February 13, 2002

The reports made public yesterday at the launch of Canada’s Innovation Strategy provide an assessment of Canada’s innovation performance and identify a number of areas for improvement.

They state clearly that Canada has made impressive progress in recent years and that overall, our innovation performance is improving at a quick pace. In fact, in some areas – such as the rate of increase in private-sector R&D spending, the number of external patent applications, R&D intensity and the number of workers devoted to R&D – we are enjoying the fastest rate of growth in the G7.

There is no doubt that Canada is on the right track. The policies and initiatives of our government over the last eight years have given Canada rock-solid economic fundamentals and outstanding economic prospects. What we need to do now is build aggressively on our strengths, using the goals and benchmarks outlined in the reports.

Economic Fundamentals

Canada’s economic fundamentals are among the strongest in the world. Here are some examples:

With Budget 2001, we brought down our fifth balanced budget or better in a row – a first in 50 years. And we are forecasting balanced budgets or better for the two following years through 2004. In fact, Canada will be the only G7 nation to balance its books this year.

Inflation is well under control and interest rates are at 40-year lows.

Our debt-to-GDP ratio – the measure of the size of the debt relative to the size of the economy – has been falling faster than any other industrialized nation. Next year, it will fall below 50% for the first time in 17 years.

Canada’s foreign debt has dropped from 45% to 20% as a share of GDP. This is its lowest level in 50 years, and lower than the United States. Moreover, Canada is enjoying a current account surplus of 3.4% of GDP. A sharp contrast to the United States, whose current account deficit stands at 4%.

The Canadian Advantage

In addition to being consistently ranked at or near the top in terms of the best country in the world in which to live by the United Nations, Canada enjoys countless advantages that already put us ahead of the international competition. For example:

According to a recent KPMG study, Canada is the most cost-effective country in which to do business. And the World Economic Forum gives Canada a "growth competitiveness" ranking of third in the world.

Canada has the most generous R&D tax incentives in the world, which contributes to making the country a magnet for new ideas and ventures.

Canada has implemented the largest tax cut in its history, through which personal income taxes will fall on average by 35% for Canadian families with children. And corporate tax rates will fall about 5% below average U.S. rates – a strong incentive for new investment in Canada.

Our capital gains taxes have been cut steeply. In fact, Canada’s top rate on capital gains is now lower than the typical top rate in the U.S.

Canada is currently one of the most connected countries in the world. Among G7 nations, we have the highest percentage of the population on-line, with every school and library connected to the Internet. And the federal government is ahead of the world in offering its services on-line.

Canada has one of the most highly educated labour forces in the world. We enjoy high income levels, long life expectancy, low poverty rates, a healthy population, safe communities and a natural environment that is second to none.