden for Canadians
While supporting key industries sideswiped by the global downturn, the Economic Action Plan is also helping them become more globally competitive.
This includes the elimination of tariffs on a broad range of machinery and equipment to lower operating costs for Canadian manufacturers and encourage innovation. In the third quarter, investment in machinery and equipment by Canadian businesses increased by more than 25 per cent—the first increase in six quarters. Actions like this will ensure that we emerge from the downturn stronger.
This much-needed tariff action complements government measures to reduce the tax burden on Canadian businesses, and builds on broad-based permanent tax reductions that are lowering the general corporate income tax rate from 22 per cent in 2007 to 15 per cent in 2012.
Through these efforts, and those provided by provincial governments, Canada's overall tax rate on new business investment will be the lowest in the G7 by 2010 and below the OECD average by 2012. By 2012, Canada will also have the lowest statutory corporate income tax rate in the G7.
Our Economic Action Plan brought tax relief to individual Canadians as well.
In total, actions taken by this Government since 2006 will reduce taxes by $220 billion over 2008–09 and the following five fiscal years, allowing Canadian individuals, families and businesses to keep more of their money during tough economic times.
Building Infrastructure to Create Jobs
After describing all of these vital government measures, and in the midst of a bustling construction site, I would be remiss if I didn't describe how much has been done to strengthen the infrastructure that binds this country and makes our communities more liveable.
Just as the threat posed by the global economic crisis was widespread, so too was the scope of our infrastructure response.
Since the release of Canada's Economic Action Plan, the Government has committed more than $9 billion in federal funding towards more than 6,700 provincial, territorial and municipal infrastructure projects, together worth almost $26 billion.
Virtually every community in Canada has enjoyed a direct or indirect benefit from our Government's investments in infrastructure. In this province alone, funding has gone to:
We have also acted in other areas:
Returning to Balance
The Economic Action Plan's success on building infrastructure and setting the foundation for economic prosperity is based on the combination of speed, collaboration and magnitude.
It's also based on a short lifespan. The Plan was not created for eternal life.
If we are to effectively provide short-term stimulus to counteract an immediate crisis, we have to provide a compelling incentive to spend that money when it is needed most.
That is why, as indicated in the report, we have set a deadline of January 29, 2010 to commit remaining funds for a number of major infrastructure programs for both 2009–10 and 2010–11. It's a strict "use it or lose it" approach that will ensure stimulus funds are spent by March 31, 2011.
Temporary means for a limited period of time.
Allowing the temporary elements of the Action Plan to wind down as scheduled by the end of the 2010–11 fiscal year is the first step in the Government's strategy to return to the fiscal balance that served Canadians so well before the crisis hit.
This alone will cut the budget deficit in half, from $56 billion in 2009-10 to $27 billion in 2011–12.
As I clearly stated last month, our Government will stay the course with the Economic Action Plan already announced, to protect and create jobs. Accordingly, Budget 2010 will be year two of our two-year Economic Action Plan.
It will not include major new spending initiatives.
Then, after fully implementing the Economic Action Plan, we will launch our exit strategy.
Once we are certain recovery has fully taken hold, we will move forward on our plan to return to balanced budgets over the medium term.
Along the way, there are certain things our Government won't do.
When the time is right, when the economic recovery is clear and entrenched and if it's necessary, we will determine the amount of spending growth restraint required to balance the budget.
As I've said before, if we have to restrain growth in spending, when the time comes we will find that restraint in the remaining $100 billion of federal program spending that is projected to grow at 3.3 per cent a year.
Ladies and gentlemen, if governments, like people, can best be judged in how they respond to a crisis, I am certain history will conclude we not only survived this global baptism by fire, we prevailed.
When faced with an extraordinary crisis, we fought back with an extraordinary response. And we did so in record time.
We made sure our response was fully capable of overcoming our immediate challenges. But at the same time, we made sure those shovels in the ground were actually creating something worthwhile.
We honoured our commitment to Canadians to deliver what was promised last January. And we honoured our commitment to our global partners to ensure our unprecedented fiscal measures would perform the way they were intended to, by laying the foundation for an entrenched recovery.
We made the difficult choices Canadians expect of us.
And we will continue to do so when uncertainty becomes recovery, so that a crisis response doesn't become a long-term burden for our children and our grandchildren, including those who will one day be honing their skills in this very laboratory.
A year ago, before this Economic Action Plan was crafted, a global crisis not of our own making threatened the economic future of our families and our country.
We took the steps necessary to ensure 2009 ends much more optimistically than it began. Our future looks even brighter as a result.
Our plan made that happen. Our plan works. And it will continue to do so.