Financial Times Business Forum

I would like to thank the Financial Times of London for giving Commonwealth leaders a chance to come together and compare experiences and approaches to meeting the challenges of the global economy.

One thing is certain, a strong economy is the essence of a strong society. It is the basic ingredient for a high quality of life for our citizens, for their fulfilment, for opportunities for them and their children.

The Commonwealth is made up of a truly diverse array of national economies -- from the developed to the developing. While we are all part of one global economy with similar pressures, there is no "one-size fits all" solution to prospering in it. But we all have come to terms with the new economic realities.

First, globalization is not a cliche. It is a real and powerful force. We cannot and should not move against this current. But we can use it to our advantage.

The second reality is that of technological change. All of us are facing complex changes. Old constraints of time and distance are being broken down. Traditional economic structures and assumptions are being swept away. In the new economy, knowledge, innovation and creativity are the keys to prosperity.

We in Canada see globalization as an opportunity not as a threat. Canada is a trading nation -- exports account for 40 per cent of our economy, more than any other major industrialized nation. That is why we have developed an economic strategy whose primary objective is making our economy competitive and knowledge-based in the global economy of the 21st Century.

The key advantages that Canada enjoys in a global setting are a modern infrastructure, advanced science and technology, openness, and skilled management.

Infrastructure is critical. Especially when you live in a country that has six time zones. Canada has world class communication and transportation networks. These are some of our most important assets, allowing us to produce products and get them to market efficiently.

Science and technology contribute to the development of new goods and services and ways of making them. Here education and promoting innovation are key. Canada is number one in the world in higher education enrollment. And our government is doing its part to ensure the widest possible access for our people to university and college training.

In fact, our major national Millennium project will be the largest scholarship program in our country's history.

The Canada Millennium Scholarship Fund, a one-time investment from the fiscal dividend we have won in our hard fought battle against the deficit, will help tens of thousands of young Canadians attend colleges and universities beginning in the year 2000.

We are creating partnerships among government, business and universities to promote high tech innovation. And we have created instruments -- like Technology Partnerships Canada -- that foster Canadian leadership in certain key knowledge sectors. And with targeted investments and a dynamic export strategy we are catapulting our aerospace sector from number six in the world to number four.

Canada is one of the most open economies in the world. With the emergence of a truly global economy, there is now a common understanding that enhanced trade and investment flows are the engines of economic growth and prosperity. Canada is living proof. We developed quickly because we opened our doors to foreign investment and technology. And we achieved one of the highest standards of living in the world.

Canadian workers are among the most skilled and productive in the world. And we have taken steps to make sure that they remain so. We have created training programs which make sure they have access to the latest skills so they, too, can adapt to the constantly changing economy. We are also working to make sure they have access to life-long learning.

Good management, entrepreneurship and quality are increasingly important to being competitive. Small and medium sized businesses are now the primary job creators in our country -- accounting for 90 per cent of new jobs. Our government has taken a number of important steps to foster this trend by promoting access to capital and technology.

Our advantages are the basis of success but they do not guarantee it. It was not enough to identify and promote Canadian advantages. We also had to create an economic environment that is good for doing business with the world. That allowed us to seize the global economy, not be mastered by it. We had to get the fundamentals right. And we did.

When I became Prime Minister of Canada in 1993, the federal deficit stood at about 6 per cent of our Gross Domestic Product -- or $42 billion. Last week, our Minister of Finance announced that the deficit for the fiscal year just passed (1996-97) stood at just over 1 per cent of GDP -- or $8.9 billion. And we are on track to eliminate it completely no later than fiscal year 1998-99.

Canada now enjoys the best fiscal health among the nations of the G-7. We measure our deficit in accordance with the strictest accounting principles. Most countries - including the UK, France and the United States - use a different measurement, one of borrowing requirements. Using this measurement, in 996-97, we recorded a financial surplus -- the only G-7 country to do so.

This meant that, for the first time in 27 years, it was not necessary for the Government of Canada to borrow new money to pay for programs or cover interest costs. And this year, we have already started to pay down our marketable debt

The undeniable fact is that a nation that has its financial house in order is a nation with greater flexibility, a nation much, much less exposed in the sudden and dramatics ebbs and flows of today's global capital markets.

But that is the least of the economic benefits we are experiencing as a result of getting government spending under control. Our lower deficit has triggered lower inflation interest rates which, in turn, have strengthened economic growth and boosted job creation.

And only when the fiscal house is in order can we maintain, enhance and modernize the social programs that Canadians cherish so deeply and that have led the United Nations to name Canada as the country with the best quality of life in the world. And only with the fiscal house in order can we make the investments we need to prepare Canada for the challenges of the new century.

Canadians are proud, deeply proud, of what we have accomplished together. And the world is sitting up and taking notice. Indeed, I would like to thank the Financial Times for helping to spread the good news of the Canadian economic turnaround to the world.

Looking ahead, economists now say that over the next two years, Canada will have the strongest back-to-back growth of any G-7 country. Stronger than Japan. Stronger than Germany. Stronger than the United States.

Ladies and gentleman, we have come a long way in Canada in creating the conditions to thrive in the global economy.

We know what it takes to succeed. Our government has a strategy to help make it happen. We have come to terms with the fundamental forces that are driving our economy. We have taken stock of our advantages and are building on them. We had to re-think the role of government in economic development. To focus on where and how to target our efforts so that it can yield the maximum positive results that we all want.

I believe we have laid the foundation for enduring success. But there is no guarantee. Canadian companies, workers and governments must constantly adapt to new challenges and new competitive pressures. We cannot stand still. We cannot take success for granted. Prosperity is not a birthright in the global economy. It must be earned.

But one thing is certain. Success breeds success. Confidence builds confidence. And Canadians today feel a new optimism. A new sense of accomplishment and pride. And a new energy to roll up our sleeves and take on the world.