Laval Chamber of Commerce

We are now well into the fourth year in the mandate of the government I have the honour to lead. What I propose to do today is to give you an account of what we have accomplished since 1993 and how I envisage the future of our country.

As I look back at over 30 years in public life, I realize that time and again we get caught up in the issues of the moment and risk losing our sense of perspective. But we must not lose sight of our larger accomplishments.

My belief in Canada, my sense of how truly remarkable it is, my respect for the tolerance, creativity and energy of the Canadian people - in all their diversity - is constantly renewed when I consider what we have done together, the distance we have travelled, the model we have created.

I wish every Canadian could share the experiences I have had in meeting leaders and people from around the world. Our country has an extraordinary reputation. We truly are seen as a model - both for the role we play as global citizens and for the society we have created. What sets Canada apart is that its material success is founded on a society that cares for all of its citizens and celebrates diversity and tolerance.

Having said this, there is no doubt that when we assumed office, our country was in economic decline. Our freedom to make decisions about our future and our ability to pursue our collective interests was disappearing as increasing amounts of our national wealth went to pay interest on our debts. Our country had one of the worst fiscal records of the advanced economies. Here in Quebec, as you may very well recall, separatists leaders in 1995 portrayed Canada as a bankrupt country with no future.

Four years ago we were facing a vicious cycle of more debt, higher interest costs, weak economic confidence and reduced government resources for programmes. Dramatic action was needed to restore Canada's fiscal and economic health. I believe that we have delivered. Paul Martin's 4 budgets have succeeded. We have restored confidence in Canada; we have restored confidence in how the federal government does business; we have recaptured our economic sovereignty; we have put ourselves in a position as a country and as a society where we will once again have the ability and freedom to make our decisions for ourselves. Wall Street will no longer be able to tell us what to do.

The key to our approach was careful, even cautious planning, to ensure we met our targets. And we set targets that balanced ambition and realism. We knew the adjustment to lower spending would be painful and we wanted to give taxpayers, the provinces and the economy time to adjust.

I am fully aware how difficult our fiscal actions have been for Canadians and for our partners in the provinces. But we made every effort to be fair in the distribution of our cuts - in fact, the areas which took the biggest cuts were almost all federal direct programme spending, such as incentives for business, transport programmes, agricultural supports, defence and foreign assistance. We protected those Canadians, like pensioners, who relied directly on income support from the federal government. And we ensured that the cuts in our own programmes exceeded the cuts we made in our transfers to the provinces.

The benefits have been clear. There is a new confidence on the part of businesses, consumers and lenders. The dividend from the new confidence of lenders has been dramatic. In the past two years, interest rates have fallen by nearly five and a half points. Over the past 20 years, short-term interest rates have been an average two points higher in Canada than in the U.S. But today, Canadian rates are about two and a quarter points below American rates. Lower interest rates are feeding back into government finances and helping both federal and provincial governments get on top of their finances. The low rates we now have are saving the Government of Quebec hundreds of millions of dollars in interest on its debt. The former vicious cycle has become a virtuous cycle.

Today Canada has regained a place of honour amongst the well-managed countries and economies of the world. The Parisian newspaper Liberation recently wrote that: "Les experts n'hésitent plus à parler du miracle canadien". The authoritative Financial Times of London wrote this about Canada: "Consider the highlights; a record breaking decline in public borrowing, falling interest rates, low inflation and best of all a long awaited upturn in economic growth. ... It all sounds too good to be true. Yet it is widely considered too pessimistic."

While unemployment is still too high, the economy is producing new full-time jobs. Indeed it has produced over 700,000 jobs since we formed the government. Most economic analysts expect that the Canadian economy will produce over 300,000 new jobs this year and again next year. And we will pursue our efforts to create the conditions to increase the number of jobs available for Canadians.

Low interest rates are the best instrument for job creation. This year, we will see the real benefits of our low interest rate policies. These low rates have put much more money into the hands of consumers and businesses than any tax cut would have.

By 1998-99, Canada will have a small surplus in terms of our net borrowing requirements. The last time federal financial requirements were in balance was in 1969-70. Most major industrial countries would interpret this financial position as indicating a balanced budget. It is with great pride that we can say that Canada alone of the G-7 countries will have achieved such a milestone.

Now at the dawn of the 21st century, it is fair to say that Canada is well positioned to take advantage of the opportunities offered in the next century. Together Canadians accepted the challenge of creating opportunity for ourselves and for our children. Together we have proven to ourselves, once again, that we are capable of making common cause to rise to the challenges we face.

What we have achieved together is important in itself. Setting goals is one thing; achieving them is quite another. But we have succeeded, and that has enabled us to rebuild our confidence in ourselves. Canadians have every reason to begin looking to the future with optimism.

The job of restoring our finances is not yet done; we must stay the course with our fiscal policy. Others are promising tax cuts rather lightly. I'd like to be able to make the same promise myself, but we're not there yet, even though we can finally see the light at the end of the tunnel. We are now nearing the point where we can invest more in priorities such as child poverty, health care, and enhancing the knowledge base of our society.

Governing is about making choices. Choosing is about deciding on priorities. Priorities are ultimately a reflexion of values. For example, in the last Martin budget, we announced selective tax cuts for low-income families, charitable organizations, people with disabilities, students and workers who are pursuing higher education, and parents who are saving for their children's education.

There are those today who propose immediate tax breaks that will help those who need help the least, and programme cuts that will hurt those who need the help most. We have different values and different priorities.

We know that the future belongs to societies whose economies are sound, whose children are prepared, whose population is healthy and which invest in knowledge, learning and innovation. These are our values. These are our priorities. This is where we will first invest scarce resources. We will not cut programmes Canadians need; we will not give tax breaks now to those who need them least before we have met the needs of preparing this country for the 21st century.

Here in Quebec, the benefits of lower interest rates and economic growth across Canada are being felt, both directly and indirectly. We must not forget that 21 percent of Quebec's economic activity is oriented to sales to the rest of Canada. The depth of integration of our provincial economy with the rest of Canada is 15 times as great as with our neighbours in the United States. For we as Quebecers, this is one of the many advantages of being Canadian.

Unfortunately, Quebec is in some ways running behind most of the rest of the country. The reasons are various, but many are political. The government of Quebec has been slower than provincial governments elsewhere to address the need to address its finances. There is no doubt that the referendum of 1995 caused a serious delay in getting on with this inevitable task. But government of Quebec is now taking real steps to get its fiscal house in order. However, there can also be no doubt that the continuing threat of another referendum undermines investor and consumer confidence and contributes to an unemployment rate in Quebec that is considerably higher than in Canada as a whole.

For our part, we have drawn the lessons from the period of acute tension and instability we experienced in 1995. Since that time, we have been doing our best to make changes in the country to avert the distress and the consequences of another referendum for all of us.

In everything that we do, we are guided by the overriding principle that it is the duty of government to devote itself to meeting the needs of Canadians. Our philosophy of federalism is that collaboration among the various orders of government in Canada is necessary to best meet the needs of Canadians. We recognize that the people of this country expect their governments to work together to address the challenges before us, without constant bickering.

It is very much in this spirit that my government is working to further reform and improve Canada.

There are countless examples of how much we Canadians can achieve when we choose to work with each other, when governments cooperate and collaborate with each other, in the interest of all. We have been able to open new markets and attract new investment and create new jobs through Team Canada. And I believe that Quebecers are happy to see that their governments - in Québec City and Ottawa - can work together to deal with economic issues.

We have been able to build confidence by creating jobs through the joint federal, provincial and municipal Infrastructure Programme. As you know, we are extending that programme for another year. And I believe again that Quebecers are happy to see that we can work together on this programme.

We have been able to secure our public pension plans through an agreement reached between the federal and provincial governments. Ensuring sustainable pensions well into the 21st century is something governments around the world are grappling with. We in Canada have succeeded. This is a tremendous accomplishment. I believe that Quebecers are pleased to see our governments working together to ensure that we can retire with secure pensions.

We have been able to streamline government and reduce costly duplication and overlap in areas like the environment, social housing, forestry and mining. I believe that Quebecers are happy to see their governments working together in these areas.

On the job training front, we have already signed agreements with three provinces. A fourth agreement is about to be signed.

And I am convinced that we can sign an agreement with Quebec which will settle this matter for once and for all, something successive Quebec governments have for years been calling for.

The conditions are right in every way for an agreement, and we believe it is in the interest of Quebec workers that we sign one soon - the sooner the better.

Lastly, we are now able to begin to give our children who are living in poverty a chance of a better start in life and greater opportunity, again because of federal/provincial cooperation. I believe that it is important to Quebecers that governments can work together to address the real issues of low-income families with children. I have just demonstrated that we are capable of working together; that we can unblock problems rather than block them; that we can make real progress together; that Canada works; and that Canada is capable of achieving much more if we continue to work together.

The strength and unity of this country is about more than the Constitution. It is about a strong and growing economy; it is about ensuring that Canada is a land of freedom and opportunity; it is about being a country in which people feel secure and respected, whatever their differences may be. It is about a democratic society which affirms and supports shared values of tolerance, generosity, fairness, compassion and respect for diversity. This is the common purpose which binds Canadians together.

And this is why we Quebecers can have a powerful sense of our identity and our pride in being Quebecers, while at the same time feeling immense pride in Canada and in being Canadian. And one has never excluded the other.

While this country's worth is about much more than the Constitution, modernizing Canada includes the Constitution. As you know, constitutional change cannot be achieved by the government of Canada alone. It requires the involvement of the provinces. As you also know, the PQ government is not prepared to address constitutional issues, and still less to participate in the reform of the federation. While this negative attitude limits what we can do in a constitutional sense it does not stop us from moving forward in a practical way in many other areas.

That is why shortly after the referendum Parliament passed legislation ensuring that Quebec and the other four regions of Canada will have a veto on constitutional changes that affect them. We passed a resolution in the House of Commons recognizing Quebec as a distinct society. Our measures on the veto and the distinct society gave effect to commitments I made to Quebecers in Verdun on October 24, 1995. But as I have said on numerous occasions, I hope to be able to do more and enshrine these measures in the Constitution as soon as this becomes possible. To do so, Quebec would have to give its consent at last.

If I were to choose two words to describe the sense I have tried to communicate to you today they would be confidence and determination.

Confidence that Canada is getting its house in order and will be well positioned as it enters the next century. Confidence that we have in Canada, a country which has the generosity, the spirit and the vision to remain a model for the world. Confidence that our federal system has the flexibility and adaptability to serve us well.

And determination to realize our potential as a country. Determination to take nothing for granted. Determination to achieve the reforms that will improve the workings of the country. Determination to adapt Canada to new realities as we enter the 21st century. Determination to celebrate the achievements of Canada. Determination to build a stronger solidarity among Canadians. Determination to represent and uphold those values that define and unite us. Determination to keep Canada united. Determination to keep Canada as the best country in the world.

• The 1997 Budget
• Human Resources Development Canada