T he Speaker: The Honourable Minister of Finance
Jim Flaherty, The Hon. Minister of Finance: Thank you, Mr. Speaker.
On budget day, it's a Canadian political tradition for Finance Ministers like me to stand here in new shoes and deliver an hour or so of self-congratulatory rhetoric. Today, in light of the global financial crisis, I'm going to break with that tradition. I'm going to tell it like it is.
The good news is that Canada is, relatively speaking, in good shape. Our debt burden is the lowest of any G7 country. That's a credit to this government, but also to the one that preceded it. Twelve years ago, debt charges consumed 26 cents of every federal tax dollar. Now it's 13 cents. To those who've made an annual tradition of complaining about how the budget didn't contain enough money for this project or that one – I'm talking to the member for Toronto-Danforth here, among others – that's why we ran surpluses and repaid debt: We can now spend more when the economy is weak.
The bad news is that in the short run, it isn't going to matter a whole lot. Anyone who's expecting a sharp rebound is either deluding himself, or is running the Bank of Canada. Although this government faces pressure to do something to stimulate growth – and we have responded to that pressure today – there's no point in sugar-coating the truth. The U.S., euro zone and Chinese economies are, put together, 22 times the size of the Canadian economy. They'll be leading the way out of this. We're passengers, mostly.
That isn't to say this government doesn't take the crisis seriously, or is unwilling to act. But it does mean we need to show some restraint. Canada isn't going to be able to spend its way into an economic expansion at a time when the International Monetary Fund is projecting world growth of just 0.5 per cent. We have to be realistic, and resist the urge to throw one new spending initiative after another on to the fire until our deficits are so huge that it's easier to land an astronaut on Mars than to see our way out of the red ink.
Therefore, our budget seeks to strike a balance between short-term economic stimulus, longer-term investment and fiscal responsibility.
That's why there isn't any personal major tax relief in this budget. With this much new spending, we can't afford it. We already cut taxes – including the GST to 5 per cent – back when the economy didn't really need the stimulus. If we hadn't done that, we would probably be able to do more today. This government will offer more tax relief when economic circumstances allow it.
Today's budget offers a significant enhancement to the Working Income Tax Benefit, a tax credit designed to help low-income families and unemployed Canadians. This makes tremendous sense from an economic point of view, and is also good social policy. This measure is unrelated to the fact that the program's nickname, WITBY, sounds like the name of my riding.
On the spending side, this government has responded to the ongoing crisis in parts of Canada's manufacturing and resource sectors with short-term solutions. Prior to the budget, we announced a $4-billion emergency loan package to help the Canadian subsidiaries of General Motors and Chrysler. Today's budget contains another $1-billion in relief money for communities that rely on forestry and other industries that have been hit hard by the downturn.
The government has stepped in because the economic slide has been unprecedented in scale and speed, and these industries need time to adjust. However, today we also issue a warning. That gravy train is making its final run. In the future, these sectors will have to stand on their own without federal assistance. It does not make economic sense to ask a software entrepreneur from Montreal to subsidize GM. And it isn't fair to ask a retail worker with no pension who earns $45,000 a year to pay higher taxes, to save the job of an auto worker who earns twice as much and enjoys generous retirement benefits.
Canadians should remain confident about the future. However, once we emerge from this period of economic trouble – and we will – sacrifices will have to be made to ensure that our country does not enter another period of chronic deficits like the 1970s and 1980s. That may mean tax increases. At the very least, we will have to cut some of the programs you see in the budget today. For years, governments in Ottawa have promised to limit the growth in program spending, usually to the growth in population, plus inflation.
For years, they have broken those promises. I am telling you today: When the recovery is here, our government will not rest until we have returned to a balanced budget. That's our plan. As long as the Honourable Leader of the Opposition says it's okay.