Flaherty urges U.S. firms to invest in Canada
Finance Minister Jim Flaherty urged American business leaders to invest in Canada during a speech in New York City Wednesday morning.
Speaking at a conference organized by the Toronto Financial Services Alliance, Flaherty told senior American and Canadian business representatives that Canada's strong economic fundamentals, sound fiscal management and its financial sector make it a welcoming environment for increased business investment.
"Based on our strong record in weathering the 2008–2009 global crisis, it is clear that Canada has the fiscal and economic rigour needed to attract savvy investors," Flaherty said in a statement released after the speech.
Flaherty touted Canada's financial sector leadership, saying it has been recognized internationally. He said for four consecutive years, the World Economic Forum has rated Canada's banking system as the world's soundest, and that five of Canada's largest banks were named to Bloomberg's list of the world's strongest financial institutions.
"In spite of the widespread turmoil in world markets, I am confident that Canada is well-positioned to respond effectively to possible shocks coming from the current global uncertainty. Canada will continue to show the economic and fiscal leadership that helped us weather the global hardships we have already faced," Flaherty said.
During his speech, Flaherty reviewed the advantages he said Canada had heading into the recession in 2008 and the actions the Conservative government took in response to it.
Financial institutions have prudent lending standards which helped avoid the mortgage crisis experienced in the United States, Flaherty said, banks are regulated and supervised by an effective system, the Conservatives have steadily cut corporate taxes since 2006, reduced red tape and promoted free-trade agreements.
Flaherty said that when the economic crisis became acute in December 2008 the government had to make a "significant political decision" to go from running balanced budgets to deficits when it launched its multi-billion dollar stimulus plan.
He said he consulted with the opposition Liberals at the time and boasted about his non-partisan nature, crediting that for successfully passing the 2009 budget.
"As I said, we had to make a decision about whether we would act boldly or not with some risk to that. We did and we brought in the budget Jan. 27, 2009. The main opposition party at the time was consulted. I met with them and talked to them about what we thought needed to be done for the country and not in a partisan way. In fact it was arguably not a fiscally conservative thing to do," he said, according to a transcript of his speech.
"Enough of them were co-operative that it passed. I think this is important in terms of what nations are able to do when faced with serious economic circumstances and the need to be pragmatic and to avoid ideological positioning. That was a time of some challenge and now it would be easier because we have a majority government which provides stability at least until our next election, which won't be until 2015," he said.
What Flaherty didn't mention in his speech is that the Liberals and NDP, with the support of the Bloc Québécois, agreed to form a coalition to try and oust the Conservatives from office in early December 2008. It was the government's inaction on the economy, according to the opposition parties, that prompted them to make the agreement.
Prime Minister Stephen Harper then asked the Governor General to prorogue Parliament, which meant a confidence vote was avoided. His government continued on and brought the budget in the following month.
Flaherty told his audience how government decision-making is stable now in Canada, thanks to the majority government won by the Conservatives in May.
"We have a majority government now in Ottawa. As you know, in the parliamentary system that means that the government agenda can be implemented using the majority in the House of Commons," he said. "We also have a majority in the appointed Senate in Canada. This wasn't true back in December 2008 when the crisis was acute."
Canada has recovered all of the jobs lost during the recession and added even more, Flaherty said. The unemployment rate is still too high but could be even worse if the Conservatives had not acted in 2008 and 2009, he said.
European crisis 'far from resolved'
He also talked about his government's efforts to create a national securities regulator. The Supreme Court of Canada is reviewing draft legislation and Flaherty said he expects to hear back from the court "any day now." If the court gives its approval, Flaherty said the national regulator would be up and running in late 2012.
Talking about the ongoing European debt crisis, Flaherty said it "remains far from resolved." He said European authorities must act aggressively to stabilize the situation and that he thinks the plan agreed to by G20 countries in Cannes is a credible one that will help restore market confidence and reduce debts and deficits.
Flaherty said it's not just Europe that must get its fiscal house in order. "Governments around the world must all live within their means. These aren't abstract economic theories. For the people in some countries this unresolved crisis and a lack of political will, will pose dire consequences," he said.
The finance minister said that as the Conservatives prepare for their next budget, amid international volatility, they will stick to their plan to eliminate the deficit in the medium-term.
"In uncertain times, our view is the most important contribution the government can make to bolster confidence and growth is to maintain a sound fiscal position," he said, adding that balanced budgets help governments respond to economic shocks.