Ottawa-Carleton Board of Trade Luncheon
In a few days, the government will deliver the fourth budget of this mandate. With every government, budgets are the milestones and markers of a term in office. They are the statement of its spending priorities. Its agenda for action.
That is why now is a good opportunity to share with you -- and with Canadians -- my thoughts about where we have been through the course of this mandate. And where we are going. Not just as a government, but as a country.
When we took office in 1993, Canada had lost its fiscal sovereignty. Because we were so indebted, and so dependent upon them, the money markets and bond traders had more say over our economy than Canadians did. Our economic and social fate depended on their whims and opinions.
The country was suffering from the worst of all worlds. The unemployment rate in January 1994 was 11.4%. And the deficit was at an all time high of $42 billion. Canadians had lost hope that an economic turnaround was possible. We knew Canadians had to recover that hope.
It was clear to us as a government -- and a nation -- that if we did not start getting our fiscal house in order, the country's decline would continue. Unemployment would increase. And the very ability of the government to act positively on behalf of Canadians would be lost.
So we took action. The action we promised to Canadians in the Red Book. The cold, abstract numbers are well known. We have reduced the deficit from 6% of the GDP when we took office, to our interim Red Book goal of 3%, which we will meet or better in the budget next week. And at the rate things are going, we are likely to beat our target of 2% for 1997-98.
I don't want to pretend that some of the cuts haven't hurt. I know they have. But we have tried to accomplish the task without sacrificing the values Canadians hold dear. Like fairness -- to regions and individuals. Or compassion. Or caring. Or the belief in strong social programs that can uphold a decent quality of life for all Canadians. That is why we cut defence spending, but established a Pre-Natal Nutrition Program and new Centres of Excellence for Women's Health. That is why we reduced subsidies to business, but increased spending on programs for young people. That is why we closed loopholes for the wealthiest Canadians, but raised the limit for parents who contribute to Registered Education Savings Plans for their kids.
The job is not completely over, but there is light at the end of the tunnel . We are already seeing the rewards -- low inflation, low interest rates, an economic climate favourable to continued and stronger growth and a growing capacity to address our social needs and to make the strategic investments we need to prepare our country for the next century.
Interest rates are lower than they have been in almost 35 years. In two years interest rates have come down by 5 ½ percentage points. Short term interest rates are now 2 ¼ % lower than U.S. rates -- after 20 years of being an average of two points higher in Canada than the U.S.
This has been more than a government achievement -- it has been a Canadian achievement. We are succeeding because of the discipline and support of Canadians. Canadians have understood from the beginning that this has been about re-establishing our credibility as a nation. The ability to set goals and achieve them is inspiring others to have confidence in us as a nation. And even more important, it is re-building our own confidence in ourselves.
Forecasters in the private sector are predicting that 1997 and 1998 will be years of strong growth. They say we will lead most of the industrialized world in economic growth. They say the economy will create an additional 300,000 jobs a year for the next two years -- on top of the more than 700,000 created since we formed the government.
I know that for someone without a job these statistics may not be much comfort. But I want them and all Canadians to understand what we are doing to combat unemployment. And how I believe our actions will create a stronger economy and more jobs for all Canadians.
Immediately upon taking office, we implemented our Red Book promise of the Canada Infrastructure Program in partnership with the provinces and municipalities. That program has resulted in more than 12,000 capital projects in every province across Canada, creating work for more than 100,000 Canadians. And we are extending this program for another year.
We have embraced the opportunities the global economy pose for a country like Canada. We rely more on exports for jobs than almost any other major industrialized country. That is why we have taken the lead in seeking liberalized trade around the world -- and in the drive for free trade zones in the Pacific and the Americas. And we are working hard to help Canadian businesses -- big and small -- sell Canadian products and know-how abroad, creating jobs here in Canada. That is what the very successful Team Canada missions -- including the one just a few weeks ago -- have been all about. And they and other trade promotion efforts will continue.
We have used the same partnership approach to create the Canadian Tourism Commission with the provinces and the private sector. Experts say that over 125,000 jobs can be created in this sector alone over the next decade. And this coordinated approach is already bringing results -- helping reduce our annual tourism deficit from $8 billion to $2 billion.
We have also been investing in the other growth sectors of the future. Industries where Canada can take on the world. That is what the Technology Partnerships Fund is all about. Investing in the cutting edge winners -- not with handouts or loans, but with hard-edged commercial investments. And that will translate into thousands of jobs for Canadians -- good jobs with a good future. We are committed to helping our aerospace industry move from number six in the world to number four. With all the tens of thousands of jobs that will go with it.
We have tackled structural obstacles to jobs. We have transformed the Unemployment Insurance Program into an Employment Insurance Program, removing disincentives for work and making the program more sustainable. We have reduced Employment Insurance premiums. Now they are 14% lower than the previous government had planned. And last fall, we introduced what we call the New Hires Program, that will virtually eliminate EI premiums on new jobs for almost 900,000 eligible businesses who hire new employees.
In these actions and in everything we have done over the last four years, the focus has been on setting priorities. In fact, we implemented the most comprehensive review of government in Canadian history so that we could focus our scarce resources on those issues of greatest importance to Canadians. We asked ourselves what areas we should focus on to best serve Canadians. And where it made sense to establish partnerships with or leave the field entirely to the provinces, the private sector or community organizations.
In our sector by sector approach, step by step, we are making progress. Government cannot do everything. It must focus on the right priorities and it must find ways to encourage others to play their part. In our relationships with the private sector, we have shifted from subsidy to partnership -- and this is already yielding dividends as our entrepreneurs are breaking new ground domestically and internationally. Just look at Team Canada. Our infrastructure program used federal/provincial/ municipal partnerships to make strategic investments in our communities and create jobs. The new labour market agreements with New Brunswick and Alberta are proof that governments are able to work together in new ways to benefit Canadians. And our agreement with the provinces to work together on child poverty shows that when it comes to the most important social issue of our times, governments can work together.
The Canada Health and Social Transfer and our guarantee of a cash floor... our reform of Employment Insurance and Seniors Benefits... the creation, with the provinces and territories, of a Ministerial Council on Social Policy Renewal... and the cross-Canada consultations of the National Forum on Health have all established the base for a new approach to securing our social safety net -- including Medicare. And they are ensuring that these programs remain sustainable -- that they are not just a birthright enjoyed by this generation of Canadians ... but a legacy we can pass on to future generations.
I know Canadians are concerned about the future of social programs. I know some of the cuts and the reforms have been particularly hard on some people. But the purpose of all our actions has been to ensure that those programs are there for future generations. By taking the actions we had to take -- and in a decent, humane way -- we are saving the social safety net in Canada. Make no mistake about it, when a country has to increase the payments it is making to bankers every year and reduce spending on social programs, those programs don't have much of a future. That is why we have had to work to eliminate the fiscal mess. And that is why those social programs will be able to begin growing again.
Our next budget will continue to advance our balanced approach. We will not budge in our fiscal discipline. We can't give up now. Not when so many have sacrificed. Not after so many years of failure by our predecessors. Not when we are so close.
Not if we want our children to have the same opportunities in life we had. Not if we want them to have the choices and tools to build their lives. It would be just plain wrong to step back into an era of high deficits and low hopes. Wrong to shortchange our future.
But, in our upcoming budget, as we see the light at the end of the tunnel, we can begin to make wise investments for the future.
Technology and globalization are transforming economic activity. Governments cannot change this. Nations cannot hide from it. What we can do and are doing is work to ensure that Canada and Canadians are winners in this new global economy. An economy which above all focuses on knowledge and our knowledge capacity.
That means helping our universities modernize and enhance their science capacity. It means helping our teaching hospitals improve their research capacity. It means increasing our investments in new technologies, research and development.
Investing in the future also means investing in youth. Yesterday, the Minister of Human Resource Development announced a government-wide Youth Employment Strategy. It will create new job opportunities for 110,000 young Canadians and expand a number of successful programs. Just as important, it consolidates all the government's programs for young Canadians, making them more easily accessible through 1-800 lines, a new website and youth fairs -- going to where young Canadians are and speaking to them in their language.
Investing in economic opportunity is important, but a healthy economy is not an end in itself. What is important is a healthy society. That means a decent quality of life for all our citizens. And a commitment to help those who need it most.
Last June, in this very hotel, on the eve of a meeting of first ministers, I pledged to Canadians that we would work with the provinces to reduce child poverty in Canada. We have worked hard. And we have demonstrated that with good will and common objectives, Canadian federalism works. I want to congratulate Pierre Pettigrew and his provincial counterparts for a job well begun.
Choosing this priority as the first focus for our fiscal dividend says as much about the values of a government -- and a nation -- as the decisions about where and what to cut in difficult times.
In the coming days we will be announcing concrete actions that will begin the work of developing an effective, modern, truly national approach to benefits and services for children and families with children who need our help. This will not be the solution to the problem. It will be the beginning of the solution. A well-spent early dividend from our collective battle against deficits -- federal and provincial. A down payment on social justice now that we can afford to make one.
Just as our system of elderly benefits was built over many years, a national approach to combatting child poverty will not happen overnight -- it will be built one step at a time. But that first step can be the most difficult and the most important. That is the step we will be taking in the coming days. We will build on this base, in partnership, as fast as our fiscal situation allows.
Investing in people means investing in a healthy country. And that means Medicare. Last week, the National Forum on Health tabled its report. I am proud of the work of the National Forum. It was a Red Book commitment -- meant to look past the headlines and the interest groups and examine how we could improve our national health care system. It brought together the top experts from across the spectrum -- and across the country. And they came to a consensus -- incidentally, ahead of schedule and under budget.
They were unanimous in their support for a universal, accessible, publicly-funded Medicare system. And they recognized that as a country -- public money and private -- we are spending enough on our health care system. But we are not spending it wisely enough or in the right areas. We have been too focused on the needs of institutions -- and not focussed enough on the needs of individual Canadians.
The report of the National Forum is nothing less than a new paradigm for health care in Canada. A new way of approaching the challenge of a healthy nation, in keeping with the timeless principles of the Canada Health Act. This will not be a report that gathers dust on a shelf. On behalf of the government, the Minister of Health, David Dingwall, is starting to act on its recommendations now. We will have specific initiatives to announce in the days and weeks ahead.
Ladies and gentlemen, we are in the fourth year of our mandate. But the pace of the work of this government will not slow down in the days and weeks ahead. Because the task of building a nation -- a united, committed nation -- can never slow down.
I have said many times that Canada is the work of every day. The real test of our system is not rhetoric or speeches. It is in the ability to work together with the provinces, with the private sector, with community and volunteer organizations... toward common goals.
For those who talk of the "status quo", of a "rigid federalism" that never changes, I say just look at the record of the last 3 ½ years. Governments working together in Team Canada to bring jobs home to Canada. The federal, provincial, municipal Infrastructure Program. Our work together in tourism promotion. The country's first-ever agreement to reduce internal trade barriers. Our new joint action on child poverty. The devolution of labour market training to the provinces. The recognition by the House of Commons of Quebec as a Distinct Society. The five regional constitutional vetoes. The Canada Health and Social Transfer. The restriction on the unilateral use of the federal spending power. Greater cooperation in shared areas like the environment.
These are the proof a dynamic, evolving, changing country.
We are proving that Canada works, that our governments can work together in the interests of citizens on economic issues, on social issues, on the environment, on presenting Canada to the world. We are demonstrating that we can modernize Canada and prepare for the 21st century. And we shall continue meeting the real needs of real people. Governing in a way that benefits all regions and parts of Canada. Doing what has made Canada the number one country in the world: coming together, working out accommodations, respecting the diversity of Canadians, looking after our most vulnerable, and always, always building for the future.