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| Minister of Finance Jim Flaherty announced the introduction of the Keeping Canada’s Economy & Jobs Growing Act which key elements of the Next Phase of Canada’s Economic Action Plan — A Low-Tax Plan for Jobs and Growth. The announcement was made in Ottawa, on Tuesday, October 4, 2011 |
October 4, 20118:45 a.m. Ottawa, Ontario
Emcee: It’s my pleasure to welcome Finance Minister Jim Flaherty here today. Being a small business owner, a member of the CFIB, it’s not too often we get a chance to get some of our tax dollars back.
Today I’m excited to have the Minister here to let us hear about his new tax credit, small business hiring tax credit to be exact. Without further ado I’d like to welcome the Minister.
Minister Flaherty: Thanks. I appreciate it, thank you. Thank you for hosting us here this morning. I certainly don’t want to interrupt business. I understand you open at 7:00 a.m. so you start pretty early. Good for you. Time for breakfast. I appreciate you letting us be here this morning. I’m pleased to be here today to discuss an important action the government is taking to help strengthen our economy and create jobs for Canadians throughout the country.
Je suis heureux d’être ici aujourd’hui pour expliquer les mesures importantes qu’adopte le gouvernement Harper afin de renforcer notre économie et de créer des emplois pour les Canadiens et les Canadiennes partout au pays.
I want to preface my remarks this morning by noting that on the world stage the Canadian economy is coping relatively well in spite of the economic challenges we must face beyond our borders. For example almost 600,000 more Canadians are working today than when the recession ended in July 2009. Botht he IMF and the OECD forecast that our economy will be amongst the strongest in the G7 both this year and next. We are the only G7 country that has recovered more than all of the output and all of the jobs lost during the downturn. Just a few weeks ago Moody’s renewed Canada’s AAA credit rating based on Canada’s and I quote “economic resiliency, very high government financial strength and a low susceptibility to event risk.”
More recently that same top rating was affirmed by Fitch with a stable outlook citing a culture of conservative policy making that allowed Canada to weather the global recession and recover faster than other nations. Nevertheless we are not immune from global economic turbulence. That’s why we need to stay the course and implement the next phase of Canada’s Economic Action Plan. Later today in the House of Commons we will introduce our second budget bill, the Keeping Canada’s Economy and Jobs Growing Act. This legislation includes some key elements of the next phase of Canada’s Economic Action Plan, a low tax plan for jobs and growth.
The act will help support Canada’s economic recovery through a host of initiatives one of the most important of which is the temporary hiring credit for small business. La Loi sur le Soutien de la croissance de l’économie et de l’emploi au Canada permettra de soutenir la reprise économique au Canada au moyen d’une série d’initiatives dont l’un des plus importantes est le crédit temporaire à l’embauche pour les petites entreprises. Supporting job creation will only happen by helping businesses and entrepreneurs succeed, keeping taxes low, investing in projects of national importance and maintaining Canada’s brand as one of the best places to invest. The Hiring Credit for Small Business will enable firms to hire new workers. To encourage additional hiring the onetime credit will provide up to $1,000 against a small employer’s increase in his 2011 EI premiums over those paid in 2010. Approximately 525,000 businesses will benefit from this temporary measure. Our government appreciates that small businesses and entrepreneurs like Buster’s Bar and Grill are the backbone of Canada’s economy and have punched well above their weight in supporting the country’s economic recovery.
To further strengthen our economy and sustain the momentum of our recovery today’s legislation implements additional important budget actions that will help make Canadian businesses even more innovative, more efficient and more competitive. Canadian businesses have both contributed to and benefited from our strong economic fundamentals relative to the global competitors. To accelerate this trend I encourage them to take full advantage of the measures available in the next phase of the Economic Actin Plan in today’s legislation because when Canada’s businesses succeed, all Canadians succeed. Key measures in the budget include expanding tax support for clean energy generation to encourage green investments, extending the mineral exploration tax credit for flow through share investors by one year to support Canada’s mining sector, simplifying Canada’s tariff legislation in order to facilitate trade and lower the administrative burden on businesses, extending the accelerate capital cost allowance treatment for investments in manufacturing and processing machinery and equipment for two years to support the manufacturing and processing sector, eliminating the mandatory retirement age for federally regulated employees in order to give older workers wishing to work the option of remaining in the workforce. As the global economy improves Canada will stand poised for success.
However as recent world events show there remains considerable risk and uncertainty in the global economy and at home too many Canadians still remain out of work. For these reasons the government remains focused on the economy. Regardless of any volatility ahead the Harper government will continue to focus on strengthening Canada’s capability to compete more effectively in this uncertain economic environment.
Quelle que soit l’instabilité à venir le gouvernement Harper va continuer de mettre l’accent sur le renforcement de la capacité concurrentielle des Canadiens dans ce contexte économique incertain.
As the private sector once again resumes its role as the engine of growth and job creation the Harper government will keep its focus squarely on sustainable actions that create the right conditions for long term economic prosperity as we complete the transition from providing temporary stimulus to winding it down and eliminating the deficit and returning to balanced budgets.
Thank you and I’d be pleased to take a few questions.
Moderator: Just before we start the usual thing – two microphones, one to my left, one to my right. Start on the left, one question, one follow up then to the right, one question one follow up. (Off microphone)
Question: A question from Reuters . Is the G20 preparing emergency measures to support markets and economies in the event of a Greek default?
Minister Flaherty: No we’re not preparing emergency measures. We’ve had continuing discussions on the issue of Greece’s ability to pay. There are important decisions to be made by the Eurozone ministers. There were decisions reached on July 21st in the Eurozone that need a couple more approvals by countries in the Eurozone in order to have the necessary approval by the 17 Eurozone countries. That’s the next step. As you know we have advocated for flexibility with respect to the size of the facility that the Eurozone has agreed to create. We think that’s important in order to have the Eurozone in a position where it can overwhelm the situation.
Question: Secondly, how concerned are you about the rapid depreciation in the value of the Canadian dollar which has just been sinking recently?
Minister Flaherty: You know, the volatility in the dollar is always a concern. What we’re seeing which is evident is a flight to the US dollar as a perceived safe haven. It’s not surprising that that has an effect on our currency in the short term.
Question: Minister, the markets are in turmoil again this morning. Should the G20 be or the Eurozone policy makers should they be concentrating on as you put it re-ordering Greek debt and perhaps now the next stage would be to either insure all bank deposits or take further steps to make sure that Greece, sort of there’s a firewall and that the financial system remains stable?
Minister Flaherty: As I have said to my colleagues from Europe before including about ten days ago when we met in Marseille, three things: one, a commitment of political will; two, decisiveness and three, clarity. In our view those are the three things that the Eurozone ministers and leaders need to do in order to restore confidence. They are meeting in Europe, the Eurozone ministers are. The G20 ministers are going to meet the end of next week again in France. The leaders are meeting in early November in Cannes so there are lots of meetings scheduled. The concern always has been to encourage the Eurozone leaders to get ahead of the markets, to overwhelm the problem.
Question: Do you think the Eurozone policy makers have to now start considering either nationalizing banks or providing a blanket guarantee on bank deposits in order to keep the financial system stable given all the concerns in the market about a Greek default?
Minister Flaherty: There are many discussions that they are having and I have not heard that subject raised.
Question: I think everyone would agree there are some useful measures that you’re talking about today but these are from the budget that you brought down in March.
Minister Flaherty: And June.
Question: Yeah, that’s right but originally in March. It seems increasingly the case that Canada is being sideswiped again by world economic conditions. Are you thinking about more measures to try to support the economy and if so when are we likely to hear about those?
Minister Flaherty: What we’re doing right now is encouraging our European colleagues to deal with the situation with which they are faced which is an urgent situation. This situation has been evolving since at least January 2010 and discussions have been taking place over that entire period of time. It is time for the Eurozone countries to deal with that situation. In the absence of an external shock to the Canadian economy we’re on the right track. We’ll stay on track. The lesson of Greece and some other countries in Europe is that accumulating deficits and creating a large public debt over time is th worst thing you can do to an economy, the people of a country. We have no intention of going in that direction.
Question: Just as a quick follow-up, some Opposition MP’s are saying it’s irresponsible of you to endorse as a senior federal Cabinet Minister, to endorse a party in the Ontario election. What’s your response to that?
Minister Flaherty: I don’t know what they thought, that I’d support the Liberal Party in Ontario, the NDP Party in Ontario. I sat in the Ontario legislature for more than ten years. I was Deputy Premier. I was Minister of Finance. Tim Hudak is a good friend of mine. We’re colleagues and friends. I’m concerned about the fiscal situation in some of the provinces including Ontario. These are issues that need to be addressed. As I just said a moment ago, if one lets deficits continue to accumulate and you develop a large public debt, watch out. I think the Conservative Party in Ontario, the Progressive Conservative Party is the best party to exercise fiscal responsibility in that province.
Question: Good morning Mr. Flaherty. Some of your opponents have said that the world is already in recession. They expect Canada to be hit by this and for government revenues to fall. What would it take in your estimation as you look forward for the government of Canada to move off its 2014-2015 date for balancing the budget?
Minister Flaherty: It would take a serious economic decline off expectations. We have not seen that to date. We monitor closely. We watch. If there were to be a serious decline then of course we would adjust. We would accommodate. We would be flexible and pragmatic in what we do. We’ve done it before. We’ll do it again.
Question: Can you define serious decline for me?
Minister Flaherty: If we had some sort of world recession obviously then that would change the picture dramatically. I’m relatively confident that what we’re going to see in Canada is modest economic growth over the next while. That’s what the IMF, the OECD say. I met with my economic advisory council yesterday. That’s what I was hearing from those business leaders from across the country. I’m comfortable with modest economic growth with that anticipation over the course of the next while.
Question: Mr. Flaherty, on the current credit you’re talking about, it’s nearing its end. The Canadian Federation of Independent Businesses based on their conversations with government people they’re cautiously optimistic that you’re going to renew this credit. Is that optimism misplaced?
Minister Flaherty: (laughs) We’ll watch and monitor and see but the goal is to get back to balanced budgets, to be on course, on the right track in Canada. Of course we’ll look and we’ll watch. We are concerned about the number of persons who are unemployed in Canada. Our unemployment rate is much better than the American rate but that’s small comfort. We still have too many people unemployed in our own country.
Question: The Financial Stability Board, you mentioned Mr. Carney yesterday, that job is expected to be an even bigger job for the next person who takes that on. Are you concerned whether the Governor is going to be able to manage both jobs, being Bank of Canada Governor and heading this board?
Minister Flaherty: I’m confident that if Governor Carney becomes the Chair of the Financial Stability Board that he’ll be able to manage that as well as his important job as Governor of the Bank of Canada. There would be more to say about that over time with respect to how the Financial Stability Board is structured and how much support there is at the FSB. It’s very important, this position. It would be a great credit for Canada were Governor Carney to take over that position. Moderator: Is there somebody behind (off microphone).
Question: I just want to come back to Les’ question, the measures you’re announcing today were from the last budget and things have significantly changed. How do they reflect that thing to the uncertainty that’s floating around and hurting Canadian businesses since they’re actually six months old?
Minister Flaherty: We anticipated in the budget we anticipated some risk in the economy. We took a substantial risk adjustment on the numbers in the budget and we also created things like this small business tax credit. We also are continuing of course on the transfers to the provinces, the health transfer increases at 6%, the social transfer for social services, education continues at 3%. We extended work-sharing and of course the tax reductions for businesses, all sizes of businesses will be completed on January 1st with another drop in the business tax rate. These are all expansionary economic policies which we had in the budget and with which we are continuing. As I said before, if it’s necessary to do more in the future because of shocks from outside then we’ll look at that but right now actually Canada is the envy of the world. Forbes magazine says that Canada is the number one country in which to do business in the entire world. We ranked number one this year. I don’t think it’s the time to waiver from the course that gives us such a solid international reputation. Thank you.
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