by
Minister of Finance
Jim Flaherty
Last month The Economist joined the Great Debate on Canadian Identity.
The Prime Minister had compared the United States and Canada to a grizzly bear and a wolverine.
"We may be smaller," he said, "but we're no less fierce about protecting our territory."
The Economist sympathized with Canadians who want a more dynamic symbol than the official beaver, an industrious but shy animal.
But the wolverine, being a sort of weasel, probably isn't the way to go.
The magazine suggested a moose with sunglasses, which it featured on its cover a few years ago, saying Canada is cool.
Maybe. I'm not going to propose my own alternative.
But I will respectfully take issue with this "industrious-but-shy" business.
Canadians are industrious, yes. But shy? Absolutely not!
In fact, history shows we Canadians are ambitious, determined, and proud.
Sir John A. Macdonald, our first prime minister, built a railway to the Pacific.
Sir Wilfrid Laurier boldly predicted "the 20th Century will be the century of Canada."
Canadian students off hiking in Europe sew the Maple Leaf flag on their backpacks, openly displaying their pride to the world.
Over Easter, we commemorated the most solemn example of Canadian assertiveness, an event that stands alone in defining our country, on the 90th anniversary of the Battle of Vimy Ridge.
Young Canadians risked their lives, and many gave their lives, for that victory.
As a result, our country came of age, and the world came closer to peace.
Vimy Ridge shows what Canadians are all about: Loyal, generous, brave, and tough. Resourceful, willing to sacrifice. And hopeful, above all.
I mention these things to put Budget 2007 in a broader context.
The record shows Canadians appreciate our vast potential, and aspire to fulfill it.
Canadians may tend not to act big. But we are not afraid to think big, and to do big things.
It is part of our national character. In other words: don't underestimate beavers, just because they are unassuming. They do their work quietly, bit by bit over time.
But the result makes a big impact.
Budget 2007 is about our aspirations, for a stronger, safer, better Canada.
It is about continuing the vision of the people who built this country and made it great.
It is about enabling Canada to take its rightful place in the world.
The measures in Budget 2007, from biggest to smallest, are designed to achieve these broader, long-term goals.
This budget begins delivering on Advantage Canada, our long-term economic plan that I presented last fall.
It is a plan to enable all Canadians to meet the challenges and seize the opportunities of the years and decades to come.
The Advantage Canada plan promotes five economic advantages we need to succeed in today's global economy:
- a fiscal advantage;
- a tax advantage;
- a knowledge advantage;
- an entrepreneurial advantage;
- and an infrastructure advantage.
Canada has solid economic fundamentals and we punch above our weight internationally.
We are on the best fiscal footing of any country in the G-7.
We are in the second-longest period of economic expansion in Canadian history, the only longer period being right after World War II.
Our unemployment rate is at its lowest level in over 30 years.
We are bringing in balanced budgets and paying down debt.
We are an emerging energy superpower on several fronts:
- We have the second-largest oil reserves in the world.
- We are the seventh-largest producer of oil and the largest supplier of oil to the US: soon to be fifth with the further development of the oil sands in Alberta;
- We are the world's third-largest producer of natural gas;
- The largest supplier of uranium;
- The largest producer of clean hydroelectric power.
and
But we must not be complacent. We face some significant challenges, including the appreciation of the Canadian dollar against the U.S. dollar, increased competition from China, India, and other emerging economies, uncertainty about the future prices of key commodities, such as oil, natural gas, and industrial metals, the slowing of the U.S. housing market; and the aging of our country's population.
And while Canadians feel our economy is strong, they are concerned about the rising cost of living.
They want their children and grandchildren to be able to realize their dreams right here in Canada.
Canadians are working hard for their families.
They expect their governments to act on their particular responsibilities to ensure we have clean air and clean water, to invest in post-secondary education and skills training, to help ensure access to top-quality health care, to provide the transportation infrastructure we need for sustainable growth, to do more to help all Canadians enjoy the benefits and opportunities of living in this amazing country.
Budget 2007 is a significant step forward in addressing these concerns, in creating our Canadian advantages and realizing our potential.
The measures in it reflect our government's practical, results-oriented approach.
The Budget is part of a long-term, comprehensive, principles-based plan.
And it is inspired by the values that Canadians share.
In Budget 2007, we have restored fiscal balance in this country.
In some ways the fiscal balance issue is complicated.
But in the end it is simple.
It is about conducting fiscal relations between governments in Canada on the basis of principles.
It is about getting our house in order, strengthening the federation and then delivering on our responsibilities to Canadians.
Our government is providing long-term, predictable federal transfers and support to the provinces.
We will respect federal and provincial jurisdictions and we will focus on core federal responsibilities, such as defence, immigration, international trade, and protecting our natural resources.
We will ensure federal programs treat Canadians fairly, regardless of where they live.
We will help ensure the provincial and territorial governments have the resources they need to provide the services Canadians expect.
I admit fiscal relations in Canada will always have a certain wonkish complexity, on paper anyway.
But in the long term, the outcome of fiscal balance for Canadian families and businesses will be clear and concrete:
- Clean air.
- Clean water.
- Safer communities.
- Better roads.
- Better transit.
- Better health care.
- Better post-secondary education.
- Better skills training.
In short, a better Canada.
That is why in Budget 2007 our government has delivered a truly historic plan to restore fiscal balance in this country.
That is why we have committed the funds necessary to make that plan a reality.
For the federal government, the restoration of fiscal balance clears the way to deliver the five economic advantages outlined in our Advantage Canada plan.
As I said in the Budget Speech, it all starts with a fiscal advantage.
In Budget 2007, our government has lowered the national mortgage substantially – again – as part of our commitment to eliminate Canada's net debt in less than a generation.
In this budget we are reducing the debt by $9.2 billion.
The total debt reduction in our first two Budgets is $22.4 billion.
This represents $700 for every man, woman, and child in this country.
Over time, the more we reduce the debt, the more freedom we will have to invest in the things our country needs to reach its full potential.
In the meantime, in Budget 2007 we are making sure Canadians will benefit directly from our debt reduction plan.
Through our Tax-Back Guarantee, every dollar saved through lower interest payments will be returned to Canadians, through personal income tax reductions.
That would amount to $1 billion, this year alone.
Lower debt means lower interest payments and lower taxes.
And lower taxes means more money in Canadians' pockets.
Taxes in Canada are too high. We all know it. There are lots of ways to show it.
Many Canadians actually wonder whether they can afford to have children and to raise them.
That alone is enough for us to act – right now – to continue reducing the tax burden on hard working families.
In Budget 2007 we have created a Working Families' Tax Plan.
We made this choice deliberately.
Our plan includes a new tax credit for each child under 18, an end to the marriage penalty for single-earner families, help for families to save for their children's education, and more help for seniors on fixed incomes.
But building the tax advantage is about more than personal income tax relief.
It is about providing an advantage to Canadian businesses as well.
Canada's manufacturers are Canada's job creators.
They have weathered tough global conditions in recent years. They deserve our support.
That is why in Budget 2007, our government is providing a new dramatic capital cost allowance incentive.
It will encourage investment in new technology, increased efficiency and new buildings, to accommodate growth.
It will allow Canadian businesses to compete more effectively in the global economy.
And, in the case of the oil sands and other industries, we are striking the right balance.
We are phasing in the accelerated capital cost allowance to promote promising new green technologies.
And we are phasing out the accelerated capital cost allowance for general investment in the oil sands by 2015.
Budget 2007 moves forward on other fronts as well.
We need to build Canada's knowledge advantage, to have the best-educated, most-skilled, and most flexible workforce in the world.
That is why our government is making major new investments in science and technology research, in skills training, in scholarships for graduate students, and in leading-edge research institutions across the country.
We also need to build an entrepreneurial advantage, because Canada's two million small businesses literally make this country work.
Approximately 97 per cent of Canadian businesses are small businesses.
They are responsible for almost half the new jobs created in this country.
That is why we are taking action now to reduce the number of annual tax filings and remittances for small businesses.
We are reducing the business paper burden.
And we are increasing the lifetime capital gains exemption for the first time in 20 years.
We also need to build an infrastructure advantage.
Canadians agree: It is crucial for long-term, sustainable economic prosperity.
That is why in Budget 2007 we are establishing the new Canada ecoTrust for Clean Air and Climate Change.
That is why our government will make the largest investment in infrastructure in Canadian history, $33 billion over the next seven years, for roads, bridges, and public transit.
In Budget 2007, our government is also taking action to modernize and strengthen our health care system.
In addition to increased health transfers to the provinces, we are investing funds to reduce wait times and to establish e-Health initiatives.
Electronic Health Records will increase efficiency and quality of care while reducing medication errors and wait times.
We are providing funds to the provinces and territories to introduce cervical cancer immunization programs.
There is now a vaccine to help prevent this cancer, and our government is seizing this opportunity to promote women's health.
This is a vital health investment.
We are also providing resources to establish and support a new Canadian Mental Health Commission, to lead the development of a national mental health strategy.
Universally accessible health care is an achievement Canadians cherish.
It is a dramatic expression of our values of compassion and inclusiveness.
Our concern for the environment is also an expression of our values.
Our pride in the spectacular beauty of our country and our determination to preserve and protect it.
That is why in Budget 2007 we are making very significant commitments for environmental initiatives. We are protecting ecologically sensitive land through the Nature Conservancy of Canada, safeguarding the Great Bear Rainforest on British Columbia's coast, increasing enforcement of environmental protection laws.
To protect our precious lakes, rivers, and oceans, we have announced our new National Water Strategy.
The Strategy includes measures to improve water quality in places such as the Lake Winnipeg Basin, the Great Lakes Basin; and Lake Simcoe, along with measures to help ensure clean and safe drinking water on First Nations reserves, to work with other governments to improve municipal sewer and water facilities and to support sustainable development and protection of our oceans.
In Budget 2007 our government is also taking action for cleaner air.
We are introducing a program to provide rebates for fuel-efficient or alternative fuel vehicles.
We will sponsor initiatives to take old, polluting cars off the road, and introduce a Green Levy on gas guzzlers.
Restoring fiscal balance, and increasing funding for health care and the environment, is about making Canada better.
Delivering the five key advantages is about making Canada stronger.
And last – but certainly not least – Budget 2007 is about making Canada safer.
Our government is taking action to combat illegal drugs, human trafficking, and the sexual exploitation of children. We are increasing our foreign aid. We are providing new support for our veterans and soldiers. And we are committing substantial new funds for reconstruction in Afghanistan.
Our men and women in uniform are reminding the world every day that the spirit of Vimy Ridge lives on, in a new generation of brave Canadians.
Canadians are proud of our country's historic contribution to peace in the world.
They want our words today to mean something.
That is why we are in Afghanistan. That is why our government is providing new resources to protect our interests and project our values on the global stage.
Through Budget 2007, our government is committed to achieving real progress on the crucial economic, geopolitical, and social infrastructure priorities that reflect our values as Canadians.
We believe in sound, honest, accountable government, robust and confident markets, equality of opportunity, and a fair regulatory and fiscal context.
Our government understands that Canada needs a plan for tomorrow – and that we have to start acting on that plan today.
That plan is necessarily a comprehensive, long-term plan.
It requires focus and commitment – and action, step-by-step.
The end result will be a country that meets our aspirations: a better, stronger, safer Canada:
A Canada that is prudent and confident, realistic and principled, and deeply, even if quietly, impressive.
Watch out for those shy, industrious beavers – they're thinking big!
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ISSN 1708-721X