Saint John Board of Trade Luncheon

The last time I had a chance to speak in Atlantic Canada, it was last October at the Atlantic Vision Conference in Moncton. Many of you were there also.

That Conference was a landmark event. It signaled a concerted and cooperative effort by all of the Atlantic provinces to prepare their economies and people to prosper in the new, knowledge-based economy of the 21st century.

It symbolized a change in approach. Away from mega-projects, grants and subsidies, and toward investing in knowledge and skills. A search for new ways to work together -- federal and provincial governments, the private sector, the voluntary sector, and educational institutions -- to ensure that the economy of Atlantic Canada moves ahead confidently into the new millennium.

Ladies and gentlemen, another landmark event has brought me back to New Brunswick. A watershed in our history that sets the stage for us to carry the historic promise of Canadian opportunity into a new century.

Last week, the Minister of Finance announced that we will have a balanced budget for the current fiscal year -- the first time in almost 30 years. We also announced balanced budgets in each of the next two fiscal years -- the first time in almost 50 years that a Canadian government will have balanced its books for three years in a row.

Balancing the budget is an extraordinary achievement in a fiscal and economic comeback for Canada that is remarkable by any standard.

Four years ago, our deficit of $42 billion was the equivalent of nearly 6 per cent of our GDP, now it is zero.

Four years ago, we were borrowing $30 billion on financial markets to pay for programs and to service the public debt. In the first nine months of this fiscal year, not only have we not had to borrow any new money, we have paid down $12 billion of our market debt.

A few years ago, Canadians were suffering under the triple burden of high interest rates, high inflation and high unemployment. As 1998 begins, the unemployment rate, although still too high, has fallen to its lowest level in seven years. More than a million new private sector jobs have been created since we took office. Low interest rates, improved consumer and business confidence, and booming exports have revived the Canadian economy.

Canada has been transformed from what The Wall Street Journal, a few years ago called a candidate for the Third World, into what Business Week today calls the home of the Maple Leaf Miracle.

How do we explain this? As always, you begin with the courage of the Canadian people. Four years ago, Canadians insisted that we make the hard choices that were needed to put our fiscal house in order; to see the job through. We have done that. We have kept faith with Canadians, and they with us. I would also like to pay tribute to our Minister of Finance, Paul Martin. He set the tone for our attack in the deficit in 1994 when he promised Canadians we would get the job done "come hell or high water." We will never forget his colourful language, or the fact that he delivered the goods.

And we will never rest on our laurels. This government will never, ever allow the finances of the nation to get out of control again.

Our aim in cleaning up the books was to do it once and for all; so that no one will have to do it again. We will not squander the fiscal dividend that our success has made available on short-term political fixes that do not provide lasting benefits. We will use the same unswerving fiscal discipline in the next budget -- and in every budget.

Balancing the budget is a very significant achievement. But more must be done. We must turn our attention to the burden of the debt. We are committed to a steady and permanent reduction in the debt-to-GDP ratio -- that is, what we earn as a nation compared to what we owe. In fact, the debt-to- GDP ratio began to drop last year, the first meaningful decline in more than 20 years.

We will continue to make progress by applying a two-track strategy: continued support of economic growth and reductions -- year over year -- of the absolute level of the debt.

Ladies and gentlemen, the era of fiscal excess in Canada is over -- forever. The post-deficit era has begun; an era when the federal government no longer lives beyond its means; an era when we can provide tax relief where it is needed most. And an era when we can make strategic investments that enhance the access of all Canadians to skills and knowledge -- the tools they will need most to have their shot at new opportunities, good jobs and higher standards of living in the 21st century.

We recognize that the tax burden on Canadians is too high. That is why we have introduced targeted tax relief measures in all of our previous budgets. And we continued to do so in the 1998 Budget. But now that the budget is balanced we have begun the next stage. General tax relief for low and middle-income Canadians, the people who have borne the brunt of our fight against the deficit.

For now, these measures must be modest, because the fiscal dividend that makes them possible is still modest. Even so, 90 per cent of all taxpayers will benefit from some degree of personal income tax relief from last week's budget. And 400,000 low-income Canadians will be taken off the income tax rolls entirely. As our resources permit, we will broaden and deepen tax relief.

Reducing taxes and paying down the debt will be important priorities in our second mandate. But they are not the only reason we took on the deficit.

Since taking office we have always followed a balanced economic approach. Mixing tight fiscal discipline with key investments that promote a stronger economy and a secure society. The whole purpose of getting our fiscal house in order is not simply for me to be able to stand here and recite statistics. It is to be able to have the resources to invest in our future; to help those least able to help themselves; to be able to put more money in the pockets of Canadians through lower taxes. That is what this budget is all about.

Our history demonstrates that we have always made the investments necessary to grow and succeed. The examples are many: Macdonald, investing in a Canadian railway, a great "national dream" to bind the country from sea to sea; Laurier opening the west; King and St. Laurent and C.D. Howe investing in the infrastructure that completed our transformation from an agricultural economy to an industrial nation. Meeting the challenge of each new era. Creating new opportunity and new prosperity for each succeeding generation.

Our challenge today as nation -- our obligation -- is no different than in those earlier times. But now we must help Canadians complete the transition from an industrial economy to an information economy; where knowledge is the most important commodity; where technology, not resources, will determine the wealth of nations; where access to opportunity depends on having the right skills. And where prosperity depends on higher education as it never has before.

In the budget last year, we created the Canada Foundation for Innovation, an arms-length organization, endowed with $800 million to fund research facilities in universities and teaching hospitals across Canada.

In last week's budget we focused on investing in people. On preparing Canadians for the next century. We announced the Canadian Opportunities Strategy, which seeks -- in a careful, targeted way -- to provide Canadians with greater, more affordable access to education, to skills, and to the high tech infrastructure that makes knowledge available with the flick of a computer switch.

The Strategy covers everything from helping parents save for their childrens' education; to easing student debt loads; to promoting life-long learning; to increasing funding for SchoolNet; to ensuring that children in low-income families have a fair start in life.

But the centrepiece of the Strategy -- the program that makes me proudest of all -- is the Canada Millennium Scholarship Fund.

It will be funded by an initial one-time endowment from the federal government of $2.5 billion. This investment -- the largest ever by a Canadian government in providing access to post-secondary education -- will generate over 100,000 needs-based scholarships each year for low and middle income post-secondary students each year over the next decade.

The scholarships will be awarded by the Canada Millennium Scholarship Foundation. It will be a private, independent body -- at arm's length from the federal government. The Foundation will be run by a board of directors, made up of private citizens. The Council of Ministers of Education -- representing the provinces -- as well as the education community, will each play a key role in determining the make-up of the board. And we will make sure that the people with the strongest interest in the success of the Fund -- students -- will also have board representation.

The Foundation will have a mandate that is flexible enough to allow it to work closely with the provinces and the education community. The goal will be: to award scholarships in a manner that avoids duplication and that complements existing provincial programs. This flexibility of mandate will extend even to having the authority -- subject to mutually agreed terms and conditions -- to allow the appropriate provincial authorities to select the Millennium Scholarship recipients in a province.

Ladies and gentlemen, this is the kind of millennium project that says something about who we are as Canadians. Not a monument of bricks and mortar. But a living, breathing legacy. That will improve lives, and enrich our nation.

The Canadian Opportunities Strategy is a building block. It is a concrete demonstration of our commitment to helping young Canadians get ready for the new economy. In an age of cynicism about government, it is important that young people see concrete action rather than just hearing rhetoric.

I am very proud of the concrete action in last week's budget. Everything we have done -- from eliminating the deficit, to the Canadian Opportunities Strategy, to the Millennium Scholarships -- has had one crystal clear objective in mind: creating an economic and social environment that permits young Canadians to realize their dreams and potential; one that passes on the historic Canadian promise of opportunity to the next generation and to the next century.

This is a responsibility of all governments -- indeed of every sector in society. We must work in partnership -- parents, students, the private sector, provincial and federal governments. The global economy, the so-called "new economy" is not about exclusiveness among jurisdictions. It is about marshalling our strengths and working together. And that we will do.

This is our vision of the future. In the Budget of 1998. In all the budgets to follow. Making a better life for ourselves and our grandchildren. It is that ambitious and that simple.