For the record, prepared notes for Finance Minister Joe Oliver at the Economic Club of Canada on April 8:
Good morning, everyone. Let me begin by thanking Colleen Johnston for that kind introduction, and the Economic Club of Canada for hosting me today. It’s great to be back.
I find myself speaking before one of the few audiences in Canada that may enjoy an economics joke. So let me seize this opportunity, and open with the words of a former Congressman: “Balancing the budget,” he mused, “is like going to heaven. Everybody wants to do it, but nobody wants to do what you have to do to get there.” (Well, perhaps it was the delivery.)
As a member of Parliament, I spend a lot of time talking to people in my riding. As Finance minister, I have met thousands of Canadians in every corner of this great country, and I have heard this repeatedly: Canadians expect their government to spend within its means.
They understand government cannot indefinitely spend more than it earns. Nor can it tax its way to prosperity.
Yet they see governments in Canada and around the world taxing and spending their way from one crisis to another.
Many remember the days when Ottawa was just the same. They lived through the Pierre Trudeau decade.
Entre 1969 et 1979, les dépenses fédérales ont triplé, soutenues par des hausses temporaires des prix des produits de base. Lorsque ces prix ont inévitablement chuté, le Canada a connu ses pires déficits budgétaires en période de paix.
Between 1969 and 1979, federal spending tripled, buoyed by temporary highs in commodity prices. This was not a response to economic crisis. It was driven by the ideology of the man at the wheel . . . and on the reckless assumption that commodity prices would remain high. When they inevitably dropped, Canada lived through some of the worst federal budget deficits in peacetime history.
Even as his successor, Brian Mulroney, balanced the operating budget, Trudeau-era debt clung to Canada like a bad flu.
Long-term government of Canada bond yields reached over 18 per cent (compared with under two per cent today) and debt-repayment costs hiked with them.
Cuts in the ’90s averted a calamity. But, by stopping one calamity, we started another.
Jean Chrétien balanced the budget by hiking taxes, cutting vital programs and slashing billions in transfer payments—transfer payments used for the health care and education we all cherish.
To quote David Frum, “As you enjoy the peace, stability and comparative prosperity of Canada in the 2010s, just consider: This is how Canadians felt in the 1960s.” But then, we made the wrong choices—the choice of unaffordable spending and the back-breaking debt that came with it—and it took us about 30 years to restore what was lost.
Consider this the theme of my speech today. At the crossroads of history, Canada will soon face another choice. There is a right path, and a wrong path. And, just like the last 30 years, this choice will have consequences.
We see the consequences of bad fiscal choices when they are made at home. As parents, we do everything we can to do right by our children. Every day, moms and dads sit down at the dining room table and lay out the bills. They earn their dollars, then they count their dollars, then they stretch their dollars as far as they can go. Families cannot print money. They cannot indefinitely put off payments for car insurance and mortgages. They have to find savings and make every penny count. Parents understand that the reward of responsible budgeting is worth it, for them and their kids. But you know what parents would never want to do? Pass debt on to their children.
One of the reasons I joined our party is because that is not the Conservative way of doing things.
Our Prime Minister understands what hard-working Canadians want and need . . . along with the proven capability to manage a G7 economy, which he did with the aid of my predecessor, the late Jim Flaherty.
The Prime Minister’s commitment to creating jobs, growth and long-term prosperity is iron-clad. He made tough choices to respond to exceptionally challenging economic times.
Only a few years ago, we stared down the worst international economic and financial crisis since the 1930s. The Great Recession erased $10 trillion in global market value . . . and the family savings tied up in those markets. Along with the decimation of savings came the eradication of jobs. Companies shuttered, paycheques ran dry. Globally, over 62 million jobs were lost.
In the face of a nearly unprecedented economic crisis, a nearly unprecedented fiscal response was required.
This was our Economic Action Plan, a low-tax plan for jobs and growth. We made unprecedented investments in thousands of infrastructure projects—over 30,000, in fact. We helped build another 12,000 projects through our Building Canada Plan. These were shovel-ready projects that created jobs, exactly when Canadians needed them most. We did the right thing for Canada. And doing the right thing worked.
The stimulus program was massive, but it was not excessive, something the opposition urged us to adopt. That was also crucial, or we would still be crawling out of a growing debt trap. We created over 1.2 million net new jobs since the depths of the recession, one of the strongest job-creation records in the G7.
The overwhelming majority of those jobs are full-time, private sector, and in high-wage industries.
According to the International Labour Organization’s Global Wage Report, Canada has the best pay gains in the G7. The Centre for American Progress says, “Canada has experienced continuing middle-income growth, while, for many countries, it has halted.”
A Fraser Institute report concluded that “the adult unemployment rate is at historically low levels,” and Canada has seen “a marked increase in high-wage factory jobs in recent years.”
And Canada’s total government net-debt-to-GDP ratio is less than half the G7 average. Yes, half.
I think you see my point. Our plan is working, but we still have more work to do. We could not, and cannot, spend our way to prosperity. Times of crisis call for crisis management. That was the purpose of stimulus. The crisis is over, and so is the time for deficit-creating stimulus spending. But there are risks out there, so we must remain fiscally strong.
When we launched our stimulus plan, at a time our country needed it urgently, we made a promise to Canadians. As soon as we were able, we would return the books to black ink.
And we would return to balance without the kind of reckless spending cuts we lived through in the ’90s. No instability, no hack and slash. Now, our Government is promising to present a budget that is balanced . . . balanced fiscally and balanced in providing benefits fairly to Canadians right across the country.
Un budget qui rend le coût de la vie plus abordable pour les familles canadiennes de la classe moyenne et à faible revenu qui travaillent fort, parce que nous savons, je sais, que ce sont elles qui en ont le plus besoin.
Because this will be a budget that makes life more affordable for hard-working middle- and low-income families. Because we understand, I understand, that they are the ones who need our help most. This will be a budget that ensures job-creating businesses thrive right here in Canada.
And this budget will look nothing like Pierre Trudeau’s budgets. He created structural deficits that arose out of permanent spending commitments unrelated to the need for economic stimulus. Ours were strategic, not structural . . . responsible, not reckless . . . the product of careful deliberation based on our financial circumstances, not detached from economic reality. His Liberal successors prevented disaster, but the way they did so was equally dangerous: through some of the biggest tax hikes in Canada’s history, accompanied by unprecedented cuts to programs and transfers.
The result? Services like public health care, at the core of what it means to be Canadian, faced a terrible crisis.
Last week, I announced that I would table the budget on April 21.
I also confirmed it would be a balanced budget. Our balanced budget will be a major accomplishment. Remember the context. We are keeping taxes low for families and employers. The personal federal tax burden is at its lowest in over 50 years. Our business tax rates are the most competitive in the G7.
We launched the largest and longest infrastructure program in Canadian history. We are continuing to grow transfer payments to the provinces for health care, social programs and equalization. Indeed, since we took office, for the country as a whole, transfers are up 62 per cent and, for Ontario, they are up 88 per cent.
That U.S. Congressman I quoted was right, you know. Everyone says they want a balanced budget; few have the steel to do what it takes to get the job done.
Our government believes that Ottawa is perfectly capable of doing what families have to do every day. But that means setting priorities and making choices.
Budgets do not balance themselves. They require a plan and the discipline to follow it. Stephen Harper has made those choices. Canadians trust his judgment, when it comes to knowing what we need to spend on, and what we cannot afford.
This has not been easy. Take a look at [Liberal Leader] Justin Trudeau’s plans to see what easy looks like. He wants to spend money we do not have, increase taxes Canadians cannot afford, and repeal tax cuts families depend on.
This last point cannot be overemphasized. We know families are trying to make ends meet. That is why our government is helping them, by putting more money in their pockets.
But the Opposition wants to take that money from them. They already promised to repeal our latest family tax cuts. They need your money, to pay for their schemes . . . It is the ’70s all over again.
Their plan for the economy is simply the wrong path for Canada.
Why is balancing the federal budget important? First and foremost, it allows us to cut taxes for hard-working families . . . keeping money in the hands of Canadians, right when they need it most. It means spending less on interest payments and more on social programs, like health care, that Canadians want and need. It means preserving our top AAA credit rating at affordable rates. It means maintaining consumer and investor confidence high, so consumption grows and we can attract capital for job-creating businesses. It means having the financial strength to withstand unexpected and unavoidable geopolitical or economic shocks, like the collapse in the price of oil, a recession, a war, or a natural disaster. Balanced budgets give us the flexibility to respond to unforeseen crisis.
And it means not saddling our children and grandchildren with our debt.
The Canadian approach—our Conservative approach—of investing money during stormy times, and then saving money when the seas are calmed, is the only responsible way forward for this country.
Which is why I am proud to announce that we intend to table balanced budget legislation.
Aujourd’hui, je suis fier d’annoncer que nous avons l’intention de déposer un projet de loi sur l’équilibre budgétaire.
Many Canadian organizations support this important inititative, including the Canadian Federation of Independent Business and many Canadians I have spoken to all agree.
So here is what we are proposing: The only acceptable deficit would be one that responds to a recession or to extraordinary circumstance, that is, a war or natural disaster, with a cost exceeding $3 billion in a year. That is responsible and reasonable. Our government understands there are circumstances when a stimulus is called for. The proposed bill would acknowledge the potential need for deficits to counter economic decline.
Within 30 days of a published deficit, the Finance minister would be required to testify before the House of Commons Committee on Finance and present a plan with concrete timelines to return to balanced budgets.
That plan would include a freeze on operating spending and a wage freeze for cabinet ministers and deputy ministers.
We would propose that if a Finance minister posts a deficit outside of these extraordinary circumstances, an automatic operating freeze would go into effect.
This operating freeze is important. Chrétien responded to a deficit crisis by hiking taxes.
The financial security of Canadians was put at risk. We cannot repeat the ’90s. The proposed legislation would ensure that we fix deficits by restraining spending first.
Furthermore, discipline would be imposed. Salaries of cabinet ministers and deputy ministers would be reduced by five per cent until a return to balanced budgets. If there is a deficit they helped to create, they would, in effect, be required to contribute to the government’s plan to return to balanced budgets.
I have touched on the importance of balanced budgets. But you may be asking: Why enshrine them into law?
Friends, this Conservative government has been in office through a terrible economic crisis and a strong economic recovery. We often talk about our past successes . . . but it is time to ensure our future. We continue to struggle with a fragile global economy.
The euro area is confronting flat growth and deflation. The growth rates of key emerging economies—like China—have lost steam.
Geopolitical crises—in Ukraine, Iraq and Syria—pose serious risks, complicating the recovery. And the massive drop in oil prices is hitting the Canadian economy hard.
But amid the bad news, there is good news.
Lower oil prices have also led to cheaper energy prices for consumers and lower energy costs for the manufacturing and transport sectors.
Our economy is growing for another reason, as well. There is one exception to the otherwise dreary story of today’s world economy: the United States, which, at long last, has returned to robust economic growth.
Expansion at our closest trading partner means opportunity for Canadian businesses.
But only if we make the right choices. We need a fiscal and economic policy that enhances opportunity, and does not diminish it. We need to spend within our means, keep taxes low, slash red tape for businesses, and make affordable investments in infrastructure . . . This is the path where opportunities are seized, the path where we leave behind a better Canada than the one we were born into.
We will never be able to keep taxes low and provide direct benefits to hard-working Canadians and their families, even in the face of an unexpected downturn, without balanced budgets in good economic times. That is why we need a law.
And friends, our prudent approach stands in stark contrast to that of our political opponents.
As Prime Minister Stephen Harper said, we will never repeat those mistakes.
The low taxes that workers and businesses plan on will not suddenly shoot up and undermine the economy.
So we can assure Canadians and their families that the programs they depend on will be there for them. This is what balanced-budget legislation is all about: making sure Canada continues down the right course . . . the only path that will create jobs, growth and long-term prosperity.
If passed by the House of Commons and the Senate, this will be historic legislation. It will change Canada’s approach to fiscal management for the better. Balanced-budget legislation may sound like a dry subject, but, like everything else in the realm of public policy, it all comes down to people.
This initiative will work in the interests of ordinary Canadians, our children and our grandchildren. It will achieve our overarching goal of a more prosperous and secure Canada, ensuring that Canadian families keep more of their hard-earned dollars in their pockets to spend on their priorities and their families.
With your help and that of Canadians from coast to coast to coast, we can make the greatest country in the world even greater.