The key to successful fiscal policy is making sure you are focused on what the economy actually needs at any given time. And those needs change from time to time.
Thinking back to the 1990s, Canada’s biggest economic need then was to bring down the federal “debt ratio” – that is, the size of the federal government’s debt compared to the size of the overall economy. Through successive governments over a quarter of a century, Canada’s debt ratio had ballooned to more than 70%. That burden was clearly unsustainable, and worse still, it limited our economic sovereignty.
Thanks to decisive actions taken by Paul Martin and Jean Chrétien, the key problem of that day was resolved – the debt ratio was more than slashed in half. Significantly, their ability to accomplish that feat was based, in part, on a healthy economic growth rate of about 3% per year throughout that entire period.
But times have changed. The years of strong growth stalled in 2008, so Canada’s current big challenge is the opposite of the 1990s – our debt ratio is well under control, but our long-term economic growth rate is projected to be too slow to generate the jobs, the incomes and the confidence necessary for a thriving middle class.
So instead of the austere policies of the Harper era which produced dismal results and a sense of grinding mediocrity, the Liberal government led by Justin Trudeau is pursing an investment plan to drive greater growth.
The first part of that plan is to boost disposable incomes and increase the spending power of ordinary Canadians and their families. So we are cutting taxes for the middle class and for small businesses. We have also implemented a new targeted Canada Child Benefit which is providing hundreds of dollars more in cash support to 9-out-of-10 families, and lifting 300,000 kids out of poverty. Income support for students and for seniors has also gone up.
Secondly, we are making historic investments in key drivers of growth that will add to Canada’s momentum – investments in vital infrastructure, housing, early learning and childcare, advanced education, scientific research, innovation and international trade.
The results so far are encouraging. Canada’s national economic growth rate is now more than double the average of the previous 10 years. We’re leading all other countries in the G7. More than 500,000 net new jobs have been generated. The deficit is coming in lower than projected. And our federal debt ratio is not only the best in the G7, it is headed on a steady downward track year-after-year.
For Saskatchewan, our income support measures help a big percentage of our provincial population, and our federal investments (now totalling more than One Billion Dollars in Saskatchewan since 2015) are producing tangible gains:
* $365 million for rural water control structures;
* $54 million to expand affordable housing units and services;
* $39 million for early learning and childcare;
* More than $200 million for scientific research and innovation;
* Close to $600 million for public and community infrastructure including highways, bridges, streets and sidewalks, transit systems, water and wastewater facilities, energy upgrades, and much more.
Plus, for Saskatchewan, we are now enacting new legislation on the shipment of grain by rail to better serve farmers, including – for the first time ever – reciprocal penalties applicable to the railways.
We are fighting hard for Saskatchewan’s priorities in international trade. We’ve got more beef and pork into Asia and Latin America. We’ve preserved our precious canola market in China. We’re hard at work on better access for pulse crops in India.
We got rid of abusive U.S. country-of-origin labelling. And we’re fully engaged on all the complex issues around softwood lumber, steel pipe, and of course NAFTA.
A new comprehensive trade deal with Europe is now being successfully implemented. A new free trade agreement with Ukraine has been finalized. And we’re examining the chances of a decent successor to the TransPacific partnership.
And finally on energy, by integrating sound environmental principles into our aggressive economic growth plan, we have succeeded in approving two large pipeline projects to move western resources into export markets.
These two projects (TransMountain and Line3) represent $11 billion in private sector investment, and some 22,000 jobs. To date, all the major contracts to build the pipe are going to Evraz Steel in Regina.
There’s a lot more work to do, but this is a solid beginning.