Shift from Innovation Importer to High-Tech Leader Powers Canadian Economy
Martin, Paul, Canadian Speeches
"TEXT 1757.","Canadian Speeches: Volume 14, #06, January/February 2001.","Minister of Finance for Canada.","Shift from innovation importer to high-tech leader powers Canadian economy.","PAUL MARTIN.","Information technology. Economic issues. Finance.","The restored strength of the Canadian economy stems from much more than a great improvement in public finances during the past seven years. The economy has been re-engineered and retooled, with a change in mindset embracing privatization, globalization and the knowledge economy. No longer simply an importer of innovation, Canada is now among the technological pace-setters. Speech to the Canadian Society of New York, New York, January 17, 2001."," For more than 100 years the Canadian Society of New York has made an outstanding contribution to fostering understanding between Canadians and Americans. It is therefore a great privilege to speak to you today, and I want to thank Kenneth Patterson and the other members of the board for inviting me.
It is always exciting to come to New York. No matter what the economic conditions, the mood in Manhattan is energizing, the beat of business electric, and the perspective global.
Today, however, I would like to talk to you about a place not too far from here where there is an equal buzz of excitement and where the energy level is equally contagious. A place on the leading edge of globalization, where the knowledge economy is robust and opportunity beckons. That place is Canada.
A robust Canadian economy
How are we doing? Well, we have just completed our 21st consecutive quarter of growth -- the longest such period since the mid-1960s, and the consensus of international forecasters is that Canada will lead the Group of Seven (G-7) in growth this year. Our unemployment rate is at a 25-year low. Our inflation rate has averaged 1.7% over the last five years -- well below that of the U.S. Our current account surplus is at an all-time high.
These numbers tell a strong story, but we are not under any illusions. The business cycle has not been abolished, and no country is immune to the ups and downs of the global economy. Today there is obviously considerable uncertainty about the short-term prospects for the U.S., and this uncertainty has implications for Canada. Clearly, caution is warranted.
That being said, a healthy mix of strong fundamentals -- fiscal surpluses, low inflation, tax cuts and forward-looking policies -- means that Canada is better positioned than it has been in decades to manage economic turbulence.
The fiscal turnaround
This was certainly not the case the first time I spoke to the Canadian Society in 1994. At that time a pattern of rising deficits, of annual spending far exceeding revenues, of borrowing money to make ends meet, was well entrenched, and corrective action was imperative. That action was taken, such that by 1998, four years later, Canada announced that it had eradicated its deficit from the national fiscal landscape. In fact, we were the first G-7 country to do so.
Since then we are one of the few nations to have begun paying down its debt. And we have done so having already moved to put our national retirement system on a sound financial footing. In 1995 our [federal] debt-to-GDP (gross domestic product) ratio peaked at 71%. Today it has fallen to 54%. Within five years it will drop to 40%. In 1993 our foreign indebtedness was 45% of GDP. Today it is 31% and falling. All in all, this represents a remarkable fiscal turnaround.
These results didn't just happen by accident. Rather, they are the consequence of a national consensus, a focused and determined effort on the part of a nation to strengthen a once ailing economy and better prepare itself for today's global reality. A consensus that did not end with the cleanup of our national balance sheet, but rather began with a revolution in the structure of our economy and in the mindset of our people. …