Here is the prepared text of Liberal deputy leader Ralph Goodale’s speech to the Economic Club in Ottawa this afternoon, a direct response to Finance Minister Jim Flaherty’s speech four weeks ago.
This was the centrepiece of a three-speech campaign—including Scott Brison in Toronto and Marc Garneau in Montreal—apparently intended to confront directly Mr. Flaherty’s economic stewardship and metaphor.
Good afternoon everyone. Thank you for coming. May I specifically express my appreciation to Fraser-Milner-Casgrain for their sponsorship of this luncheon, and to the Economic Club of Canada for hosting.
I’m grateful for this chance to talk with you today – in a serious, measured way – about how the Liberal Party sees the economic prospects facing Canada … About the growing burden on this country’s middle-class families … And about the appropriate role for government in responding to a situation that’s becoming more, not less, concerning.
I want to offer a sober, unfiltered perspective on the international economic outlook. And what that means, from a Liberal point of view, for the priorities we need to pursue here at home … To protect ourselves from international risk … To position ourselves to succeed in an economy that has grown more perilous … And to prosper in the years ahead notwithstanding trying times right now.
This examination will contrast sharply with that offered by the Harper Conservatives. Our approach is far more responsive to the real hardships taking hold of Canadian families as they struggle with this challenging time.
To underscore our commitment to a serious and sensible discussion on the economy, I am joined today in this effort by two of my colleagues.
Our Finance Critic Scott Brison is addressing an Empire Club meeting right now in Toronto. And in Montreal this noon-hour, Liberal Industry Critic Marc Garneau is meeting with the Montreal Chamber of Commerce.
As well, Mr. Ignatieff is talking about these same issues today at an “Open Mike” town-hall meeting in Guelph.
I hope our message is unmistakable: The Liberal Party regards the economy – and the concerns of middle-class families – as our nation’s top priority. We will approach this important matter with the rigour, respect and reason that we find so missing from the government.
But let me begin by breaking a cardinal rule of political communications. I am going to knowingly repeat a charge laid by our opponents – understanding that I risk reinforcing the very mis-impression they hope to leave about the Liberal Party.
As you know, some three or four weeks ago, Finance Minister Jim Flaherty unburdened himself of a most unusual speech before the Canadian Club – not about the economy, but about swashbucklers along the bounding main. One particular allegation was so clever, so subtle, so insidious that I believe it requires a direct rebuttal.
Allow me therefore to be categorical … To leave no question and no doubt: I am not a pirate!
I have no sword. No flintlock. No eye patch. This glass is filled with water, not rum. The only squawking parrot I know is Pierre Poilievre. And I would never let him sit on my shoulder.
I should also declare – before the Talking Points pour forth from the PMO – that neither am I an alien transformer, a vampire or a werewolf.
You laugh! But I joke about this to make a serious point.
Under Mr. Harper’s Conservatives, Canadians are treated to absurd rhetoric of this sort almost daily. At a time of severe financial distress, when thousands of employable Canadians are unable to find work … With the United States struggling to avoid a return to recession and currency wars casting a dark cloud over the international economy, this piracy stuff is the level of discussion we get from our government.
It’s more than a nuisance. It’s unacceptable.
I know it’s tempting to throw up your hands and say “that’s just politics”. But those who peddle only partisan pap win when the rest of us resign our search for a higher level of discourse. When something as serious as the state of Canada’s ailing economy and the effect on our families is being discussed, we should demand better.
Mr. Flaherty gave a second speech just last week. And while he managed to avoid flagrant references to Captain Jack Sparrow, it was, in its own way, equally cavalier.
He presented the government’s Fiscal Update. With less than 24 hours’ notice. On the day after Thanksgiving. Not before Parliament. But at a political luncheon. The timing was suspect – rushed, some say, to distract from Canada’s losing bid for a seat on the U.N. Security Council.
In other words, it was about politics. Not the public interest.
In substance, last week’s Update was excruciatingly superficial. A dismissive, sometimes contradictory treatment of the nation’s books and our prospects going forward.
It asserted that Canada’s economy is performing better than predicted. Yet it revealed the largest federal deficit ever recorded – $55.6 billion – nearly $2 billion higher than projected just last spring.
What’s more, according to the Update, by 2015, the red ink just disappears – poof, as though by miracle. There’s no explanation as to how this radical shift will occur. The Minister simply insists: “We’re on track.”
That’s a strange thing to suggest when you consider the “track” he’s on has taken us from a $13 billion surplus to an all-time record deficit. And that deficit began BEFORE, I repeat BEFORE, not “because of” the recession.
Mr. Flaherty’s “track” is one of missed projections, worsening results, lost jobs, and indifference to the burdens on Canadian families.
To get to the basics: The Finance Minister says his GDP growth projections are based on 15 forecasts provided by the private sector. He further says he adjusted their “average projected growth” downward, as a safeguard against the risk of an overly optimistic outlook.
The simple averaging of projections is, in current circumstances, an insufficiently prudent effort. Rarely have projections from the private sector varied so widely.
There is a huge discrepancy among those 15 private sector forecasts, from the most optimistic to the most pessimistic – a gap of nearly a $60 billion. Adopting an “average” across such a vast chasm is unrealistic, especially if your most reliable forecasters are all on the pessimistic side of the equation, and the effect of averaging is simply to dilute their caution.
Secondly, the Minister’s downward risk-adjustment is small. His discount – his safeguard against adversity – amounts to a revenue cushion, at best, of just 0.61 percent. That’s less than a rounding error in the books of the Government of Canada. Even worse, his cushion grows thinner, not thicker, as the years unfold. This is completely backwards.
Even in the best projections, beyond two years forward, the risk of error increases exponentially. The outer years are where the greatest cushion against risk is required, but that’s exactly where Mr. Flaherty sets aside the least protection. Coincidentally, that’s also when he lays his claim to a sudden return to surplus.
That fact alone renders suspect his claim of a balanced budget.
Beyond the bare numbers, the analysis in the Update – which used to be a rich survey of the best that public and private economists had to offer – is equally lacking.
There’s no assessment of the factors at play in the global economy through which Canada must find its way. For the most part, the analysis consists of selective statistics to show other countries performing worse than we are. But to be the “least bad” is hardly an assertion of strength. And to Canadians struggling to find work, it is small comfort to know there are many more like you in some other country.
A responsible Update would offer a frank assessment of the fragility in the United States and some sense of how their continued lack of growth will affect our exports. It would tell us how long American unemployment will remain close to 10% … Whether deficits will continue to gobble up 10% of their annual GDP … Whether a new round of stimulus or “quantitative easing” will come from Washington and what, if anything, that might mean for our own policy choices.
Some economists suggest the United States is headed toward a five or seven or ten year stretch of economic drift, similar to that which hobbled Japan. They see great cause for concern as consumers reach rock bottom and a new round of foreclosures depress spending and activity.
In our view, that is likely too pessimistic a perspective. But why don’t we know Jim Flaherty’s view? Why don’t we have a detailed assessment from this government?
The same must be said for the situation in Europe, where the Greek debt crisis signaled the need for substantial rebalancing in the EU. But how long will that take and how thorough will it be?
The unstated hope of much of the world is that emerging markets – especially China, India and Brazil – will fill the demand-gap left by a flagging United States. Here again, we need to know whether the purchasing power of a growing middle class in these countries is adequate. Will new BRIC domestic demand substitute for fewer exports to the US or the EU?
These are hard global realities NOT explored in an Update apparently designed to be digested quickly before dessert.
Finally, we’re seeing what some call a “currency war” among the world’s economic powers, as they rely increasingly on monetary policy to compensate for economic deficiencies. We need look no further than the jump in our own dollar to recognize that Canadian families have a direct stake in this discussion. The Update provides little insight as to how we’ll navigate these suddenly treacherous waters.
It’s not that we suspect only the worst will come to pass. Certainly, we all hope fervently for growth at home and abroad to surge ahead of current projections.
But we know the balance of risks is growing. The Governor of the Bank of Canada tells us this is so. The Minister himself grudgingly acknowledges this fact.
Is this just the customary correction in the business cycle after 15 years of unbroken expansion? Or is something more fundamental going on? Some economists see a decade or more ahead of decline and drift. Many families sense it. Let’s hope they’re wrong. But let’s also insist on getting the data and the analysis to be fully informed and fully prepared.
These are extraordinary times. Times which beg more detailed accounting, thinking and planning. Yet just when we need more, this government provides less.
And here’s why that’s so wrong:
Because unless we get a full and honest analysis from our government, Canadians cannot intelligently or responsibly assess what it means for working people and what choices government should make.
Policy decisions should not be taken in a vacuum. They should not be based on ideology or bias. They should be rooted in a transparent and open assessment of facts. This government obscures the facts. It evades that analysis, and therefore it robs Canadians of a discussion that we desperately need to have. Which, I suppose is their whole objective.
The Liberal approach is one that’s familiar to you. It is a record of genuine economic achievement – achievements that largely sustained this country through the rough times since 2008:
• A previous decade of balanced budgets;
• Explicit contingency reserves and extra prudence factors embedded in the budget-making process;
• The balanced use of surpluses to pay down debt, make tax rates competitive, and invest in vital economic and social priorities like the child tax benefit, public infrastructure, innovation, student assistance and healthcare;
• The slashing in half of Canada’s debt ratio;
• Low and stable interest rates;
• Well-controlled inflation;
• A rational Canadian housing market;
• A secure public pension system;
• Sound banks and responsible financial system regulation.
• These are the strengths that got us through. But Mr. Harper has weakened some of them and the way forward is now far from certain.
Of course, there are two ways to measure our prospects – by what economists see and say. And by what families feel.
We’ve discussed the former as best we can. Let’s turn now to the latter – to the practical challenges, the day-to-day realities that grip Canadian families, and about which the government had even less to say in last week’s Update.
The defining fact of economic life for many Canadians is anxiety.
People are worried about their jobs and their ability to pay down a level of household debt that has soared. Middle-class families in Canada are being squeezed like never before – more severely, in fact, than anywhere else in the western world.
The average Canadian family is about $96,000 in debt. We owe almost $1.50 for every single dollar of disposable income. And our cost of living keeps rising.
Credit card balances are high. Mortgages have been borrowed against. And lines of credit are full.
We can debate how we got to this point … About the need to encourage a greater culture of savings and prudence. But we also have to recognize that many families are simply doing what they have to do to get by – to manage a household budget that is stretched with costs that are growing.
A budget made even more difficult by the high cost of child care, or sending kids to university, college or CEGEP, or taking care of an aging parent. Or all these things together.
The source of household debt in Canada isn’t twice-yearly trips to fancy resorts, speedy new sports cars or other luxuries. It’s about making it through day-by-day.
And it’s not a task made any easier when the value of the family home is uncertain and your RRSPs have yet to recover.
These same middle-class families look to Ottawa and see a government that never fails to congratulate itself for its so-called “sound economic management”. But they wonder where they fit in.
This Conservative government has a “do you get it” problem.
Do you get what families are actually feeling? Do you get that risks are growing not shrinking? Do you get that demographics are set to make this challenge even greater, as the baby Boomers become the biggest generation of senior citizens in history?
Do you get that there’s a role for government in helping Canada and Canadians overcome this new era of economic risk?
The Liberal Party “gets it”. We have always recognized that a growing middle class is the cornerstone of economic prosperity. And we’ve always recognized that government has a legitimate part to play in helping the middle class to grow, prosper and keep the country strong.
So Liberals would take a different approach than we’ve seen from this government. And we would begin from a different premise.
One that recognizes the outlook for our economy is more fragile. That the balance of risks internationally is tilted toward the downside. And that our middle class is hurting and needs support.
Where does that take us in terms of priorities?
Fiscal responsibility – certainly. That’s part of our Liberal brand and, unlike Mr. Harper, we have a track record to prove it.
Our initial target will be getting his deficit down to 1-percent of GDP within two fiscal years. We’ll re-establish properly structured “fiscal shock absorbers” to protect against nasty surprises. And our platform commitments will be costed, showing how they’ll be financed without adding to the Harper deficit.
But our policy commitments – the choices we make – will demonstrate clearly how we differ from the Harper Conservatives.
First priority: Learning. Invest in the creation of affordable early learning and childcare spaces. Close the gap in Aboriginal education. Help families save for post-secondary education. Skills training for workers. Language training for immigrants. Literacy training for those who need it.
We will invest in our people to build the best-educated, most highly-skilled workforce in the world—because this is the most important thing the federal government can do to help middle-class Canadians succeed. It is also the best way we can help prepare our economy to compete and win in the years and decades to come. Productivity and competitiveness depend on the quality of our brainpower.
Second priority: Care. Two weeks ago, Michael Ignatieff announced our Liberal Family Care Plan, to help hundreds of thousands of families care for loved ones at home. These are costs that families cannot ignore. They don’t want to ignore them. And government should be there to help.
Let me add an emphasis on health care. In particular, the federal-provincial agreements that will come up for negotiation in a couple of years. The jockeying has already begun and, already, we’ve seen this government attempting to downplay its obligations.
A Liberal government will defend our public, universal healthcare system. We must preserve and protect this anchor of middle-class success. This defining aspect of what makes us Canadian.
Third priority: Pensions. We’ve proposed new measures to help Canadians save for retirement, and to protect pensions when companies go bankrupt. This is fundamental to a sense of security as we enter an era defined by an aging population and more retirees than ever before.
And we must tackle the CPP/QPP. We’ve proposed consideration of a supplementary CPP – as have many experts. This government’s answer is silence and absence.
They had to be dragged kicking and screaming to the federal-provincial-territorial table to talk pensions. Since then their efforts have been a litany of missed deadlines, failed efforts and half-hearted talk. Liberals led a national consensus over a decade ago when our pension system required overhaul. We are prepared to do so again.
And to all that, let me add a final priority – one that characterizes the international nature of today’s and tomorrow’s economy: We simply must be leaders beyond our borders. For four years, Mr. Harper insulted China and ignored India. Our share of those markets failed to keep pace with the growth of their economies. We have to do better.
Can there be any question that our standing in the world community has been diminished after the embarrassing failure last week at the United Nations? Is there any doubt that such shortcomings are also a threat to our economy – at a time when so much of the weakness that puts our jobs and growth at risk comes from overseas?
These are our priorities. Job for today. Jobs for tomorrow. A learning society where every Canadian can reach their potential. Help for middle-class families. Support for seniors. And a new era of global leadership, worthy of our history.
Conservative priorities are different. A more costly, less reliable census. Untendered stealth fighters. Bigger jails. A billion-dollars of extravagance for one weekend in Toronto. But the needs of middle-class families don’t figure.
Mr. Harper dismissed support for family caregiving as “reckless” – let caregivers use up their vacation-leave, Conservatives say, or use up their savings. Yes, “let them eat cake”, Marie-Antoinette!
Instead, the Harper government is planning another tax cut for large corporations – 20-percent more, on top of the tax cuts of 35-percent which these companies have already enjoyed. They already have the second-lowest rate in the G-7. They already have a 10-point (or 25-percent) advantage over the United States. Mr. Harper would add $6 billion more every year.
Now don’t get me wrong. As a former Finance Minister, I like cutting taxes. But if you’re a responsible Minister, your tax cuts will be affordable, sustainable and consistent with your other obligations to Canadian citizens. And be especially careful when you’re already $55.6 billion in the hole.
So we will cancel these extra Conservative corporate tax cuts until the budget is balanced. We’ll utilize the $6 billion per year to reduce the deficit, and to invest in the priorities of ordinary Canadians: learning, care, and leadership in the world.
There is a clear choice here.
A choice of priorities. A choice of values. A choice between Mr. Harper’s Canada and the Liberal alternative. A choice that Canadians will have to make when the time comes.
Liberals have made our choice. We choose the priorities of middle-class families. We choose forward-looking policies to lead to a more prosperous future. We choose to pull our country together, and face together our challenges as one great people.
With these choices, we can build the future our children deserve.